Dairy farmers are feeling the pressure of increasing volatility in the water market, after a season of record-high prices and dry conditions. Coupled with uncertainty around water policy and management, farmers are finding it increasingly difficult to plan how they manage their feedbase.
The Water in Focus events brought together a range of experts — on federal, state and local water policy, regional water allocations and trading, water procurement strategies and irrigation management — to assist irrigators with these decisions.
Independent consultant Claire Miller, formerly a ministerial policy adviser and dairy industry strategist, gave a status update on the Murray-Darling Basin Plan. Her key messages were:
The basin plan is on track to deliver its environmental outcomes on time and in full without the need for further water recovery before 2024 — and maybe not even after then.
However, the political context remains fraught with a high risk that the goalposts may be moved again. Community, industry and company groups are mobilising.
In the short term, water market transparency, lowering conveyance losses and addressing over-extraction in the northern basin are positive ways to address basin plan problems.
Mark Mitchell, from the Department of Environment, Land, Water and Planning, presented an overview of water market trends over the past decade. His key messages were:
Despite speculation, the majority of water in the region remains tied to land. However, since 2015, the proportion of privately held entitlement not tied to land has increased to 12 per cent (298 gGl). Last year, the majority of water held by investors went back into productive use.
Water use in the GMID has fluctuated significantly over the past 10 years in response to seasonal conditions and water availability. 1,318 Gl was used in GMW districts in 2017–18, 21 per cent less than the volume used in 2004–05.
429 Gl was used by LMW diverters in 2017–18. LMW diverters’ use has increased steadily since the millennium drought and is now more double the volume used in 2004–05.
Irrigators in the GMID and LMW diverters continue to use more than the volume of entitlement tied to their land and are reliant on the water market and carryover to help meet their water needs.
Water allocation prices generally reflect water availability in the connected southern Murray-Darling Basin, and water availability in NSW has been seen to have a very strong influence on market prices in recent years.
Given that the majority of allocation being bought and sold is by active users, trends in price reflect the market fundamentals of demand and supply.
The reduction of the size of the consumptive pool and the increase in water use for horticulture in the Sunraysia will influence future water share and allocation prices.
Goulburn-Murray Water representatives Mark Bailey and Andrew Shields gave a seasonal update. Their key messages were:
Having experienced low rainfall and low inflows this season, water reserves are low, meaning that there is limited water available for early seasonal determinations. However with average inflows, allocation against HRWS should reach 100 per cent in all northern Victorian systems by February 2020.
The Bureau of Meteorology’s climate outlook has no tendency towards either a drier or wetter season at this stage.
Carryover will be deliverable this year in the Murray, Goulburn, Campaspe and Loddon systems.
RMCG consultant Daryl Poole highlighted some strategies for managing risk around water. His key messages were:
Operating in an interconnected water system, industries respond in different ways to water availability and price. Water use has changed as the agricultural landscape changes and will continue to do so under different climate scenarios.
Most businesses use a combination of water procurement strategies, alongside feed production and procurement strategies. These include: ownership; carryover; leasing; forward contracting; and cash reserves. The suitability of the different options will vary depending on your business position and personal approach to risk.
The event was closed by Rob O’Connor from Agriculture Victoria’s irrigation team. His key messages were:
Dairy farmers are becoming more efficient with their water as they restructure the feedbase to include dryland and irrigation crops, summer-active forages and annuals.
Tools available to optimise water use through irrigation scheduling include Agriculture Victoria’s Weekly Irrigation Requirements summary (based on evapotranspiration) and soil moisture monitoring equipment.
For more information, visit murraydairy.com.au
