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Big Ag flexes its muscle « Previous | |Next »
July 25, 2010

The Murray-Darling Basin Authority has delayed the release of its science-based report on future water allocations in the basin until after the election.

Irrigators --especially Big Ag--- are gearing up to fight the deep cuts they suspect will be made to their water allocations by questioning the independence of the authority and challenging the legitimacy of the basin plan when it is finally released. The delay helps the ALP avoid the backlash from irrigators, Big Ag and the Coalition attack over water cuts. The Nationals oppose any cuts in water rights, they are antagonistic to the Authority's charter emphasis the environment as well as agriculture and rural communities, and are hostile to efforts to return more water to the environment.

BigAg is not that interested in reforming agriculture----it is a subsidised industrial agriculture is an agricbusiness built around a chemically a saturated, water guzzling, biotech, export orientated agriculture that has little time for sustainable agriculture, organic farming or farmers markets. The latter is the province of small local farmers who are struggling to make ends meet.

As things stand today government policy, in spite of the basin plan, ensures that agribusiness, specifically biotech, stays central to Australian food policy both domestically and internationally. It also ensures that small farmers -- the supporters of the sustainable-food movement --- pose no real alternative to agribusiness.

| Posted by Gary Sauer-Thompson at 3:44 PM | | Comments (13)


gary, it's as much about the people not being able to have a say at the polls if there was any party differentiation. Which there really wouldn't be if the plan is truly based on science and not merely an emotional reaction to a run of extremely poor inflows to the Murray system.

The biggest problem facing irrigators is the precarious financial situation they find themselves in at present. Decisions from financiers regarding future outlays are going to be heavily influenced by the outcomes of the Basin plan. The extending uncertainty is what irrigators are protesting, as they prepare for the oncoming season.

I'm a little disappointed to read that exporting our surplus produce is now also a blight upon Australia, and note some ire that farmers are not the subsistence variety envisioned. Poverty being synonymous with sustainability, presumably

Farming is a business, Australian farmers who basically have to produce commodities at prices third world consumers can afford have had to become efficient both through scale and technology. It is saddening to think that being truly world competitive (without government subsidy) through the use of available technology could be unappreciated to the extent indicated.

There is no such thing as sustainable agriculture while our cities fail to return their effluents to the land. It is cities that are unsustainable - but of course will survive and thrive through desireability and the ability of the human race to bypass sustainability. Through efficient farming practises to the ability to siphon off water from distant rivers.

There is a largish irrigation company operating near my place [actually there are several].
It employs, mainly [not entirely] on a part time, casual, low paid, no pay for holidays, no sickies, come in when we say or don't come at all, seasonal basis about 20-40 persons.

It uses about the same amount of water as a small rural city of about 5-10,000 in population and probably more than a medium size city suburb, employs a small, very small fraction of people by comparison and produces crop[s] that would be uneconomic if it paid the real price of the water which, after the initial purchase price, capital investment tradeable at a profit, costs zero to use.
Billions of litres of water annually [except for a few tax deductible costs like electricity].

It pours herbicides, insecticides and artificial fertilisers by the large truckload onto the soil. Huge quantities of water are sprayed into the air mainly on summer days, and they can average near 40C here, and some of that water actually gets to the plants, a large % does not. The water then percolates down the soil taking the herbicides etc with it and picking up and concentrating salt as it infiltrates back into the river.
It is officially not potable for humans and on the edge, sometimes over, that for animals.
The 'slug' of chemicals and salt travels downstream to a place [again not far from me] where some, a small amount, is removed at considerable expense to the taxpayer [millions of $$$$s] but not the company, and it then continues downstream picking up more of the same from other places until it gets to a river town where it has to be purified, again at public cost, for domestic and industrial etc use.
The ecological damage done to the river by this practice is enormous.
Toxic water, toxic soils, barren dry weed infested ex-wetlands are all that is left other than the polluted main conduit channel.
Other commercial and industrial enterprises suffer from the lack of water due to the irrigators taking virtually all no matter how much or little there is.
The riverboats can't satisfy safety requirements cos they can't get into the dry docks for inspection cos the river levels are low.
Recreation facilities, caravan parks, commercial holiday businesses are suffering, people are losing jobs, shops going broke because the river is losing its wildlife, trees and water, there is no water outside the main channel for much of the southern extent of the river and we all know of the disaster that is the Lower Lakes.
State and Federal govts are spending millions on band aids trying to patch up the sores that lack of water is causing and exposing. For example to combat acid sulfate soils in dry lagoons a suggestion, a serious suggestion, has been to add fly ash from coal power stations to the 'lagoons'.
Even the proposers admit its crazy.

All this for the benefit of a very few irrigators whose economic value is minimal and who would suffer barely at all in a river system that was sustainable managed.
Dog in the manger stuff.
Holding the country to ransom.

Stark staring outright unforgiveable crazy.

I despair.

"The Murray-Darling Basin Authority has delayed the release of its science based report..."
Ho ho ha ha.
Fred, onya for the ventilation, the anality baffles me, too.

fred at least your local irrigator employs people in Australia, not like many of our manufacturers who have moved their operations off shore, or others who simply import goods manufactured without any other input from Australians.
Australian farmers have to be cost competitive, as they don't have the luxury of a "minimum wage" as the general working population do.

I'm not sure what you perceive as the real cost of water but I can assure you that it is not free. I have the joy of paying for water I don't even get, then pay extra when/if I do get it. There are pumping costs, and infrastructure maintainence - not to mention the initial purchase and installation of pumps and distibution systems.

Governments allocated the water to irrigators, issued licences and encouraged land development and in doing so created billions of dollars of rural wealth. many billions more than proposed to "fix" the Murray.
Incidently why is it any different for an irrigator to have amassed "billions of litres" of entitlement than say for governments to sell land off to developers at mere fractions of final value- perpetuating the environmental impact of suburbia.

now i've had a bit of a look and can't see any levels in the Murray locks more than a few inches below full supply - though I did hear they were to drop the levels in a couple of sections presumably for weir maintainence. Lake Alexandrina is now within 5cm of sealevel, and Goolwa 20cm above.

You write:

Farming is a business, Australian farmers who basically have to produce commodities at prices third world consumers can afford have had to become efficient both through scale and technology. It is saddening to think that being truly world competitive (without government subsidy) through the use of available technology could be unappreciated to the extent indicated.

Farming is a business within a capitalist economy. The logic of capitalism is towards more and more concentration---get big or get out. Economies of scale and all that. You know the scenario.

Hence we have factory farming, agri-businesses, monoculture, biotech and exports. Big Ag. It's the future. The state and federal departments of agricultural are 100% behind Big Ag.

My concern is with the small farmer and how they can survive rather than be eased off the land through restructuring packages that involves them selling their water allocations to Big AG. Hence my concern for farmers markets and more tasty and healthier food. It provides a niche for the small farmers that may enable them to avoid being squeezed by Coles and Woolworths who make all the money.

My multi meg irrigation licence entitles me to use 40/50/60% whatever of the number on the licence [millions of litres] every year at absolute zero cost.

I pay nothing for the water.

If I pump 10 million litres it costs me the electricity and infrastructure and that is all subsidised via tax deductions.
In fact if I sold my property now I would make a well above inflation profit, well above, on my licence and infrastructure alone.
Just the licence alone would give me a huge return on my initial investment.
During all those years I have paid nothing for the water itself.
That is the case for most irrigated water in the basin.
Extra water and leased water obtained by trading became necessary when irrigators used up so much of the water in the river they had to purchase more to water their crops with perennial crops the main culprits.

The need for that type of water leasing would shrink to nearly nothing in a properly managed sustainable river system .
Overuse of a scarce resource.

I remember well the big auctions along the river 5-6 years ago when irrigators realized they needed to increase the size of their licences [so a quota of 40% of 100 meg gave them the same amount of water when they were using 100% of 40 meg] and the costs of the licences skyrocketed [but the price of the water itself did not] and then later when even more water was required trading and leasing exploded.
Thanks to the stupidity of the system as much water was taken from the river after the inroduction of quotas as before.
SA didn't even know how much water was being taken out of the river until about 5-6 years ago when metres became compulsory.
Don't only blame the governments they were responding to political pressure from the irrigation lobby, still are, lots of the govt. advisors are irrigators shamelessly advocating open slather.
At one stage most of the official 'advisors' to the govt on the Basin Commission here in SA were irrigators.
I'll sympathise with irrigators when the industry admits it has greedily overused a common resource and takes steps to cut back the shameful waste that occurs so matter of factly.

Its not 'our' [irrigators] water.
It belongs to all, and we need to use it sensibly.
And sensibly is the last word we could apply to the current and historic situation.
We have the absurd situation that:
1. millions of litres of water costs me [and most licencees]nothing
2. a commercial enterprise pays a small price for water/kilolitre, and then gets tax benefits
3.urban domestic users pay top dollar without deductions.

What price water?

Gary, economies of scale are required to exist on the land. There is a fair amount of work involved and if you don't have enough scale the $/hour return can be well below minimum wage. Or negative in a drought year irrespective of scale.

You talk about capitalism as if it is wrong to own anything, and that ambition should be quoshed. I disagree and think that those who are good farmers should be able to expand.

The problem is that efficient Ag is required to sustain the worlds growing population and it's growing affluence, perhaps in the guise of BigAg.

I can't survive on a hectare of land like a Chinese peasant simply because the 6 tonnes I'd grow of wheat would be worth $1200-1500. And that doesn't go far toward living expenses. Now you might say I should get a real job to supplement my efforts, but I want to be a full time farmer and that requires resources on a larger scale.

If we really think about what is important in life it's food and shelter. Our cities exist not only because food can be transported but because efficient agriculture has spared the drudgery of laboring on the land. I see a lot of opinion that farming should return to the "good old days" but see few volunteering to actually take on small scale farming for their living.

I couldn't agree more with you on farmers markets, but you have to understand that they are making a good return per unit of land - perhaps significantly better than farmers supplying our supermarkets. Some of it is capturing both the production and retail markups. But you need to be close to those markets and have time. Unfortunately harvet tends to occur at the exact same time you are trying to sell the produce. And the real niche market is in the freshness.

I'm 6 hours from Brisbane and 8 hours from Sydney - how would I do it?
So to fulfill my desire to work the land, and truly make something from mostly renewable resources, I grow acres and acres of wheat to sell at 20 cents a kilo which someone grinds adds water and bakes to sell to the consumer for $3 a loaf.

So to supplement that meagre existence I choose to use water to the best effect that I can and that is by growing cotton at present. That's because Australia produces cotton more efficiently than any other country on earth - especially in respect to natural resources. And in doing so make a living so I can have a home, a car and provide my children an education. Just like anyone else in our capitalistic society.

"BigAg" perpetuates because it is easier to move to an urban centre and work for Bunnings than eke a living on the land. Only the dedicated remain - and those who can harness enough resources to make a living equitable with our urbane friends return on effort.

How you get that I "talk about capitalism as if it is wrong to own anything, and that ambition should be quashed" from this comment of mine:

The logic of capitalism is towards more and more concentration---get big or get out. Economies of scale and all that.

is beyond me. You actually agree with me when say that:
economies of scale are required to exist on the land. There is a fair amount of work involved and if you don't have enough scale the $/hour return can be well below minimum wage. Or negative in a drought year irrespective of scale.

The logic of concentration in capitalism, and the economics behind it, doesn't work to the advantage of small farmers. It works in favour of Big Ag. So the small farmers go the wall because their business becomes uneconomic. They sell up and leave the land. This process is what is happening in the Murray-Darling Basin today.

You also say that:

The problem is that efficient Ag is required to sustain the worlds growing population and it's growing affluence, perhaps in the guise of Big Ag.

Not really. Big Ag is about making profits and growing bigger through selling its product. The best way for it to do so in an open economy connected to the global economy is through exports. Capital accumulation is what drives Big Ag, not altruism for feeding the world's poor and starving. The latter is done by ngo's such as World Vision.

Nor am I suggesting that Australian agriculture actually turn back to small scale farming for their living---the implication of the concentration logic of capitalism is that this is not possible. What is possible is finding a way--a niche-- for small scale farming to survive within such an economy where Big Ag is provided with lots of government support.

That niche is providing a different kind of product to Big Ag---the farmers markets indicate that there is a demand for 'clean and fresh' from the affluent middle class in the cities who are part of the slow food + regional food movement. As you say re farmers markets:

you have to understand that they are making a good return per unit of land - perhaps significantly better than farmers supplying our supermarkets. Some of it is capturing both the production and retail markups. But you need to be close to those markets and have time. Unfortunately harvest tends to occur at the exact same time you are trying to sell the produce. And the real niche market is in the freshness.

Most of the small farmers supplying fresh food for the urban farmers markets and the restaurants are close to the capital cities.

you have thrown some light on the claims that Australian agriculture is efficient and subsidy free-unlike those awful Europeans and Americans.

Australian agriculture is highly subsidised --eg., water as you point out and not paying for the downstream effects of its type of chemical intensive agriculture.

Drought relief is another subsidy. Nor doubt there would be all sorts of subsidies (tax breaks) for using fossil fuels.

When you use terms like "and all that" or "you know the scenario" you do not come across as applying support to the initial "logic of capitalism".

Followed closely with "Hence we have factory farming, agri-businesses, monoculture, biotech and exports" which in your opening post you do not appear to rate highly.

As BigAg is a product of capitalism then it would be a stretch to consider you a flag waving fan of capitalism.
If I'm wrong I apologise wholeheartedly. You haven't clarified your stance on capitalism, so I'm not sure.

I'm not seeing where BigAg has any benefits over small farmers other than through economies of scale. They trade into the same markets beit wool, cotton, meat or wheat. What BigAg saves on inputs through bulk purchases is lost through management and administration costs. It all comes down to having the lowest cost per unit of production as to who is most viable. The continuation of the family farm as the mainstay of agricultural production indicates that biggest is not necessarily best.
While BigAg has the capacity to pay more for land and/or water entitlements it tends to purchase when prices drop and rarely sets record prices.
I also don't see where BigAg gets more govt support. Companies couldn't get the drought interest subsidy(which is the main one that comes to mind), nor those with significant off farm assets. One would think that the $100 000 limit gives smaller mortgages an added advantage relative to larger entities.

The return on effort and/or capital on farms is leading to the loss of farmers in Australia. The divide between city wages and farm profit is getting too wide. The reality is that in the grains industry 62% of farms made a business loss, and nearly 30% a real cash loss. see page 12.

I would doubt too much about agriculture is because of altruism in the purest sense.
I also doubt that Worldvision grow too much food themselves.

When you criticise farms for monoculture and inorganic operations I believe you really are championing smaller holdings.

Nan, a little dated but indicative re. subsidy. Aust $1.6 billion in 2003
EU $113 billion

I don't think farmers are overjoyed about drought payments, well not the circumstances. Not that many irrigators receive even those. Drought transport subsidies apply for livestock producers not irrigators.

Seems to your way of thinking every tax deduction is a subsidy. perhaps it is, but hardly unique to Agriculture.
Is there any primary industry on earth charged fuel exise on non-road operations? I understand even general trucking can claim half the excise back.

just wondering what you pay for the actual water Nan, assuming you are connected to mains infrastructure. Yes there is a water charge but how much is for the water after the fluoridation, chlorination, delivery, pressurisation, installation and maintainence costs are removed.

Fred, My licence allows me to use a share of the resource when available. my allocation has been an average 8.5% over the last 5 years. Last two 0%. In NSW extractions are fully metered. Statewater charges a fixed charge and a usage charge. The last two years have seen a personal outlay of $20000 in fixed charges each year for a big fat nothing in return. I get to pay another $12/meg when I do use some. As I'm an irrigator I also get to pay an additional $20000 in rates to the local council.
As part of our licencing requirements we must not release contaminated water off farm. A considerable expense.
We don't have a water table below us, save for the Great Artesian Basin some 1000m below. We have very low water infiltration beyond the rootzone.

I don't know of many legitimate business expenses that are not tax deductible. you can make the same case for power, gas or petrol etc and they aren't even renewable resources.

I'm happy to hear you will get a good capital gain on your investment, just like those who bought houses in Sydney decades ago will too. How does it compare to them? Mine had been similar, but getting left behind now.
Why would you view purchased water access rights as anything other than an investment, an investment that will grow the more efficient we get with water. Incentive in itself to use water wisely.

You certainly do things differently in SA, no doubt. We've undergone some pretty big changes here in the last decade with Water Management Plans that were definately not drawn up by irrigator interests.

My final thought is this: even though the cost of the actual water is minor, irrigators are aware of it's true value- what they produce with it. Every drop wasted on farm is costing the equivalent value of lost production every time. I do my best to use each drop as effectively as possible.

The irrigation industry is doomed.
Unless it agrees to, and prefereably initiates, major changes in operation most of the industry will suffer dramatically in the very near future.
There is not enough water to satisfy the demand that has arisen from the historically unmitigated essentially uncontrolled growth over the previous decades.
The recent drought[s] was not and is not, contrary to public perception, the cause of the problem.
What has been evident for at least a decade or two is that uncontrolled 'free trade' based on 'market' principles unregulated despite appearances, because of a plethora of agencies all responding knee jerk wise to the irrigation lobby and their political mouthpieces, has led to the absurd situation where water allocations exceed supply.
About 5 years ago the dams in the Murray were near full [check out the MDBA report for I think it was 2005], record levels, they held enough water for a year of [1]irrigation [2] urban/domestic/industrial needs [3]environmental needs in that order of priority assuming virtually zero inflow .
Which happened.
That water disappeared that year.
Drought highlighted the problem that there was allowed to be an overspending of the water budget.
At the end of the year the dams were effectively near empty and quotas were introduced because the water had been prolifigately spent.
If the drought had not occurred in that and following years there would still have been a need to have quotas because irrigation plus urban/industrial use exceeds NORMAL inflow.
Thats why the river has been damaged so dramatically, environmental flows were below minimum to satisfy the irrigators demands.
Since that time CSIRO and BOM and researchers have confirmed [reluctantly in the case of CSIRO] that NORMAL expected inflows for the southern Murray-Darling Basin will in future fluctuate around an average of 20% [or more] less than historic flows which in themselves are insufficient to maintain existing irrigation levels.
Droughts will increase in severity and frequency and the shit the irrigators and the river has gone through in the last few years will repeat itself unless major changes occur.

In short less water.

Therefore irrigation will have to decrease.

Or all irrigators will suffer, some more than others.

This is no secret.
Check out the world's largest river system hydrological analysis ever completed in the last year by CSIRO.
Its on the net.
Sustainable Murray or similar title , you only need to read the Executive Summary.

You [thats a generic you not you specifically] can ignore it if you wish but the fact is that climate change will exacerbate the current situation that there is simply, very very simply, not enough water going to flow into the Murray in the present and future to sustain existing levels of irrigation.

Thats why you haven't received water.
Neither have I.
I got an account from SA Water today nicely telling me my accumulated credit for water I have not received in past years is 97 meg taking into account quotas which varied, from memory, from 9% to 46%, dunno what it is now and its academic because I have no access any more.
The stupid situation is that if we fluke a flood year I can get all that 'carry over' water, plus normal licence allocation and the cycle of glut-waste-deficit will repeat.
There is a classic science fiction short story called 'The Cold Equations" about a space pilot who discovers a stowaway at the start of a space journey. The problem is the ship is only able to sustain the life of 1 person for the trip.
Cold equations. Try to sustain both and both die.
So he kills the stowaway.

Thats the situation several fisheries [eg cray in the SE of SA] found themselves in years ago. Overfishing meant stocks and replenishment rates could not sustain the existing fishing fleet.
So they, the fishers, reduced the fleet over time voluntarily.
Now either the irrigation industry does that or the governments will have to do it [highly unlikely] or the climate regime will do it.
But the cold equations are clear.
One way or another its gonna happen.
Check out the "Wentworth Group of Scientists" [google them] for some options for governments and industry to solve the problem together.

fred, I fail to share your pessimism unless you have access to info I don't.

no, there isn't enough water to supply demand in average years. That's why we have an allocation system. Now I know it has come as a shock for SA irrigators to face restrictions, but it really isn't the end of the world. I'm in a Northern NSW valley and we expect an average 50% reliability of supply. Yes there are too many water licences if you expect a guaranteed 100% every year.

I would say the lowest Murray Darling inflows on record, in an unprecedented event of consecutive years (low inflow years are normally followed by high inflow years) have had the biggest impact on the system.

If the "four years to February[2005] were the driest on record"

and then the last few years rewrote that record, then it is hard to ignore the impact of drought.

I did a quick look and you are right that in Oct 2005 Lake Hume was nearly full and by Oct 2006 it was 12%. While Hume fell 80% Dartmouth fell only 15%. I know at the time the NSW govt were shocked because they had always allocated water on the Murray allowing for Historical minimum inflows. Unfortunately the min. inflow level record was massively lowered that year. As you say water it was overspent.

My valley has only ever allocated water on hand, in storage.

I've read the CSIRO report you mention, it indicated a -30% to +20% expected flow change here. Best guess -9%. Since it's aiming 20-40 years down the track I think I'll be able to live with it. I've improved my water use efficiency by about 30% in the last 15 years, so hopefully can be another 30% more efficient by then. Assuming the current 100% flow change ends and I'm still in business.

I like your fisherman analogy, but i don't expect water when it's not there. I only expect my share when it's there. Then both I and the environment can get some.

I'd just prefer it if the environment didn't kill me(as an irrigator) off because there is nothing to share at present.

I read the Wentworth Group publications too. From memory they've changed their minds from 1500GL required several years ago to 4400GL now. Which poses the question why the 200% extra? How did they get it so wrong the first time, assuming they are any closer to being right this time.