Big costs are tipped for water

ROLLERCOASTER RIDE: Our future will not be like the past. Agriculture must anticipate, innovate and collaborate to be ahead of the curve, ABARES boss Steve Hatfield-Dodds says.
ROLLERCOASTER RIDE: Our future will not be like the past. Agriculture must anticipate, innovate and collaborate to be ahead of the curve, ABARES boss Steve Hatfield-Dodds says.

Farms will have to get much bigger and farmers must get used to paying far more for water, regardless of whether Australian agriculture actually reaches its $100 billion production goal in 10 years.

The often contentious and increasingly water-thirsty almond and cotton sectors will also be an important players when it comes to lifting Australian farm productivity, says Australian Bureau of Agricultural Resource Economics and Sciences boss, Dr Steve Hatfield-Dodds.

However, he also felt $100bn was an "ambitious target".

"Part of the reason it's ambitious comes down to recognising our past good luck," he told the national ABARES Outlook 2020 conference earlier this year.

"Global price trends have been very favourable for livestock in recent decades, accounting for about 90 per cent of the rise in Australia's nominal agricultural values in the past 20 years."

The nation's recent roller-coaster ride of seasonal successes and setbacks, and drier, hotter climatic challenges ahead also provided some obvious hurdles to ag productivity growth.

Drought-depleted national livestock numbers and low water reserves in waterways and major storages were immediate challenges, reflecting a long running trend of drier conditions testing farm profits, particularly the past 20 years' of crop earnings.

Future rainfall and climate variability would also challenge and change farm sector investment decisions, which in turn would impact on regional economies.

Australian sheep numbers are now at their lowest point in 116 years and the cattle herd down to 30-year lows.

ABARES tipped farm production worth $59bn for 2019-21, down from $62bn.

"While we all hope prices stay favourable - and ABARES considers this likely for livestock for a few years - getting to $100b requires hard work and tough choices," Mr Hatfield-Dodds said.

While farmers had already done a lot to lift farm productivity and trade competitiveness for 20 years, business as usual was not good enough.

Continuing the trend to larger farms and getting more bang for our water buck would be key drivers of future productivity and crucial to achieving the $100b target.

Those drivers could also come at the expense of long-time irrigation-based industries and traditional family farm production agendas.

Despite the complexity of managing resources in the Murray Darling Basin, the market enabled water to be managed efficiently.

ABARES calculates water trading adds about $150 million to agricultural output in the southern Murray Darling Basin, and up to $600m in dry seasons (two years in 10).

"Water's expensive because it's increasing in value in dry and wet years," Mr Hatfield-Dodds said.

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