I am one of the lucky ones, because we bought our farm before the 2007 Water Act and before land and water were separated. Back then a water licence came part and parcel of the land; they were a package.
A lot has changed, unfortunately, for anyone trying to get into food and fibre production and set themselves up, as water does not necessarily come with the purchase of a property. The value of permanent water (or a water licence) has skyrocketed, so even if a young farmer (or perhaps I should say new farmer) wants to get into the game it will cost big money.
Now believe me, buying a farm is not an easy thing. First you need a deposit and then the banks won’t lend more than 60% of the asset value. So, you get a family loan or perhaps there is some other arrangement with family members to get you in the game - or you win the lottery! And that is before you look at the equipment needed to be productive. The increased value of water has made that step a little more challenging.
These days new / young farmers are reliant on temporary water to be productive and make a living. What does temporary water mean? Someone with permanent water has access to a percentage of their entitlements (the number of permanent water entitlements they have) year in and year out. So if they own 100 megalitres they have access to 100 megalitres of water when allocation is 100%. When it is 45% they get 45 megalitres and 0 megalitres when allocations are 0%.
When someone does not use all their permanent water they can put it on the water market and a farmer can buy it and use it for that year, hence temporary water.
As I said I am one of the lucky ones and have permanent water. This gives me an advantage, as firstly I can carryover water I do not use one year into the next, which only people with permanent water can do. This is a great tool for planning for the following year. Another advantage is increases in allocation results in access to more of my water.
The 1st and the 15th of the month are critical days for farmers looking to plan crops at this time of the year as these are the days that allocation announcements are made for the NSW Murray Valley. These days have a massive impact on farm planning and potentially the price of temporary water.
As the 1st of September draws near many farmers are feeling a little stressed and tense, waiting to see how much water they will have access to or how much temporary water will be. All this will impact on which crops are grown and how much, as well as which jobs need to be done to prepare ground for the cropping program - the list goes on!
Access to as much water as possible early in the season (season starts 1st July) is critical to planning because there are cut-off points for when crops can be sown and preparations can be done. So spare a thought for those of us waiting anxiously for the 1st of September.