WATERING CANE: Industrial size sprinklers irrigate a cane farm.
WATERING CANE: Industrial size sprinklers irrigate a cane farm.

Irrigation price drop could boost sugar output by millions

MACKAY canegrowers have welcomed an assessment showing that a significant reduction in water prices could increase output by millions of dollars.

The Australian Sugar Milling Council released a report which details how a 25 per cent reduction in the cost of water from the State's sugarcane irrigation schemes could deliver up to $220 million in additional output over four years.

ASMC's analysis was undertaken after the Queensland Competition Authority made a recommendation to government to introduce further, significant increases in costs to irrigators over the period 2020 to 2024.

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

The QCA recommendations represent a four per cent per annum increase for cane irrigators between 2006/07 and 2023/24, from $39 million in 2006 to $79 million by 2023/24.

Water represents upwards of 15 per cent of a cane irrigator's total farm costs.

Stagnant productivity, falling cane volumes and mill underuse could threaten the viability of some sugar mills, the ASMC reported.

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

"We are calling on the Queensland Government to reject the QCA recommendations and reset water charges to levels 15-25 per cent more affordable than that proposed by the QCA over the 2020/21-2023/24 period," Mr Pietsch said.

ASMC's Director of Policy, Economics and Trade David Rynne said the government's decision comes at a critical time, with sugar and cane prices at decade lows, regional economies hurting and grower use of water allocations falling.

Chairman of Pioneer Valley Water Andrew Cappello and Chairman of Canegrowers Mackay area committee Joseph Borg both agreed the government's decision was counter-productive.

"During the late 90s we used about 90 per cent of our water allocations but with water and electricity prices increasing by over 100 per cent in the last 20 years, water usage has dropped to about 30 per cent," Mr Cappello said.

"That equals lost production of half a million tonnes of cane production annually, estimated at about $20 million which translated into $80-$100 million that could be spent on the economy by farmers which the government could raise taxes from," he said.

"We've been calling for a reduction in water prices for years and welcome the ASMC report," Mr Borg said.