Nuts rise on water price

Almonds in particular are setting down solid roots as high global demand delivers record returns and unprecedented exports.

Temporary allocation prices have hit $210 per megalitre in the Murrumbidgee Valley and a whopping $280/ML in the Murray Valley.

Traditional croppers have chosen to sell water in preference to planting a crop.

While the Riverina already houses 12 per cent of the country’s almond plantations, the crop is expected to expand by 50pc in the next three years, according to Almond Board of Australia chief executive Ross Skinner.

He said almond growers would make good profits even in the soaring Riverina water market, which had paved the way for the growth in plantings.

“With water prices about $270/ML that still only makes up 10 per cent of a business’s gross return because the crop is so valuable,” Mr Skinner said.

“(Almond growers) have significant capacity to pay well above the current rates for water.”

New players would continue to invest in the region while existing almond growers would expand their operations, he said.

Barham cropper John Lolicato, Whymoul, said while it was “only fair” water was bought by the highest bidder, some traditional croppers had been priced out of the market.

“I’m punting on the fact water will be more than $300 and can’t justify going to market to finish my crops,” Mr Lolicato said.

“Cereal growers aren’t even competing with another primary product for water because it’s all sitting in a bucket reserved for the environment.

“You can’t expect to remove so much water that’s available to the productive sector and not have an impact on the amount of food and fibre that can be grown.”

Water trader Tom Wilks, Wagga Wagga, said if current trends continued rice could become an opportunistic crop in the coming years.

“We may see other cereals drop off as well because people won’t have the rice stubble to plant it into.”

Winter cereals are typically planted into summer rice stubble.

RuralCo Water general manager Phil Grahame said a shift from cereals should not necessarily be feared.

It made economic sense for growers to move toward the best value crops, he said.

“It needs to be orderly and I expect there will be problems that arise but we need to recognise the only way these new nut developments will get water is if it makes sense for existing irrigators to sell it to them for a profit,” Mr Grahame said.

Mr Wilks said when nut trees matured they required more water.

Almond investment had driven groundwater prices up from $550/ML to $1750/ML in the lower Lachlan Valley and increased pressure on the lower Murrumbidgee valley, Mr Wilks said.

Mr Lolicato questioned if nuts were here to stay or if they would keel over like the grape and citrus industries did before.

“There may well be a long-term future in almonds and walnuts but a lot of our regional communities have developed around broad-scale irrigation,” Mr Lolicato said.

• Demand drives up exports by 246pc in the past five years.

• In 2015-16 export sales will reach $600 million

• The latest export value of almonds was $13.29 a kilogram

• Average crops yield 3t/ha