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Water should grow food, not investment portfolio

Water trading and water hoarding are adversely impacting Australia’s ability to grow food, and therefore need to be acknowledged and addressed, according to the Speak Up Campaign.

Its chair, Lachlan Marshall, said he was “stunned” by a South Australian report which claims there is no evidence of water hoarding in the southern Murray-Darling Basin.

He said issues around water being used as an investment tool are real and should not be ignored.

The report, released this week, was prepared by researchers at the University of Adelaide and the lead author, Dr Adam Loch, has been quoted saying “we didn’t find any evidence of anyone withholding water off the market at any point during the period of concern, roughly between 2017 to 2020”.

But Mr Marshall said he disagrees, stating water has been held back from sale, forcing farmers to pay more. What exacerbates the problem from a food growing perspective, is that it happens more often during drought and forces prices up to unaffordable levels.

“As a nation we need to understand the importance of water for growing food. If we want to remain sustainable, producing enough staple foods for our domestic needs and also trying to feed other hungry people throughout the world, we must ensure enough water is provided for farming.

“At present, with the impacts of water reform and climate change, that is becoming problematic. We already have indications of significant rises in the cost of our food; if Australians want clean, green locally grown food on their tables, our farmers need water. It can’t be used for growing if it’s owned by an investor or superannuation fund waiting for the next dry spell in the hope of maximising their return,” Mr Marshall said.

He is supported by University of Melbourne researcher and author Scott Hamilton who, in conjunction with La Trobe University’s Profess Scott Kells, published an article on water which they described as Australia’s ‘epic fail’.

In it they said: ‘The failure of the Murray Darling Basin Plan is linked to poor political decisions but also to poor market design. Australian water rights have become a financial investment product. As a result, there has been an influx of capital from non-users, for purposes such as speculation and branded water ‘investing’.

“This has led to higher water prices overall, and a wider spread between the prices farmers receive when they sell water rights, and the prices they pay when they buy water rights.”

Mr Marshall said the Adelaide University report is not consistent with either the ‘Epic Fails’ paper, or messages from the ACCC interim report which indicated there are major problems with Australia’s water market.

He added it is also worth nothing you do not have to specifically ‘hoard water’ to have a major impact on the water market, especially when you take into account foreign companies own at least 10 per cent of our water.

“Data and trades are not transparent, which is a critical step to having a decent water market. One thing the Adelaide University report does acknowledge is that ‘analysis into price increase drivers in water markets are challenging due to data limitations’.

“It also states ‘speculation is likely, and with good reason given the gains possible’. One way these financial gains can be achieved is by holding back water so the price increases.

“No-one is in any doubt that this is not in the best interests of our farmers and their ability to grow our food,” Mr Marshall said.

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