Water gushes through Olam International ‘tag’ loophole

VICTORIA’S biggest private water owner, Olam International, has bypassed Murrumbidgee trade embargoes, snapping up $11 million of discounted water for its Lower Murray River properties.

VICTORIA’S biggest private water owner, Olam International, has bypassed Murrumbidgee trade embargoes, snapping up $11 million of discounted water for its Lower Murray River properties.

Analysis of the Singapore-based company’s water purchases show it owns two zero-share “tagged” water access licences, which allow it to buy and transfer unlimited volumes of Murrumbidgee water to the Murray during inter-valley trade embargoes.

Meanwhile, the rest of the Murrumbidgee’s irrigators have been restricted from trading water out of the valley for most of this and last season, forcing them to sell their water locally at up to $50-a-megalitre less than they could get on the NSW, Victorian and South Australian Murray irrigation markets.

Olam’s ability to bypass the embargo is due to a loophole in the Murray Darling Basin Plan’s trading rules that exempt the almond grower from trade restrictions in perpetuity, because its two Murrumbidgee licences were tagged to Lower Murray Water corporation’s zone 7 (Barmah to South Australia) before October 22, 2010.

In four days from December 5 to 8 last year, Olam bought 11,504 megalitres of Murrumbidgee allocation water and transferred it on to its Lower Murray Water tagged licence, at a cost of $646,200 or $56 a megalitre.

At that time Lower Murray Water zone allocations were trading at $102 to $109 a megalitre, where it would have cost Olam $1.17 million to buy the same 11,504 megalitres.

So far this irrigation season Olam has spent almost $2.5 million purchasing 37,797 megalitres of Murrumbidgee water and transferring it onto its Lower Murray Water tagged licences WAL20097 and WAL20098.

But those figures are overshadowed by Olam’s 2015-16 trade, when the multinational spent almost $8.5m buying 40,000 megalitres of Murrumbidgee water, during a season where Murray River water prices surged to more than $280 a megalitre.

A Water NSW spokesman said there was no limit on the volume of water that could be traded on to a Murrumbidgee zero-share licence, which is tagged to the Victorian Lower Murray Water zone.

The spokesman also confirmed tagged licences created prior to October 22, 2010, were exempt from inter-valley trade embargoes out of the Murrumbidgee.

However: “The tagging facility only allows for water to be consumed at the nominated approved work in the Murray (on the irrigator’s LMW property),” the spokesman said. “It does not facilitate the movement of water out of the Murrumbidgee to then be traded to another party.”

Yet The Weekly Times analysis of Olam’s trades show that last season the company transferred 18,524 megalitres off its tagged licence on to another owned by the South Australian water broker Waterfind (WAL21514).

Olam trading manager Toby Smith, who also sits on the National Irrigators Council, refused to respond to questions on these trades or the operation of its tagged licences.

“We don’t discuss the specifics of our procurement activities across the industry segments that we participate, including water purchasing,” Mr Smith said.

“Olam is active in the water market to meet the irrigation needs of the almond orchards that we lease in NSW and Victoria.”

According to the Victorian Water Register, Olam holds at least 61,124 megalitres of water entitlements on the Murray River.