Australian Dairy Farmers president Terry Richardson made the claim last week in an opinion article supporting the Murray-Darling Basin Plan.
“Ultimately it is the devastating impact of drought that is most responsible for rising water prices,'' Mr Richardson said.
Responding to criticism of his statement, Mr Richardson wrote a further piece last Friday, attempting to clarify his remarks but he repeated his claim that has annoyed many irrigators:
"The objective of the column was to share a view that drought is the major factor impacting on basin communities, including of course dairy farmers''
Many irrigators are blaming the Murray Darling Basin Plan for contributing to high prices because of the transferrence of more than 1100 Gl of water to the environment.
The northern Victorian region and southern Riverina were not in drought last year, but prices climbed as high as $500 Ml.
Mr Richardson was not available for comment this week and the ADF was not providing any further comment on the statement.
Mr Richardson's first article quoted a report by consultants but the consultants are challenging his interpretation of their report.
“Water policy experts, including Aither, have found the market to be working effectively and that high prices are the result of high demand and low supply caused by persistently dry conditions and below-average rainfall,'' Mr Richardson said last week.
Since the statement was published, the consultants, Aither, said Commonwealth water entitlement purchases had also contributed to the rise in the price of temporary water.
“In Aither’s 2016 report for the Commonwealth Department of the Environment we concluded that Commonwealth water entitlement purchases had increased water allocation prices. We estimated that government purchases increased water allocation prices by 27 per cent in 2014-15.”
The UDV has also issued a statement saying the ADF commentary does not reflect the views of the UDV or farmers.
The UDV has called on the ADF to "clarify its opinion", saying farmers feel let down by the commentary and the lack of consultation.
The UDV says the basin plan has had a huge impact on the northern Victoria dairy industry and local communities, with farmers feeling stressed and frustrated.
“The UDV believes the basin plan must strike a balance on the impacts it is having in regional communities.”
Mr Richardson was referring to high prices for temporary irrigation water. Prices in northern Victoria peaked around $500/Ml last year, but the region was not in drought.
Aither said Commonwealth purchases played a role in pricing because whenever there was an increase in demand or a reduction in supply, prices were likely to increase.
“While the current drought will end at some point, Aither is of the view that market participants need to be prepared for a new normal. While there will always be seasonal fluctuations, compared to historical prices, higher long term allocation prices are expected to be driven by a mix of increased irrigation demand, new development, and water recovery from the consumptive pool.”
Blighty farmer Lachlan Marshall said his initial reaction to the comments by the ADF was extreme anger followed by disappointment.
"It is difficult to comprehend how the leader of a national organisation could have such a poor understanding of the impact the failing basin plan is having on the industry they are representing.
"For the benefit of Mr Richardson and his ADF colleagues, please take note: The plan is failing your industry. It is not protecting the environment. The science on which it was based is flawed and our communities are suffering.''
Murrabit farmer, Andrew Leahy, said the statement seemed to go against UDV and VFF policy, opposing any further water buy-backs.
"If they are not following policy then we don't want to be involved with them,''Mr Leahy said.
"Yes, drought does have an effect on prices, but when you lose about one third of the region's water to the environment, that's going to have a major impact, tool."
Mr Leahy said the ADV should have consulted with irrigating dairy farmers before making the statement.
You can read the ADF's original statement here:
Read Aither's comments in full here.
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