While the problems of the Murray-Darling stretched from Queensland down through NSW, Victoria and into South Australia, the impact of achieving a sustainable river system will be felt most in one single electorate, that of Farrer, which in recent years has progressively been expanded from southern NSW to encompass a vast area stretching up westernmost parts of NSW to the Queensland border. It now includes much of the length of the Darling River, which flows into the electorate from the neighbouring seat of Parkes, and nearly all of the Murray.
I asked the Member for Farrer, Sussan Ley, if she could talk about how the impact of reduced water allocations would be felt in a community in her electorate, to show how interconnected and potentially fragile regional towns were. This is what she told me about the dairy industry, just one of a number of agricultural industries like cereals, citrus, rice and wine on which communities depend:
Dairy farmers around the town of Finley in NSW (about 150km west of Albury) have, over the years, bred exceptional herds, which are worth a couple of thousand dollars per cow. They have also invested heavily in rotary dairies and farm equipment. They water their pasture and crops using the latest technology. This is intensive agriculture at its best and it cannot simply give way to something else.
For every megalitre (1 million litres) of water, these farmers produce 2300 litres of milk. If the dairy industry in the NSW Central Murray loses, say, 37% of its water, that’s 25,900ML which equates to 60 million litres of milk. Imagine the hit to profitability taken by every single farm? The irrigation company will be forced to load higher fixed costs onto a smaller number of users — at some point this becomes uneconomical and tough decisions will be made that will close channels and force farmers to exit whether they want to or not.
If the number of dairy farmers drops, it may be that the nearby dairy processing factory downsizes or closes — or stops making some lines of, say, yoghurt or cheese. Some workers may lose their jobs. The town businesses which supply machinery, pumps, milk vats, parts, motor bikes, fertilizer and fuel to the farmers will have their viability tested. Small business owners will lay off staff. The clothing and shoe shops will close and people will do their ‘big’ shopping down the road at Cobram, or Albury. The temporary workforce — farm hands, factory workers, bar staff, casual tradesmen, shop assistants — will leave for a more certain income stream somewhere else; with no family ties in the area it won’t take them long.
The smaller country schools in the villages around will start to close as families leave the district. These schools are the centre of their small communities, often where everyone gathers for a Sunday BBQ or the all-too-frequent farm family gatherings aimed at helping families cope with tough times. Finley High School recently opened new facilities to help middle year students develop career paths in automotive trades and a brand-new hospitality kitchen. The school will find this valuable vocational training held back by insufficient local employers to host student placements and work experience. The kids at the school, already hardened by 10 years of drought, will resolve to leave as soon as they can. They will not come back!
The mood and morale of the town will sink. It is already at dangerously low levels with the people exhausted at the prospect of a further 18 months of uncertainty.
The need for health services (particularly mental health) will skyrocket. The churches and the CWA will come to the fore. Centrelink and other government agencies will send more staff. What will the banks do, if they decide the equity in farms and local businesses is sliding? What will this do to local house prices? As people leave, rate revenue will drop and councils will find it difficult to put money back into community halls, roads and landscapes.
As for those dairy cows, they will be sent to the nearest abattoir as ‘choppers’. Apart from losing generations of valuable genetics the farmer will be lucky to get a couple of hundred dollars for them. And we will get our milk from somewhere else — airfreighted from New Zealand in all likelihood.
I have faith in the resilience and strength of country people. I have seen them manage years of drought and many will try to overcome even this depressing scenario. Today though, all of Australia needs to understand what is at stake for the bush.
Lay was on solid ground right up to the air-freighted milk. Emotive, but factually-based.
Of course, they could change their business model or move, as rural people have done for generations. But then they wouldn’t be victims.
There is one thing that we can learn for certain from this scenario: Ley is not interested in the full truth.
(1) Appropriately, given Ley’s electorate, her scenario is solidly based on a furphy. No one agricultural sector, per se, will lose 37% of irrigation water. If the return on irrigation agriculture by way of dairy cattle is better than that of other sectors, the dairy sector may even increase its use of irrigation water, particularly if food prices increase significantly, and particularly if, as Ley suggests, the milk competition has to be air-freighted from New Zealand ‘in all likelihood’.
(2) Ley’s scenario is constructed as if it operates in a vacuum. There is, in fact, a context for this scenario. Ley does not mention the cost to regional tourism of blue-green algal blooms. She does not mention the cost of ever-increasing salinity. She does not mention the cost of reduced income as a result of declines in amateur angling (90% European carp). She does not mention the cost of decline in duck shooting (not enough ducks left to shoot). She does not mention the cost of biodiversity loss, presumably because she places no value on biodiversity or on ecosystem services.
(3) $2,000 dairy cows go to the choppers? Crap. There is a thriving export industry in high quality dairy stock.
(4) Another furphy – that this is about the bush. Ley can’t have it both ways. Actually, it is about the nation. All of us. Ley, no doubt confidently expects all of us to pay to fix the full catastrophe.
(5) So, Ley does a bit of special pleading. She ignores the full costs of what is going on. Then she has the hide to ask to understand what is ‘at stake.’
IMHO, Ley leads us straight to what is at stake, alright – the truth.
I’m still a little unclear about the difference between allocations and actual extraction. Has the NSW Central Murray dairy industry been using (say, for the past 10 years) 100% of farmers’ allocations – which may now be cut by 37%? Or have they actually been extracting something less than 50% of their allocations (because of drought, not all needed etc) and a 37% reduction in allocation may not in fact have any effect on the amount extracted? I ask because the local member’s calculation seems to indicate that a reduction in the allocation will translate exactly into a reduction in extraction.
CM
1. You have licence for a certain amount of megs. Some licences are for high security and some for low security water.
(2) The distributing authority calculates how much water it can allocate in a given year. If there is lots of water in the storages, then it is likely that both high and low security licences will receive the full allocation. If there is less water in the storages, the high security licences might get a full allocation and low security licences little or non. The allocations are given as a percentage of the licence amount, so everyone gets the same allocation, pro rata.
(3) While the water market system is far from perfect, for years now farmers have been able to purchase allocations from other farmers. It is therefore possible for an individual farmer to increase his irrigation water use well above his licence level. The idea is that this will cause agricultural investment to head towards highest value returns per meg of water. To some extent, this has already happened. The other pressure is that on-market water is epensive when it is scarce, so it tends to drive efficient use .
(4) In constructing her scenario, the local member was being political with the truth.
Thanks Boerwar. So there’s licences and then there’s allocations. And you are saying that for all intents and purposes, allocations = extractions. So when the MDBA suggests a 37% reduction in allocations they really do mean that farms will have access to 37% less water – presumably that’s regardless of how much is flowing down the river.