Reform of Australia’s $1.8 billion Murray Darling Basin water market must recognise the multiplier effect of commodities, not just their returns to growers and investors, according to one of Australia’s biggest wine producers.
John Casella is the managing director of Casella Family Brands, the nation’s third largest wine company and producer of its biggest single wine export, Yellow Tail.
Mr Casella grows and buys grapes across southern Australia, and his grower network uses about 45,000 megalitres of irrigated water.
“When you look at what one megalitre brings back to regional communities in grapes, it’s much more than what it does in other crops,” Mr Casella said.
Basin water markets
The call came before the election was announced, with the Morrison government considering recommendations from an Australian Competition and Consumer Commission Inquiry last year into the Basin’s water markets.
The 18-month inquiry received more than 130 submissions and revealed widespread mistrust in the market, with claims it was rife with manipulation and corruption.
The ACCC’s deputy chair, Mick Keogh said there was a need for comprehensive and focused reform to build trust and market efficiency as well as greater integrity and transparency.
He said a key recommendation was the establishment of a national water markets agency.
“One of the biggest issues that irrigators raised with us was the fact that the market reporting in comparison with, say the wool industry or the beef industry or the sheep industry is very poor in terms of the water market, and their confidence in trading in the water market is very much affected by the fact that you’re scratching around for information or scratching around for reliable information,” Mr Keogh said.
Last October, the government appointed former secretary of the Department of Agriculture and Water Resources, Daryl Quinlivan, to develop a water market reform road map, to be delivered in June 2022.
Regional water distribution
Mr Casella said he was concerned about the rising cost of high security water for permanent plantings such as wine grapes, and the government should consider capping water allocations for crops that did not return as much value to regional communities.
“The economic return to the growers and landholders may be greater, but the return to the community is much lower, and I think we need to keep that in mind. It’s not just about the price, it’s about the return to the regional communities where the water is distributed to.”
Mr Casella said the current wine vintage looked promising despite some unusual weather events and a wetter than average summer across southern states.
The COVID-19 pandemic had presented supply chain challenges such as the cost and availability of shipping, but sales of the company’s flagship Yellow Tail wines had increased.
Last year, the company produced about 13.5 million cases of Yellow Tail and exported them to more than 50 countries.
Watch this story on ABC TV’s Landline at 12:30pm on Sunday, or on ABC iview.
Posted , updated