Tight water supply equals challenging year for irrigators

By Jamie Salter

Tight water supply and high water allocation prices made 2019-20 a challenging year for southern Murray-Darling Basin irrigators.

The latest Aither Water Markets Report, released on August 13, showed 2019-20 had the largest recorded water allocation price decrease in the second half of any water year since the millennium drought broke.

Average allocation prices across the southern basin opened above $600/Ml in July 2019, then gradually increased, peaking in January 2020 at $811/Ml.

In the second half of the water year, prices decreased more than 70 per cent to as low as $195/Ml.

Aither Water Markets Report director Chris Olszak said 2019-20 was the third dry year in a row.

“Demand from permanent horticulturalists to secure water combined with binding trade constraints led to the record-breaking water allocation prices,” he said.

“Prices were pushed as high as $970/Ml in the Lower Murray.

“The subsequent collapse in water allocation prices was driven by timely in-crop rainfall and market optimism buoyed by a shift towards more positive rainfall outlooks.”

Mr Olszak said rainfall outlooks for 2020-21 were more promising than at the same time last year, but more rainfall will be needed for winter crops.

“Without decent winter and spring rainfalls, considerable demand from winter croppers needing to finish off crops may combine with demand from permanent horticulturalists looking to secure their water for subsequent years,” he said.

“If this happens, high allocation prices are likely again this season.

“But good rainfalls over the last week are now much more promising for lower prices necessary for summer cropping programs.”

Inter-valley trade limits are already in effect this year and the report predicted prices in the Lower Murray to be the highest of all trading zones.

Prices may also be high for the Murrumbidgee, but could be changed as a result of good rainfall.