Industry sources suggest that many growers will be asking for $4000-$5000 a megalitre their water.
The decision by the Federal Government to allocate $50 million for buying water from willing winegrape and other irrigators for the environmental health of the Murray Darling Basin is seen as a potential lifeline for wine grape producers thinking of leaving the wine industry.
The dilemma for winegrape growers is how to arrive at what the government will accept as a fair market price for individual licence allocations, taking into account investment and future losses.
Industry sources suggest that many growers will be asking for $4000 to $5000 a megalitre to receive a viable payout for leaving the industry.
The water entitlement purchasing measure was announced in late February by Climate Change and Water Minister Penny Wong and sparked an attack on the NSW Government by South Australia's River Murray Minister Karlene Maywald.
Ms Wong says a public tender process has begun and irrigators wishing to sell water are invited to submit offers to the Federal Government at a fair market price.
"Growers wanting to raise capital to make their businesses more efficient, more profitable and more resilient to drought and climate change now have the option of selling some of their water entitlement to the Government," she said.
"Purchasing water from willing sellers is crucial to addressing the over-allocation of water in the MDB."
The Murray Valley, Riverland and Riverina are Australia's three major inland regions, producing more than half of the nation's winegrapes from more than 3000 growers.
Riverland Winegrape Growers' Association executive officer Chris Byrne says many growers will leave the industry if they receive a reasonable price for their permanent water licences.
"I think many growers would relinquish their licences if they got $4000/mL or higher to enable them to pay taxes."
Riverina Wine Grapes Marketing Board chief executive officer Brian Simpson says many growers will consider selling their water but they will need to receive more than $5000/mL for it to be a viable option.
SOURCE: Extract from GrapeGrowers & Vignerons, April edition