Murray Darling savings 'overkill' cripples crops and jobs

Murray Darling study finds water 'unused' as 100 SunRice jobs go

Water
SunRice chairman, Laurie Arthur.

SunRice chairman, Laurie Arthur.

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A series of unintended consequences in the Murray Darling Basin Plan has had a disproportionate impact on farmers growing annual crops

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Irrigation efficiencies and revamped water policies have saved so much water in the lower Murray Darling Basin in the past nine years thousands of gigalitres in allocations which could have been available to crops actually spilled down river and out to sea.

An industry report for SunRice has identified a series of "unintended consequences" of the contentious Murray Darling Basin Plan had a disproportionate impact on farmers growing annual rice, maize, cotton and fodder crops.

Southern basin farmers with general security water rights have had disproportionately less water allocated, despite reserves being available and government commitments made to them about the security of their entitlements.

The report by independent Victorian water industry consultants, RMCG, said far more water had been allowed to travel to South Australia than the Basin Plan ever intended.

Drought has certainly been a big factor, but a whole series of policy settings are also hurting general security irrigators, and our communities. - Laurie Arthur, SunRice

SunRice has just confirmed it will cull another 100 workers from its ranks at the Leeton and Deniliquin rice mills because the coming Riverina crop will be well below last autumn's 54,000 tonne harvest.

That takes the company's total job losses in a year to about 230 - or more than a third of the 600 positions in an average production year.

"The drought has certainly been a big factor in reducing what will be grown," said SunRice chairman and Murray Valley farmer, Laurie Arthur.

"But there are a whole series of man-made factors and policy settings also hurting general security irrigators, and our communities."

He said general security entitlements which achieved 81 per cent water yields for croppers in the Millennium drought had only yielded 69.9pc in the past 10 years.

The available water appears to have taken a step change downwards, much lower than anticipated, even allowing for climatic conditions, transfer of water to other crops and government water recovery programs - RMCG report

A typical general security irrigator's water use had effectively halved because they were getting less yield from what water was in the system.

The report found in the decade to 2019, annual average Murray and Murrumbidgee standard irrigation water use had reduced by 1.6Gl, to 46 per cent of the long-term average.

Less used than expected

"In recent times the available water appears to have taken a step change downwards, which appears to be much lower than anticipated, even allowing for climatic conditions, transfer of water to other crops and government water recovery programs," RMCG said.

Mr Arthur said the timing of water releases and bigger stored water reserves, based on new minimum inflow standards set at 2008-09 benchmarks, had drastically reduced availability to farmers when they needed it.

"It makes it very difficult to keep operating our business in the Riverina, going forward," he said.

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SunRice was in "urgent and advanced discussions" with the federal and NSW government trying to address the inequities with balanced changes to the Basin Plan.

Based on what happened in the Millennium drought we should have had some allocation in recent years - Laurie Arthur

Mr Arthur noted that in 2008-09 - the rice industry's toughest ever irrigation year, when Murray Darling Basin water reserves totalled about 1000Gl - southern NSW irrigators were allowed to use nine per cent of their allocation entitlements.

"In the past couple of years reserves have totalled about 4000Gl and yet we've basically had no allocation at all," he said.

"We're certainly not saying we should have received a full allocation, but based on what happened in the Millennium drought we should have had something in recent years.

"Water users have a lot of money invested in general security entitlements but have somehow the characteristics those licences represent have been lost - they're yielding less."

The RMCG report noted the Murray Darling Basin Authority had also acknowledged irrigation cap compliance "overkill', or water under use in all states, but in the Murray Valley under use had been "very large".

Two thirds spilled to SA

"A spill of two thirds of the cap credits from storages on the Murray River (more than 8000GL) flowed into SA between 2010 and 2018 than would have been the case if users were utilising water at cap benchmark levels," the report said.

Mr Arthur believed if available water had been better managed recent rice crops would have been bigger and SunRice might not have had to put off so many workers this year.

The latest job loses include 82 manufacturing and support positions and 20 at SunRice's storage subsidiary, Australian Grain Storage.

The company, which also has milling and marketing operations in Vietnam, USA, Jordan and Papua New Guinea, deeply regretted the significant impact of the staff cuts on its Riverina heartland communities.

It had taken significant steps, including offering record fixed price rice grower contracts, to ensure at least one shift a day would operate at Deniliquin and Leeton mills until at least early 2021.

Mr Arthur said the guaranteed price contracts had encouraged enough growers to commit to 2019-20 yields, which at least would tally more than the tiny crop of a decade ago.

Business still strong

Despite drought in Australia, SunRice's global business was strong and would continue to use its international rice sourcing capabilities to fulfill requirements in more than 50 global markets.

Chief executive officer, Rob Gordon, said the company would do all it could to support employees and their families in the months ahead.

"In normal production years our facilities generate close to $400 million in direct expenditure in these communities," he said.

"Despite the anticipated under recovery of fixed costs in the Riverina, the strength and resilience of our international supply chain will be flexed accordingly, to help reduce this impact."

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The story Murray Darling savings 'overkill' cripples crops and jobs first appeared on Farm Online.

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