Water brokers stranglehold on Murray Darling Basin’s inter-valley choke points

With the help of software, a few big players control the majority of water trades, earning millions, while smaller irrigators have little chance of securing a drop.

Getting water through the Barmah Choke or out of the Goulburn and Murrumbidgee into the Lower Murray is worth millions of dollars.

Water broking heavyweights have a stranglehold on the Murray Darling Basin’s inter-valley choke points, helping a favoured few squeeze premiums of up to $100 a megalitre out of the market over the past six months.

At 10am on January 5 this year WaterNSW opened up trade from the Murrumbidgee, where water was selling for $103 a megalitre, to the Murray, where it was worth $190/ML.

Of the 333 Murrumbidgee applications vying to get a slice of the 40,711ML available for transfer to the Lower Murray, just six brokers took control of 99 per cent of the trade, earning their clients a $3.54 million windfall at the click of the keyboard.

Australian Water Brokers Association president Ben Williams said his members were lodging clients water on their licences to facilitate trade, admitting it was not ideal, but the best system they had.

However H2OX water exchange chief executive Lex Batters said the lack of transparency meant the system was “open to favouritism” and potential price manipulation.

WaterNSW has instigated a review into the inequity of the current first-come, first-served system, which the Australian Competition and Consumer Commission has found creates a “technological ‘arms race’ between a limited number of market participants who have the expertise and resources to use digital technologies to help ensure they are at the front of the queue and able to capture the majority of benefits”.

Broker dominance was reflected in The Weekly Times analysis of recent trades, which identified which brokers dominated the inter-valley (IVT) market.

Instead of numerous small parcels getting through, The Weekly Times found just four brokers took control of 36,033ML of the Murrumbidgee to Murray IVT trade on January 5, equal to 88 per cent of all that was available, with two other brokers snapping up smaller parcels.

Canadian-owned Ruralco Water succeeded in getting 15,000ML transferred on to its water access licences, with another 10,204ML lodged on to agricultural consultant Andrew Bomm’s WAL, 6710ML on to South Australian broker Waterfind’s WAL and 4108ML on to the Water Exchange’s WAL.

Just two irrigators managed to soak up the dribble left behind by the big players, with one getting 130ML through and the other 41ML.

The inequity of the current system has been repeated at least five more times over the season with brokers dominating Murrumbidgee to Lower Murray trade, when just:

12 of the 360 applicants got 35,800ML through the IVT on February 1, earning about $2.18m.

16 of the 366 applicants got 26,800ML through the IVT on February 15, earning about $1.47m

12 of the 307 applicants got 30,600ML through the IVT on March 15, earning about $1.5m.

18 of 271 applicants got 20,100ML through the IVT on April 6, earning about $735,000.

13 of 295 applicants got 20,800ML through the IVT on April 13, earning about $700,000.

The problem is not confined to NSW, with traders using software “bots” to monitor the Murray Darling Basin Authorities Barmah Choke trade balance, automatically lodging trades as soon as the number changes on the website.

In Victoria water brokers are also given exclusive access to a portal for Goulburn to Murray River IVT transfers, allowing them to lodge trades at the click of the keyboard.

In contrast, ordinary irrigators must first type in their credit card details, by which time it is often too late to get water through the IVT, as the bulk of trade has been taken up by brokers.