Rising rates crush livestock profitability: Schulz

Opinion: Rising rates crushing livestock profitability

Opinion
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COORONG district farmers are being subjected to what might be the most expensive water prices for livestock anywhere in the world and have been forced to absorb a 250 per cent increase in mains water costs in just eight years.

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PENNY SCHULZ

Field farmer and Livestock SA board member

COORONG district farmers are being subjected to what might be the most expensive water prices for livestock anywhere in the world and have been forced to absorb a 250 per cent increase in mains water costs in just eight years.

This is on top of some of the world's most expensive (yet unreliable) electricity, and levies for Natural Resources Management and Emergency Services, which have continued to rise steeply.

The cost of water alone is compromising the profitability of livestock enterprises, even at a time of record cattle prices and excellent prices for sheepmeat and wool.

As our markets return to prices more aligned with long-term averages, our region will not be able to remain profitable due to the rates being charged by SA Water.

To put our predicament into perspective, we were paying about $1.30 a kilolitre for water in 2008-09, compared to $3.24/kL in 2016-17, with the new 2017-18 financial year ushering in a further increase.

Livestock SA's regional meeting in Meningie on July 20 confirmed our support for the region's producers.

And while we commend the efforts of local stakeholders, discussions at Meningie also served as a reminder that water security is increasingly a statewide risk for livestock producers, especially those who rely on mains water supply.

At a local level, the Coorong Water Transportation Scheme project emerged out of livestock producer frustrations, with skyrocketing water prices impacting the profitability of the region’s livestock production. The project, which is a collaboration with the Coorong District Council and supported by Regions SA and other community and private organisations, will explore new avenues for sustainable water access and affordability after the recent application to SA Water was rejected. 

SA Water required livestock producers to significantly increase the region’s annual water consumption for a transportation deal to be generated, as the region’s water use was deemed to be insignificant.

At a time when we are all being encouraged to conserve water, SA Water is refusing to do anything unless we use more.

In support of producers in the region, Livestock SA will actively engage with government at the state and federal level to assist local farmers and emphasise the importance of investing in water infrastructure.

Given the squeeze applied by SA Water’s monopolised prices, producers are being forced to acknowledge that private investment – which will cost millions of dollars – may be the only way to remain viable.

As such, potential streams of funding support for such private investment needs to be rigorously pursued if Coorong livestock producers are going to contribute to boosting the state’s agricultural productivity.

With our quality pastures and mild climate, the Coorong region is already recognised as ideal for livestock production.

Being a local livestock producer, I want this reputation and capability to continue, as we actively work to secure the future viability of our business for the next generation. 

The Coorong District Council is home to an estimated 250,000 head of cattle valued at $366 million, complemented by 1.2 million sheep worth $203m.

With many livestock producers already paying more than $100,000 a year for water, the potential for 20-25pc growth in the Coorong livestock industry, adding the equivalent of $113.8m-$142.2m annually to the economy, is in serious doubt.

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