Australia's Murray-Darling Water Plan Will Raise Food Prices, Farmers Say

Plans to cut irrigation by as much as 37 percent in Australia’s Murray-Darling Basin, home to almost half of the nation’s farms, will raise fresh food prices, the country’s main farming organization said.

Reducing the amount of water flowing to farms will cost “thousands” of jobs and increase reliance on imported food, National Farmers’ Federation President David Crombie said in a statement on the organization’s website. The Murray-Darling Basin Authority released a guide to its plan yesterday that said about 800 full-time jobs may be lost.

The Authority, which manages water resources in an area almost 1-1/2 times the size of Texas, recommended the government buy as much as 4,000 gigaliters of water from irrigators and divert it to the river system. About 93 percent of Australia’s fresh food comes from the region, which accounts for A$15 billion ($14.6 billion) of Australian crop and livestock exports, according to government figures.

“Australian food grown fresh for Australian consumers will take a massive hit and Australian families will have to get used to paying more,” Crombie said. “Agricultural production and environmental needs are not mutually exclusive, they can and need to be balanced.”

Next year’s release of the basin plan will be followed by 15 weeks of consultation before being presented to the government and to Parliament in late 2011 or early 2012. State governments will be required to write new water resources plans to take effect across all the states by 2019.

Job Losses

The New South Wales Irrigators Council, which represents farmers in Australia’s most populous state, estimated job losses from the plan may be 17,000 and recommended its members attend the consultation sessions.

“If you eat or wear natural fiber, you’re affected by this,” Council Chief Executive Officer Andrew Gregson said in an e-mailed statement today.

Water is an issue for Prime Minister Julia Gillard, who had to form a minority government with backing from the Greens Party and three independents from rural farming districts after the Aug. 21 election delivered the closest result in 70 years.

To secure backing for her government’s legislative agenda, Gillard must satisfy the independents and the Greens, who want more water diverted to protect the environment in the world’s driest inhabited continent.

Farmers are granted entitlements to set amounts of irrigated water and the buyback plan would cost the government as much as A$4 billion on current pricing, the authority said yesterday.

Catchment Area

The catchment area for the Murray and Darling rivers, as well as their tributaries, covers more than 1.06 million square kilometers across four of the nation’s six states.

Average rainfall in the region is 530,618 gigaliters, about 1,000 times the volume of Sydney Harbor, with 94 percent of the water evaporating and 4 percent ending up as runoff, according to the Authority’s website. The region produces 53 percent of Australian cereals grown for grains and 95 percent of the country’s oranges.

Diversions listed in the plan would see the value of irrigated cotton production fall by 25 percent in the basin, so- called broadacre agriculture, which includes rice and cereals, would fall 30 percent, dairying 10 percent and horticulture by less than 5 percent, according to the report.

Australia is emerging from a drought that began in 2002, slashing grain and cotton crops and denting the farm industry that makes up almost 12 percent of the economy, compared with 8 percent for mining, according to industry figures. Above-average rainfall this year may boost wheat production to the third- highest on record, the government’s commodity forecaster says.

To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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