Water market made murkier

Water market made murkier


Politics
LITTLEPROUD VISIT: Federal Water Minister David Littleproud visiting a Swan Hill stone fruit orchard last month.

LITTLEPROUD VISIT: Federal Water Minister David Littleproud visiting a Swan Hill stone fruit orchard last month.

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Outcry from permanent planters prompts Minister to dip his toe in deep end of market reform

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Federal Water Minister David Littleproud has waded deeper into the quagmire of irrigation markets this week, making a special visit to prominent permanent horticulturalists who are raising concerns over the price of temporary water allocations.

Prolonged drought has dried up water allocation to owners of low security, or temporary, entitlements.

Prices are up to six times the long-term average and there's no relief in sight.

This week's report from the Murray-Darling Basin Authority said the September inflows to the Murray River system were in the lowest 4 per cent of September months on record

Citrus Australia, the Almond Board, and olive giant Boundary Bend told media that "speculators" like the Duxton Company had hoarded water assets to drive the price up and then on-sold when other irrigators were desperate.

Mr Littleproud responded by convening a closed door meeting with the permanent planters and local MP Anne Webster in Mildura this week.

Ms Webster said she expected a "short-term solution" to water prices would be announced, but declined to detail what it could be.

Mr Littleproud has been criticised by southern Riverina irrigators for failing to meet with them to hear their concerns.

When asked why he had singled out permanent planters this week, Mr Littleproud said he often met with annual cropping irrigators as well and responded to their concerns by launching an independent inquiry into the socio-economic effects of water recovery, and a market inquiry by the Australian Competition and Consumer Commission.

I regularly meet with the dairy industry and annual croppers. - David Littleproud, Federal Water Minister

"I meet with representatives from all sectors to discuss how the water market operates," Mr Littleproud said.

"I regularly meet with members of the dairy industry and annual croppers.

"Over the past 12 months I have met with farmers right across the country and it was their direct feedback that I acted on in initiating these inquiries."

Irrigators across the Murray-Darling Basin are heavily invested in water assets and are waiting to see what comes from both the government-commissioned inquiries, as well as Mr Littleproud's response.

Their financial future depends on it.

Annual croppers in grains, rice, fodder, cotton and so on, as well as dairy farmers, lease their water, or sell it on the spot market, when the price ticks above their profit margin.

They sell into the market to maximise profits in dry times and set themselves up to plant in a wetter year when water is cheaper.

Also, many ex-farmers have sold their land, but held their water as a superannuation fund in their retirement.

Market reforms could, potentially, limit the use of carryover products that enable water owners to defer the use of allocation from one season to the next.

Carryover is important for many growers who need to forward sell their annual crop before they even plant.

It works as an insurance policy against unexpected dry times.

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