Water sales pump up farming cash flows

Some Queensland farmers earn more selling water entitlements than growing crops, a Brisbane legal firm specialising in water trading says.

“Water is genuinely becoming liquid gold and an increasing number of farmers are being lured away from the land,” solicitor Tracey Moore said.

Ms Moore said Queensland had issued more than 36,000 unsupplemented irrigation licences under which holders could pump from rivers or use floodplain water held in storage.

Water trading was not yet possible in all catchments.

However it was happening in the Bowen Basin, the Burdekin, Fitzroy and Border river systems and around Bundaberg.

“In regions where water trading is possible, there is a temptation for farmers to sell their entitlements to larger operations or even to resource companies who are looking to acquire water for their mining operations,” Ms Moore said.

“The markets can be fairly volatile and some big prices are being paid, especially by the resource companies that require so much water.

“‘More than $2000 a megalitre is not unusual.”

Ms Moore said a further development was the practice of water banking, which involved acquiring water entitlements over and above producers’ needs in order to secure their position.

Sometimes the additional water was resold or the licence leased back to the original holder short term.

Farmers who had decided to continue on the land were also starting to factor the cost of water into crop choice as a matter of necessity.

“This means that there will be a big shift in the types of crops we are going to see grown in Queensland. This will eventually impact the price consumers pay at the checkout,” Ms Moore said.

Current water management initiatives went a long way to addressing water shortages.

“But the long-term availability of water depends ultimately on climatic factors, meaning the future is, to an extent, unknown,” she said.

“I would like to see as much focus placed on water and other sustainability initiatives as is being placed on the introduction of an emissions trading scheme. A successful trading scheme may slow down climate change but it will not necessarily resolve water issues.”

Meanwhile, the Australian Competition and Consumer Commission yesterday released a position paper seeking submissions on charges for irrigators and bulk water operators.