Water for Fodder has impact on trade limits

Nearly 15 per cent of Water for Fodder allocation to Goulburn

Dairy
TRADE EFFECTS: The Federal Government's Water for Fodder program has had an impact on the market.

TRADE EFFECTS: The Federal Government's Water for Fodder program has had an impact on the market.

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Slow transfer of Water for Fodder allocations.

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A leading water market analyst says the Federal Government's Water for Fodder scheme had an immediate impact on the market, even though initial details on the program were quite scant..

Mardsen Jacob Associates principal Simo Tervonen said irrigators considering buying allocation water at the time postponed their trading plans and waited for more details to emerge.

"Now it is being delivered, the biggest impact is on trade zones," Mr Tervonen said.

"It's delivered from SA to upstream zones, so it will have an offsetting impact on trade limits."

The Water for Fodder program is the result of a $98 million deal the federal government made with the South Australian government to supply 100 gigalitres of cheap water for southern Murray Darling Basin irrigators to grow up to 120,000 tonnes of pasture and fodder for livestock.

In return the federal government committed to revive Adelaide's desalination plant.

Farmers were able to apply for up to two 50 megalitre parcels of water for $100/ML.

Read more: Victorian irrigators put in 1000 more Water for Fodder applications than NSW irrigators

Mr Tervonen said the prospect of Goulburn IVT opening had already softened prices in the Murray as buyers await increased supply from the Goulburn.

"If the IVT opens and remains open, that will bring prices in the Goulburn and Murray to parity," Mr Tervonen said.

"It's not that much water, but it will have an impact on those trade limits."

Trade limits had been applied to a number of inter valley transfers, across the southern connected Basin.

Of the 40GL to be delivered, around 13 gigalitres was allocated for users Above Choke.

While Mr Tervonen said that might not seem a lot of water, it would be delievered in small parcels, in order to keep the Choke trade open.

"This year, getting water downstream of the Choke has been very restricted so the opportunity Water for Fodder brings is not insignificant," Mr Tervonen said.

There was 14.6GL of water allocated to Goulburn River users in Victoria.

Mr Tervonen said this was one factor which would contribute to the predicted opening of the Goulburn IVT.

"The more significant driver is the ongoing deliveries of IVT water from the Goulburn to Murray by the MDBA and Goulburn Murray Water," Mr Tervonen said.

"They are delivering a certain amount of water month on month and the scale is much larger, it can be up to a couple of hundred gigalitres per annum, last year the IVT deliveries were 430GL in total, an all time high.

"Last year the Goulburn IVT was closed until late January, after that the IVT deliveries meant the limit opened up and remained open for the rest of the season, and it's not out of the question that the same would happen this year."

Read more: Victorian dairy farmer has likened Water for Fodder to Tattslotto| Update

A spokesman for the Federal Department for Agriculture said the Water for Fodder program closed on December 13, with successful applicants notified on December 17.

As at January 23, 5.2GL had been transferred to successful applicants.

"Successful applicants have until 3 February 2020 to return paperwork to the department which is necessary to finalise their application under the program - this includes essential forms for processing the water trade," the spokesman said.

"Once these are submitted and verified by the department and water authority, successful applicants will have access to water under the program."

About 65 per cent of the second stage applicatons had now been submitted.

"The department is working with applicants to ensure their paperwork, specifically trade forms, are completed correctly before submitting the paperwork to South Australia for processing," the spokesman said.

Applicants who were successful under Round One of the program, but didn't fulfil the obligations of their conditional acceptance by February 3, or did not proceed, would be excluded from further processing.

"The department will update its website after February 3, to include the number rejected by the department as they did not meet the requirements and the number that decided to not proceed."

In the event a conditionally accepted applicant was excluded, the water would be reallocated to another applicant, based on the order of their random ranking, on the reserve list.

The story Water for Fodder has impact on trade limits first appeared on Stock & Land.

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