Plugging holes in Sunraysia
For many farmers in the Sunraysia region in Victoria’s North West the availability, security and ongoing supply of water is top of mind. The latest summer featured a series of days over 35 degrees which placed huge demand on the river system.
The Barmah Choke is a bottleneck in the system which restricts water flow from the upper Murray to the Sunraysia region.
As planned and immature tree plantings below the Choke reach full production in the next five years, including an additional 15 thousand hectares of almonds, there will be even more demand placed on the system.
Some farmers in the region hold permanent water entitlements but remain heavily dependent on the temporary water market and are concerned about cost.
Sunraysia avocado and mango producer Ryan Marr currently irrigates using temporary supply as well as small amounts of permanent supply and carryover and is particularly concerned about the amount of water available during extreme dry conditions.
“There are a lot of permanent plantings going in the ground at the moment which is going to make temporary water in low supply during dry years,” Marr says.
“Low supply means higher pricing, which will make it all the more important to ensure your business is healthy enough to withstand short term high prices if relying on temporary water.”
He’d also like to see more investment in water storage.
“We have seen huge areas of new greenfield sites approved for irrigation, making additional investments in water storage infrastructure absolutely critical at this point,” Marr says.
During the millennial drought from 2001 to 2009 temporary water prices reached $A1,000 per ML (currently sitting at ~$A240 per ML) which had an enormous impact on Sunraysia’s wine, dried grape and citrus industries.
Despite this there are some farmers that are almost completely dependent on the temporary water market.
Sunraysia mixed horticulture farmer Hardeep Singh is reliant on the temporary market and water accounted for around 15 per cent of his operating costs in the last financial year.
“I'm not concerned about the actual security of supply but I am more concerned about the market manipulation that exists in the water market and government regulations which will put pressure on the price,” he says.
“As the price of water increases, low-value commodity growers become water sellers and free up availability for more of the permanent planting growers. So I think water will be available at hard times but you will have to pay.”
There are others that err on the side of caution and hold enough permanent water entitlements (at 100 per cent allocation) to irrigate their entire operation.
Many large corporates investing into permanent tree crops in Sunraysia are also opting not to tie up capital in permanent water but mitigate risk by adopting a long term water strategy.
This generally includes a mix of buying from the spot market, leasing permanent entitlements from investors and negotiating forward allocation agreements for up to five years.
When it comes to water supply, our farmers are faced with many options and must decide whether to direct capital towards permanent water at an extremely high price or use it to increase the amount of land available for production, among other things.
Whatever the decision, every farmer in the region should be seeking to mitigate the risks of another millennial drought and decide on the best strategy for them now and into the future.
Jason Marr, Regional Executive, North West Victoria, ANZ