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$1000/ML hard to justify

It all comes down to economics - cold hard figures that don't care for the emotions of a drought.

But one has to wonder whether some irrigators are letting their heart rule their head in offering $1000 per megalitre for temporary water on the open market.

It may seem ridiculous but the numbers don't lie - just look at the national water index of water brokers, Waterfind, which tracks the sharp rise in prices over the last three months.

Clearly supplies are short, placing upward pressure on prices.

But demand has to be strong as well to drive prices as high as they are currently.

Understandably, many farmers need water urgently to keep permanent plantings alive until the drought does break, hopefully with spring rains.

But the question has to be asked whether they are, in fact, throwing good money after bad, given the forecast of a wetter than average spring is 50:50 at best for most of the Murray Darling Basin.

It's a big punt when, as one irrigator in the media today put it, falls of "Biblical proportions" are needed to revive farmers' fortunes.

What do you think?

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Comments


Date: Newest first | Oldest first
Part of the problem is the agreement NSW government reached with Snowy Hydro.

Irrigators were allowed to borrow Snowy water in 2002-3 and again in 2005-6 the water was required to be paid back later.

Snowy and the NSW Government agreed that the irrigators would not be required to pay back the "Snowy borrow" this year.

However a condition of allowing the irrigators to use this water was that they not be permitted to trade the water that would otherwise have been paid back.

I don't know who put this requirement in - MI says it was Snowy but there seems no commercial reason for Snowy putting in a condition prohibiting trade - its a barrier to trade and a breach of the National Water Initiative.

Whatever the reason on prohibiting trade Snowy should be encouraged to explain why they have imposed the no trading condition and be encouraged to reconsider given the consequences.

The no trading condition results in no-one having enough water to do anything useful.

Irrigators cannot trade so that some irrigators can aggregate enough water to keep permanent plantings alive.

Whilst everyone is grateful that Snowy did not require the payback this year, why have they prohibited trade? Or was it a condition included at someone else's request?

Posted by JP on 4/09/2007 9:11:23 PM
There's something desperately wrong with a system that requires farmers to have to compete financially against the likes of Mac Bank, and with the whimsies of the likes of the Greenies and their Government subsidies, to be able to provide the very food we need!

It's bad enough that farmers on riverbanks, served by irrigation schemes provided by concerned and focused previous generations of tax payers, have to pay anything extra at all for water, beyond the power for the pumps!

It's like having to pay for air to breathe.

With our Governments (both sets) not interested in this country's sovereignty, or future as a self-sufficient producer of anything, we will probably soon come to rue our increasing reliance on imported substandard foods and manufactures, especially when the decreasing value of our wages effectively wipes out the present price advantage of produce and products from undemocratic regimes.

Posted by Bez on 4/09/2007 10:52:06 PM
Water has been overallocated in this the driest continent and that done during a wetter period.

The reality is users of water will have to compete for water, a scarce commodity, in the marketplace including domestic and environmental users.

High-security supply of good quality water is probably worth much more than $1000 per meg.

Any growth or in fact sustainance of existing intensive use in agriculture will depend on utilisation of northern Australian water which is abundant, close to the area of greatest demand (Asia) and not at this stage much sourced for urban use.

Posted by Seeds on 9/09/2007 4:08:39 PM
A national problem requires a national solution.

With Victoria again looking at below 'spring rains', how are the VFF farmers feeling about financially supporting their organisation, that is causing the stumbling block to a national solution?

Why subscribe to an organisation, who's CEO has hindered the whole process of the national water debate through arrogance & ego?

Posted by Billy on 10/09/2007 8:07:00 PM
I disagree with Seeds. Users 'will have to compete for water' only if that's the way we allow things to be.

While agreeing that there are different types of user, the farmer does not have access to desalination plants and if we force him to compete with financiers, traders and dealers, who add nothing to the end product except expense, Australia will surely ultimately lose the rest of its agricultural heritage to foreign imports and with that, a great deal of its independence and sovereignty.

I would prefer a system where a fair and workable allocation of water rights was permanently attached to our (we're still a democracy, aren't we?) best productive land, so that Australia could once again become self-sufficient and gainfully employed, and a net exporter of agricultural produce.

The 'workable' farm, including water can then be traded among citizens as much as they like.

Good farmers, as do other citizens, continue to be responsible, including what is today called 'looking after the environment' and a lot more objective research is needed to determine what is necessary to keep the rivers healthy, both for the farmers' economic benefit and to protect natural beauty for all of us.

Posted by Bez on 13/09/2007 9:06:24 PM
Water is a commodity, with a value.

The only system that seems fair for allocating water is the same system that we use for "allocating" electricity and other commodities (fuel, food), i.e. user pays.

It seems logical to me that all users of water (river or underground) will have to pay per litre for the water that they use.

This will cause water to be redirected from areas in which it is used inefficiently, particularly on low-value crops (e.g. pasture) to crops where it will be used efficiently, which will mostly be higher value crops such as orchards, market gardens, etc.

This does not mean that rural users will pay the same price per litre of water as, say, domestic city users.

As "bulk" users, they should pay less per litre, in the same way that "bulk" electricity users pay less per megawatt.

The lower price should also reflect the fact that farmers have paid for the infrastructure (pumps, dams, pipes, bores) that they have set up for their enterprise, while domestic households have not had to meet the full costs of the infrastructure that provides their water.

Posted by TM on 5/03/2008 3:15:59 PM
Michael Thomson is the Editor of FarmOnline. He has previously worked as the Canberra Parliamentary Press Gallery correspondent for the Rural Press group of agricultural newspapers, and as a senior reporter with Queensland Country Life.

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