THE water market is entering a highly fluid situation, with change driven by the Federal Government’s success in passing its buyback legislation.
At the same time, nearly every aspect of farming across north-west Victoria is under the microscope as the cropping, livestock and horticulture industries come to grips with our recent extraordinary rainfall events.
Cropping faces a serious green bridge and the sprayers are in the paddocks en masse, the horticulturalists are preparing for a tsunami of disease challenges with mildew, and the price of water could be likened to a rollercoaster.
Ruralco Water broker Jon Armstrong sees challenges ahead as irrigators look to secure long-term supply.
Mr Armstrong said that since getting its buyback legislation through both houses, the Federal Government now has until 2027 to deliver water savings from the Murray-Darling Basin which should have been achieved by this year.
He said the next step would be the tender offer from Canberra, which he expected before the middle of this year.
“We do know there will be two major tranches – the first being the much talked about 450 gigalitres,” he said.
“The government already has about 10 per cent of that, leaving a bit over 400GL to be achieved through projects and recovery – although there is not a lot of time left for that.
“Then there is the 605GL coming via sustainable diversion projects, and that target is currently about 300GL short.
“So in a nutshell, Canberra needs to find about 700 ‘voluntary’ gigalitres. It has also found another $100 million for First Nations water, but what this actually means and how it will be implemented no one really knows just yet.
“At the same time, in the past month, the water price has increased about $200, so if you are looking for your water money now, we strongly believe the market is your best option.
“Also, with all the unusual rain activity we have been going through, and more is expected, there has to be an impact in the market soon, and that is certain to put downward pressure on prices.
“When the next round of allocations comes out, that is also expected to see people guaranteed more water, giving people the choice to irrigate, sell or both, which would also soften the temporary market.
“Which means things are looking very good for irrigators – now.
“But the Bureau of Meteorology is sticking to its guns about the El Nino, and autumn is likely to be the next big focus for everyone because if things do start to dry off – and bear in mind despite the rain, temperatures have been high, very high, and showing no signs yet of cooling off – there is a very real chance prices will quickly start to rise again at that point.”
Mr Armstrong described the current market conditions as “somewhat misleading” because while they make things look good for now – and with all the subsoil moisture, even into 2025 – none of that guarantees long-term stability.
“Which means sellers and buyers need to have a long-game view about what they do next – whether they are buyers, use leasing or opt for temporary water.
“This market is good for buyers but a shift in weather patterns can make some significant differences, and fast.”
