Murray Darling Basin: Olam bypasses trade barriers

A lucky few Murray Darling Basin irrigators hold ‘grandfathered’ entitlements, allowing them to bypass water trade barriers.

Global nut giant Olam has sold off 89,085 megalitres its southern Basin water, but kept two Murrumbidgee licences that allow it to bypass trade barriers.

Agribusiness giant Olam has held onto its valuable tagged NSW irrigation water licenses, which it has loaded up with 156,388 megalitres over the past six years to bypass the Murrumbidgee inter-valley trade limit.

In late 2019 the Singaporean company announced it was selling its 89,085 megalitres of water entitlements in the southern Murray Darling Basin to Canadian pension fund PSP Investments for $490 million.

Under the deal Olam also agreed to continue managing the water and 12,000ha of almonds.

But despite selling most of its own water a search of the NSW Water register shows Olam kept its two zero-share Murrumbidgee water access licenses, which are tagged to the Lower Murray.

The register shows Olam is still buying Murrumbidgee and Colleambally irrigators’ water to load up its zero-share WALS 20097 and 20098 with 25,647 megalitres in the six months to February this year.

There are only five tagged WALs held in the Murrumbidgee that allow their owners to buy discounted water when the IVT is closed and transfer it to their Murray properties where prices are often far higher.

The Weekly Times is not suggesting Olam is trying to profit from retaining the WALs,.

The company did not respond to requests for comment.

In Victoria there are another 20 tagged entitlement holders with a combined 12GL, which translates to about 22GL of carry-over and allocation that can bypass the Goulburn IVT in a season.

The Victorian Government’s current Goulburn to Murray trade review found “when these grandfathered tags use water and the IVT balance is credited, it means that less allocation trade is made available under the Goulburn-Murray water trade rule”.

The Australian Competition and Consumer Commission’s recent inquiry into water markets in the Murray-Darling Basin called for tagged or “grandfathered” water licences to be extinguished in NSW and Victoria.

That call has been echoed by Murrumbidgee Irrigation, which lodged a submission to the ACCC stating: “The grandfathered arrangements in the NSW Murray and Murrumbidgee have a demonstrated and disproportionate impact on Murrumbidgee water users and undermine existing trade rules”.

The Victorian Government has already ruled an entitlement’s tagged status is lost once it’s sold.

But WaterNSW told The Weekly Times “the tagged status remains with the licence when a change of ownership occurs”.

This inconsistency, plus the ACCC’s recommendations, has led the MDB Authority to undertake a review of the tagging protocols, which may result in both states abandoning tagged trades that can bypass Murrumbidgee and Goulburn IVTs.