SunRice boss fears ag is going nuts on water usage

His comments reinforce a recent call by the Almond Board of Australia for a moratorium on all new water allocations for greenfield irrigation developments - including the booming almond industry's projects - until a review of the river system's capacity to support more development is carried out.

The almond board wants reassurances the Murray Darling system can sustainably support a "prosperous and diverse" irrigated agriculture sector and its communities.

It is concerned about more irrigation development's adverse impact on third parties or the environment.

Mr Arthur said permanent plantings in the southern basin - notably nut crops - had expanded from a 17,000 hectare footprint to 75,000ha in the past decade.

They now relied heavily on annual water entitlements bought from mixed farming districts upstream where irrigated crop and livestock production traditionally ebbed and flowed with fluctuating water availability and rainfall conditions in the basin.

"I love nuts. I think they're a fantastic sector for agriculture, but we don't have great rivers like the Danube to rely on in Australia," he said.

Permanent crop (high security) water entitlements had long been restricted to less than 20 per cent of valley licences to preserve a diverse base of water-dependent farming industries rather than putting vast plantings of citrus, nuts or grapes at risk when droughts or low flow conditions set in.

NSW's Murray Irrigation area had no high security water entitlements at all.

With the water market now deregulated, allowing entitlements to trade along the river system, Mr Arthur estimated fixed plantings consumed "well in excess of the old 10pc to 20pc rule of thumb" in the southern Murray Darling connected system.

In the past three years, with drought intensifying and fresh tree plantings requiring new allocations, water prices had soared as permanent croppers' high security licence values climbed from $2000 a megalitre to $6000/Ml.

Rather than paying those premiums, many had rushed to temporarily secure general irrigation allocations at around $500/Ml to keep their trees productive, but squeezed annual croppers out of the water market.

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Additionally, Mr Arthur said about 28pc of the connected water market was now sidelined via environmental buybacks.

These were often bought from annual irrigators upstream in areas which traditionally supported a diverse farming, processing and service industries.

"There's been a marked movement of water from traditional areas and a dramatic shift from annual cropping to permanent plantings," Mr Arthur told the NSW Farm Writers Association.

"I believe we have passed the threshold and highly profitable annual irrigation industries might be the big casualties unless action is taken now.

"Continued unsustainable expansions of permanent plantings will lead to widespread failures in those sectors too, triggered by the next significant drought, or global oversupply in certain commodity markets.

"Taxpayers will quite likely be required to finance an emergency horticulture sector help scheme."

While not wishing to pick a fight with agribusinesses pushing almond production as an ethically popular investment option, he said Australia's volatile seasonal trends and ethereal river systems were most suited to responsive annual cropping and livestock systems.

Even the almond board had emphasised how all irrigated industries were mutually interdependent on each other's sustainability.

It said fixed horticultural plantings relied on the flexibility of annual croppers and dairy farms to trade water, while the workforce and service industries in vibrant annual cropping areas helped the almond industry at harvest.

However, Mr Arthur pointed to areas serviced by Murray Irrigation as indicative of the unfair pressures now facing mixed irrigation communities.

MI's active water entitlements had fallen from about 1.2 million megalitres to about 830,000Ml.

MI entitlements had also been frequently bought by irrigators in other areas purely to be handed to the government in exchange for grants to upgrade their farm infrastructure.

At the same time, he estimated almost half the water moving downstream to rapidly expanding nut plantation investment schemes at Swan Hill, Mildura or the lower Murrumbidgee had evaporated or soaked into the environment before it reached its destination.

A megalitre of water entitlement bought from a farm at Leeton, Wagga Wagga or Shepparton was not worth a megalitre when it reached a downstream orchard.

Buyers downstream should probably be buying 1.5Ml to 2.5Ml in upstream entitlements for every megalitre they required.

He understood this month's Council of Australian Governments (COAG) would be discussing this specific issue.

Mr Arthur acknowledged as an irrigated grain grower and chairman of a public company relying on rice crops for its processing plants, his opinions may be expected to favour traditional water users.

"Everybody's point of view tends to depend on where they come from, but I believe things are very wrong," he said.

"A megalitre at the top of the system does not equal one megalitre hundreds of kilometres away".

Evaporation, forest-impeded Murray tributary flows, plus general environmental losses to flooding and South Australia's lower lakes had to be better valued by the water market without putting valid upstream communities and industries at risk.

The "highly charged political debate" about water should also not smother good technical discussion, including the long-running proposition of diverting water from northern Australia to southern river systems.

"I think it warrants looking at more seriously," he said.

"Technically speaking its an infrastructure project that could happen. but it will have plenty of political challenges."

A decade ago the estimated cost or piping water from the Gulf had been ruled out by critics because of the distance and pumping stations involved, with a likely cost to southern water users of $150/Ml.

"When you're paying $500/Ml for water at the moment, $150 doesn't sound too bad to me."