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Australia Recommends Cuts to Key Farmland Irrigation

Oct. 8 (Bloomberg) -- Irrigation in the Murray-Darling Basin should be cut by as much as 37 percent to protect the environment in a drought-prone region that is home to almost half of Australia’s farms, according to a report.

The government should buy 3,000 to 4,000 gigaliters of water from irrigators and divert it back into the river system, a measure that would reduce farm production by 13 percent and cost 800 jobs, the Murray-Darling Basin Authority said.

“The environment has not had significant water for decades,” the report said. “The real possibility of environmental failure now threatens the long-term economic and social viability of many industries and the economic, social and cultural strength of many communities.”

The Murray-Darling flows through four Australian states and covers 1.06 million square kilometers, an area almost 1-1/2 times the size of Texas. About 93 percent of the nation’s fresh food comes from the region, which accounts for A$15 billion ($14.8 billion) worth of Australian crop and livestock exports, according to government figures.

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, according to the authority.

“Water is wealth for the communities of the Murray-Darling Basin and taking away this much water would destroy dozens of communities and industries,” National Irrigators’ Council Chief Executive Officer Danny O’Brien said in a statement.

Grain, Cotton Production

The 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.

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.

Greens, Independents

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.

The Murray-Darling authority is due to release its basin plan early next year, which will be followed by 15 weeks of consultation. The proposal will then be presented to the government and to parliament late next year or in early 2012. State governments will be required to write new water resources plans to take effect across all the states by 2019.

“Water reform in this country is a marathon, it’s not a sprint, and there is a long way to go to the finishing line,” Cotton Australia Ltd. Communications Manager David Bone said by phone from Sydney. “We have always supported water reform when all the social impacts are fairly and properly addressed.”

The Murray-Darling Basin accounts for 90 percent of Australia’s cotton production, according to the authority’s website, with the majority of the crop planted on irrigated land. The nation was the world’s fourth-largest shipper of the fiber in the year ended July 31, according to the U.S. Department of Agriculture.

“We need to back a system that safeguards the essential environmental needs of our river system alongside the legitimate activities of high-value irrigators,” Winemakers’ Federation of Australia Chief Executive Officer Stephen Strachan said in a statement.

To contact the reporters on this story: Gemma Daley in Canberra at gdaley@bloomberg.net; Wendy Pugh in Melbourne at wpugh@bloomberg.net

To contact the editors responsible for this story: Bill Austin at billaustin@bloomberg.net

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