AustraliaWater prices double, makes farmers think twice about profitability of crops

23:32  08 november  2018
23:32  08 november  2018 Source:   abc.net.au

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Water prices double, makes farmers think twice about profitability of crops© Provided by ABC News Winegrape grower Jack Papageorgiou said growers are concerned about increasing water prices. Growers are struggling to keep up with doubling water prices brought on by little rain and high demand.

Wine grape grower Jack Papageorgiou said that many producers he had spoken to had sold up to 50 per cent of their permeant water during the Millennium Drought and were now feeling the pinch.

"They'll be in a difficult situation when the price of water goes to this sort of point — and we don't know how high it's going to go," he said.

Current water entitlement prices are estimated at a little less than $5,000 per gigalitre and some stakeholders have predicted the value will rise to more than $7,000 before Christmas.

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While the Central and Renmark Irrigation Trusts have said that water on the temporary market has more than doubled in price compared with this time last year.

"In the wine industry thank god we're looking positive … but if the price of water keeps going where it's going the little profit we may make this year will go to water entitlements," Mr Papageorgiou said.

Renmark Irrigation Trust's Peter Duggin has echoed the concerns of farmers.

"It's probably something a lot of people are fearful of and are wondering just where and when water entitlement prices will stop rising," he said.

Growers questioning whether crops worth planting

Fruit grower Nathan Jericho has been looking at the market for long-term sustainability.

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His Barmera property in South Australia grows wine grapes, watermelons and pumpkins, and Mr Jericho has started to pay more attention to the water market to estimate whether he will gain any profit from his crops this season.

"If we're going to only get really low prices and if we've got to spend a lot more on water, well we start to question whether we can sustain growing these crops," Mr Jericho said.

"I think if it started heading towards more than $500-$600 per megalitre … then maybe after that we would start to question 'do we put maybe as much in?'"

"We can only hope that if the price of water goes up, then the price of the produce will go up as well."

Demand threatening to outweigh supply of water

Adding to the monetary strain for irrigators, less water is now available for growers because more than 2,000 gigalitres of water is now owned by the Commonwealth Environmental Water Holder, which irrigation experts have labelled 'significant' as roughly 30 per cent of water has been taken out of the system.

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The transfer of water was part of the Murray-Darling Basin Plan to ensure environmental benefits could occur to look after the Murray River and the ecology around the river.

"While that's a good thing … the irrigation community now do not have access to that 2,200 gigalitres worth of water," Mr Duggin said.

"[It comes] at a time when there's been an expansion of plantings and an increasing of plantings that use higher water levels.

"The supply of water is certainly coming back, both through the MDBP but even more crucially through the impending drought that we appear to be in, in South Australia, and certainly the drought we are definitely in, in all of New South Wales and much of Victoria."

The Commonwealth Environmental Water Holder has defended its procurement of the water

"When things are dry it's tough on the whole river system including the environment," a spokesperson said.

Central Irrigation Trust CEO Gavin McMahon has referenced an Aither report that indicated that while the water market is strained, it can survive the season.

"They [reports] say there is enough water to cater for the permanent plantings that are out there, but it is certainly a lot tighter than it would have been through the last drought," Mr McMahon said.

But vineyard owner Donald Heward has been less worried about the immediate future, but is instead looking further ahead.

"I think this year we're going to battle through quite good, but if it doesn't rain, next year's going to be probably a bit of a horror story," Mr Heward said.

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