Water price reset needed say irrigators

That's according to the Australian Sugar Milling Council, which has released a detailed assessment of the impact of the proposed Queensland Competition Authority price increases on water charges for irrigators for 2020-24.

ASMC chief executive officer David Pietsch said the Palaszczuk government should reject the QCA recommendations and reset water charges to levels 15-25pc more affordable than what had been proposed.

"With 67 per cent of the state's sugarcane production dependent on irrigation, inputs like water need to be affordable and reliable," Mr Pietsch said.

"The projected additional costs are unsustainable and left unchecked, will result in further decline of the Queensland sugarcane crop and financial stress for many sugar mills."

ASMC analysed the costs and benefits from a social, economic and environmental perspective of 15pc and 25pc reductions to water scheme prices over the period.

The key findings are:

- The QCA recommendations represent a 4pc/year increase for irrigators between 2006-07 and 2023-24 (from $39 million in 2006 to $79m by 2023-24).

- Water represents more than 15pc of an irrigator's total farm costs.

- Stagnant productivity, falling cane volumes and mill under-utilisation threatened the viability of some sugar mills.

- A 25pc reduction in water prices would result in 1.3 million tonnes more cane and $88.3 million more in sugar, molasses and energy production.

- Community benefits include 140 jobs, $41.7m in increased incomes, and $131.9m in indirect supply chain output.

ASMC director of economics, policy and trade David Rynne said increased water charges damaged regional communities at a time when sugar and cane prices were at decade lows and water usage was falling.

"Our analysis has looked at the water price levels needed to maximise community returns for our endowment of water and vast cane lands," Mr Rynne said.

"The scenarios we've modelled show that both a 15pc and 25pc price reduction would result in increased and efficient water use that would deliver both cane yield improvements and tangible benefits to the community that exceed the costs.

"Let's be clear, the benefits of improved price incentives are four fold. They include shoring up mill viability, regional development in terms of higher sugar, molasses and energy production, environmental improvements including improved utilisation of nitrogen and herbicides, and ensuring the state's water assets don't become stranded assets."

The ACMC report follows calls by farmers for a freeze on water prices pending a review of the QCA report.

Canegrowers chief executive officer Dan Galligan said the level of extra impost, on top of high electricity costs, was beyond the capacity of farmers to absorb.

"For example, canegrowers accessing water from the Pioneer River channel scheme in the Mackay region face an increase in their fixed (Part A) charges of 48pc over four years," Mr Galligan said.

"It will be a 51pc increase if irrigators are asked to pay for dam safety upgrades.

"In the Bundaberg region, water bills will go up 28.6pc and in the Burdekin they'll climb 17pc.

"What will happen is that farmers will turn off their pumps and not use the water, meaning crops will underperform and there's the real risk that some irrigation schemes will fail because farmers can't afford to use them."

Meanwhile, the LNP is calling on the Palaszczuk government to freeze bulk water prices as a means of supporting businesses and saving jobs during the COVID-19 pandemic.

LNP Natural Resources Shadow Minister Dale Last said there should be no increases in bulk water costs from Seqwater and SunWater during the declared public health emergency.

"Water plays a vital role in ensuring supermarket shelves can be stocked with the food and products Queensland needs," Mr Last said.

The Irrigation Prices in the Queensland Sugarcane Regions report is available at asmc.com.au