Murray Darling Basin Plan Response

Water delivery system

The Murray Darling Basin Plan was signed into law on Thursday, 22 November. It will affect water availability and affordability, particularly for dairy farmers in shared irrigation districts. This presents a significant but not insurmountable productivity challenge if dairy farmers are to maintain and grow their milk production.  

The Sustainable Diversion Limit

The Basin Plan sets a Sustainable Diversion Limit (SDL) of 10,873GL for surface water, which means 2750GL of water is to be recovered by 2019. So far, 1577GL has been recovered.

However, the Plan also contains an adjustment mechanism to allow the SDL to be adjusted by +/-5%, or 544GL in either direction, on review in 2016. This means the volume ultimately recovered could be anything between 2206GL and 3294GL.

The volume will go down if environmental works (or ‘offsets') deliver similar or better outcomes to 2750GL with less water. It will go up if the additional water can be recovered with neutral or positive socio-economic impacts (ie, water savings from on-farm efficiency works).

Water affordability and availability for dairy farmers

The reliability of water entitlements held by dairy farmers in QLD, NSW, Victoria and SA will remain the same.

For those in the southern connected system who rely to some extent on the temporary market, then there may be some years, or times of the year, when water is scarce and expensive. Conversely, dairy farmers with allocation to sell to horticulturalists in dry years should get a reasonable price.

The commitment to keep the Lower Lakes at 0.4m above sea level in 95 out of 100 years will maintain access to water for SA farmers on the Murray Swamps. The commitment to maintain the lakes at sea level in the five in 100 years anticipated to be dry may cause river levels to drop out of reach of farmers’ pumps and damage levee banks by allowing them to dry out.

Costs and Benefits of Farm Irrigation Modernisation

Since 2007, the Australian Government has recovered water for the environment through tenders to buy back irrigator entitlements and by investing in on- and off-farm water-saving infrastructure upgrades.

In December 2012 Dairy Australia commissioned a cost-benefit analysis of farm irrigation infrastructure upgrades on 10 dairy farms in northern Victoria and the NSW southern Riverina.

The analysis will assist farmers who are considering whether to partly or entirely modernise their properties to adapt to a future with less water. It also identifies the impacts of different water recovery mechanisms such as government investment in farm upgrades for a share of the water savings versus buybacks.

The Government’s On-Farm Irrigation Efficiency Program involves a 50:50 sharing of water savings. Participating farmers transfer water entitlements back to the environment that are equivalent to half the savings they achieve. In return they receive Australian Government investment on their farm. The on-farm upgrades enable farmers to maintain or increase their productivity while using less water.

Main findings

  • Upgrades cost the Australian Government about $3700/ML for the environment’s share of water savings.
  • Upgrades delivered $9800/ML worth of increased farm productivity (annualised capital value).
  • The market value of the farmers’ share of water savings is about $1800/ML.
  • Using this water to increase production generates additional regional economic activity worth $6200/ML (capitalised value) based on $500/ML per year additional farmgate production.
  • Farm upgrades improved irrigation labour efficiency.
  • Water use is reduced by 2.2ML/ha per year on the modernised irrigations areas of the farm.
  • Pasture yield improvement is 2 tonnes dry matter (DM)/ha and 0.4 tonnes DM/ML.
  • Farmers reported that government funding enabled upgrades that they otherwise could not have afforded or that would take years to complete incrementally and at greater cost.
  • Additional benefits reported included greater likelihood of farm succession to the next generation of farmers, farm expansion, improved business resilience and the ability to use improved water delivery service provided by water companies modernising their district supply systems.
  • Buyback tenders for irrigator entitlements for the environment cost the Government around $2000/ML, but are associated with reduced regional farm productivity. This in turn reduces regional economic activity by around $4,300 for every megalitre purchased by the Government.

View the Farm Irrigation Modernisation Cost-Benefit Analysis factsheet

Dairy Australia and RDP support for farmers

Dairy Australia’s water research and development programs will assist dairy farmers to adapt to the Basin Plan over the next 12 years and beyond. Current research includes:

• improving border check irrigation performance project in the Murray region;
• performance of lucerne under variable irrigation strategies;
• developing forage systems for cool temperature pasture based systems; and
• forage assemblies for increasing productivity in livestock systems.

RDPs in all Basin States will continue to assist farmers through field days and other extension opportunities to learn about research findings and advances in farm system planning and technologies, business risk management and technical advisory services. For more information, please contact your RDP.

Murray Dairy has also applied to Regional Development Australia to fund its proposed Accelerating Change and Sustaining Communities project. This will include taking automation, feeding systems, irrigation design and robotics developed in research programs and road-testing them on farms under commercial operating conditions.