SA allocation outlook forces grower rethink

SA water allocations could start at 14pc


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OPENING SA water allocations could start as low as 14 per cent for 2019-20.

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SUPPORT AVAILABLE: Rural Business Support CEO Brett Smith encourages local irrigators to seek business advice and financial counselling if they are struggling.

SUPPORT AVAILABLE: Rural Business Support CEO Brett Smith encourages local irrigators to seek business advice and financial counselling if they are struggling.

THE state government's Monday announcement that opening water allocations could start as low as 14 per cent has dealt local irrigators a double blow, with SA water prices lifting 20pc overnight.

According to water trading exchange Waterfind, temporary water prices were $503 a megalitre on Friday. By Tuesday, they were $625/ML.

At the start of the last irrigation season, July prices were about $250/ML.

Waterfind market regulation, government and conveyance director Stuart Peevor said temporary water prices had not been this high since the millennium drought, while recent permanent water prices trading up to $6000/ML for SA Murray water were the highest seen in history.

While the early projections are part of the state government's new policy to "provide earlier information to irrigators", SA Murray Irrigators chair and Riverland almond grower Caren Martin said they were also "irresponsible".

"Anyone working on real-time water values has just taken a big hit overnight," she said.

"Thankfully, it is the low end of the season. But while most harvests are over, any irrigation shortfalls can damage trees, which will ultimately affect next year's crop.

"We haven't finished our season yet, so this will affect our short-term irrigation purchases. Looking forward, we will have to reassess the whole operation - so we are praying for rain."

Mrs Martin said the announcement also made a "mockery" of Murray-Darling Basin planning.

"When the MDB Plan became a concept in 2009 and was finalised in 2012, the expectation was that over-allocation would be addressed and fixed," she said.

"In 10 years, governments have compounded the problem, created more entitlement than ever, and tried to make everyone equal - now things are worse.

"The Commonwealth Environmental Water Holder is carrying over 500 gigalitres this year - why haven't they used that water if the situation is that bad?"

Environment and Water Minister David Speirs stressed that the minimum allocation forecast was the 'worst-case scenario', based on recent storage volumes and projected inflow conditions across the River Murray system.

"This allows food producers to plan for the worst, while we all continue to hope for significant improvements," he said.

Department for Environment and Water's River Murray water operations manager Jarrod Eaton also reiterated this was an early projection only.

"This projection is based on an outlook that assumes conditions across the rest of 2018-19 will continue to be extremely dry," he said.

"If conditions across the remainder of the water year track closer to the long-term average, then the projected opening for 2019-20 could be just over 20pc."

MDB water storages are below 36pc of capacity and continue to decline.

Despite this, Mr Eaton said significant improvements across 2019-20 were likely.

"Most inflows to the River Murray system historically occur between July and November, so the main inflow season is yet to arrive," he said.

"The Bureau of Meteorology's outlook across the MDB shows there is no strong indication either way towards a wetter or drier-than-average three months ahead.

"Regular water allocation updates will be provided and reflect any improved water availability."

Mr Peevor said many Waterfind clients had expressed concerns about the 14pc opening allocation forecast.

"We have to clarify that this is an ultra-conservative approach by the government," he said.

"While they have announced 14pc, under a very dry scenario, there is still a 90pc chance that growers will have 75pc of water by the end of the year," he said.

"It's difficult not to focus on the 14pc, but that's a highly unlikely figure for the whole year."

Rural Business Support chief executive officer Brett Smith encourages SA irrigators to seek expert business advice and financial counselling if they are already struggling in the drought conditions.

"Our rural financial counsellors can help irrigators take a big picture look at their unique business situation and present proactive options to ensure they are making affordable, informed and confident decisions about their way forward," he said.

"For some, this may mean it is a good time to redevelop. For others, the high price of water presents the ideal opportunity to exit the industry and invest capital elsewhere."

The official SA opening water allocation will be announced in mid-May.

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