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Standing Committee on Agriculture and Water Resources
Water use efficiency in Australian agriculture
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Standing Committee on Agriculture and Water Resources
McVeigh, John, MP
Swanson, Meryl, MP
Keogh, Matt, MP
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Content WindowStanding Committee on Agriculture and Water Resources
Water use efficiency in Australian agriculture
MURRAY, Mr Michael Bernard, General Manager, Operations, Cotton Australia
CHAIR: I welcome the witness from Cotton Australia to today's public hearing. Although the committee does not require you to give evidence under oath, I advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the Houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make a brief opening statement.
Mr Murray : I will firstly introduce the Australian cotton industry. The modern industry dates back from the early sixties. It spread out from the Namoi Valley in New South Wales. It now extends from the Central Highlands in Central Queensland down to Swan Hill in Victoria. We occasionally have outliers. At times, cotton has been grown in the Ord, around Ayr on the North Queensland coast and in the Flinders area. But the big growth area has been in southern New South Wales over the last 10 years or so.
On average—and we bounced around an awful lot—the cotton industry is worth somewhere between $1.5 billion to $2.5 billion farm gate to Australia. As a general rule, normally about one-third is produced in Queensland and two-thirds in New South Wales. Water availability is our biggest single driver. Most cotton farmers and, indeed, most irrigators, generally, are not restricted so much by land. They are restricted by the amount of water that they have. To give you a bit of an idea of the variation in Australian cotton production, in 2007 to 2008 we produced just 600,000 bales right in the middle of the millennium drought. By 2012, we had bounced back to 5.3 million when water was available post that drought. This year, we will produce somewhere in the order of 4.2 million to 4.3 million. With the last couple of years we have been back down around the two and a half million.
In terms of where we are at with water use efficiency—as I said, water is our single most biggest driver—I have sent out in my submission links to the sustainability report that shows that we have improved water use efficiency by 40 per cent over the last decade. We expect that journey to continue. When we talk about water use efficiency we are very much interested in, basically, converting water into product—so more crop per drop. Basically, the best index, as I outlined in my submission, is the gross production water use index which effectively says how much water was applied, including rainfall, and how much crop you got out of it. That is what our focus is on. We will continue to work on that. We work on that for the fact that it drives our productivity.
While we are enjoying a little bit of a purple patch pricewise at the moment, as today on the Darling Downs you could probably get somewhere in the order of $520 to $540 a bale, the long-term average price of cotton over the last 20 or 30 years has been about $450 a bale. As an average line or a trend line, it has been pretty flat. So if you want to stay in business when prices increase you have to drive efficiencies. Whilst we drive efficiencies in all parts of our businesses, water use efficiency is a key one.
If I was to look at what to me are the most important things from government to help assist that, absolutely number 1 is continued support for the research and develop program. For matching funding for rural research in the cotton industry we have a compulsory level—you have $2.25 a bale. That is matched by the federal government with another $2.25. And that means that our Cotton Research and Development Corporation which manages those funds and manages the research can invest somewhere between $15 million and $20 million a year in research.
On top of that, we have been recipients of the benefits out of the rural R&D for profit program. Much of the work that you saw today out at the university has been funded through that project. And, as you would probably be aware, that program is very much trying to foster cross-industry development. So the work that they are doing is almost equally applicable to the cotton industry and the cane industry, and the rice and the dairy industries. I guess that was no better demonstrated than by Joe there with his multi-screens covering sites in many states. So research and development are absolutely important. The tax incentives that allow for accelerated depreciation for irrigation investment are, again, very important. They have been in at least for a couple of years now with a three-year accelerated depreciation.
In terms of going forward, I am not expecting the government to provide big licks of money for subsidising water use efficiency for the sake of water use efficiency, but I think some modest investment in the area. What I mean by modest—and we can argue about the numbers—is: if there was a program that allowed me a 25 per cent subsidy on investing in improved water use efficiency, I think that would be very generous but also balance off the private good, which is mostly going to be received by the irrigator, with the public good, which is much greater economic activity in both the micro level in regional communities and also the overall tax take. It is not a direct comparison, but I was down in Tasmania recently, and with the funding that the federal government largely and, to a lesser extent, the state government have put into developing new irrigation schemes in Tasmania, some post studies on that have shown that for every dollar that the state government has invested in those schemes the landholders have invested a further $2 to $5. So there is quite a multiplier effect in terms of the infrastructure spend. But then built on top of that is the ongoing revenue that comes out of that process and, obviously, the tax receipts. That is what I would sort of like out of it.
In terms of this inquiry—and I certainly do not think it is any fault of the committee, because the terms of reference only makes a small reference to environmental flows—there does seem to involve a whole lot of focus on water use efficiency and the water recovery required under the Murray-Darling Basin Plan. I think they are almost two separate issues. If we are talking about the water recovery effort and, in particular, the current focus on the 450 gigalitres up water, I think what we really need to be asking is: what are we trying to achieve here? What are the outcomes that we are after? If the outcomes are particular environmental outcomes, how is the best way to achieve that?
In some cases it may be by acquiring additional water entitlement. In other cases it is about doing the sorts of things that Tim mentioned, which are generally referred to as 'complementary' measures. In particular, many of our dams release water, supposedly for fish breeding but at temperatures that are too cold for native fish to breed in, because the dams do not have multilevel offtakes or thermal curtains. To me, it would make much more sense to get an environmental outcome by funding those sorts of complementary measures rather than simply acquiring additional entitlement. Not that entitlement does not have a role, but at this stage, with over 2,000 gigalitres already acquired under the Basin Plan, the adoption of complementary measures—spending the additional money that would have been spent on additional water purchases on complementary measures—would really leverage some great environmental outcomes out of the entitlement that has already been acquired, plus all the water that is in the environment anyway.
Once you have made a decision, the next question is: what is it that we are trying to achieve? If you do land on a decision that says we must, for whatever reason, acquire further entitlement, then I think the water use efficiency programs are the 'least worst' option, if you like. They are far, far better for communities than straight buybacks. They certainly do come at a cost, but even in the work of the Murray-Darling Basin Authority, when they have compared the impacts of the Basin Plan on the northern basin—Tim's area—where virtually all the water was required through water use efficiency efforts under both the New South Wales and Queensland managed plans, federally funded, it showed a slight positive social and economic impact. Where water recovery has been just through straight purchase there has been a very strong negative impact.
The full implementation of the Murray-Darling Basin Plan in the northern part of the basin will cost something in the order of 710 jobs out of the communities in the authority's own figures. These are not big communities. These are communities like Dirranbandi and Collarenebri, that we have heard about, which have only a couple of hundred people in the first place. In the case of Dirranbandi, full implementation was going to take 30 to 35 per cent of the non-government jobs out of that community. If that water recovery work is required to be done through efficiency programs, they have a very important role. But, equally, there should be a case, and there is a strong case, for water use efficiency just to boost efficiency of agriculture.
I can enter a program, and I can to do a deal with the Commonwealth and say, 'I'm going to return this amount of water to you guys, and I'm going to be more efficient on what I've got left here.' It's like ripping this much off this piece of paper. That works for a while, but if I go around the next time and return some more—and I will rip some more off the paper here—it does not really matter how much more efficient I am on my remaining water, I start losing my overall productivity. That is where it really starts to bite into communities. So when it comes to environmental outcomes I am not saying that there is never a case for entitlement acquisition, but there are also many other ways that we achieve environmental outcomes. I might leave it there.
CHAIR: Thank you very much. We appreciate your candid opening statement, the time you spent with us today and also the submission that you have put in. It is much appreciated. The cotton industry gets a bit of a bad rap. It has been raised today that from time to time people say it is not an efficient use of water because—well, I do not know why it is not an efficient use of water. Basically, people think producing food is more defensible morally than producing fibre. Do you want to comment on the mechanism where people arrive at the decision to grow cotton versus other products?
Mr Murray : I have never yet met anyone that has 'cotton grower' tattooed across their forehead. They have a set of resources and the key set of resources is an entitlement to use a certain amount of water. They will then make a decision as to how they best utilise that. Normally, the biggest single driver on that is: what return can I get for my megalitre of water? In the vast majority of cases in a broadacre sense, they are going to direct that water to growing cotton because it produces the best return. I might argue, looking at the numbers—and Lindsay is here later; he has a small horticultural enterprise that supplements his cotton production—that growing zucchinis might, on the surface, give me a greater return per megalitre. However, if I grew a thousand hectares of zucchinis, I would probably completely and utterly flood the market. I also have a set of machinery, soil type, skills and labour. I have to put all that into the mix, but out here on the Downs, in most of these places, people could quite genuinely decide they can grow sorghum, maize or cotton, and 99 years out of 100 the best result is going to be cotton in terms of their return.
Dr McVEIGH: Thanks, Michael, for your presentation and being with us today. You have said and your submission outlines that Cotton Australia has got a fair bit of criticism for the On-Farm Further Irrigation Efficiency program and you touched on preference towards complementary measures, and you used one example just now. Can you provide some more examples just to give the committee a bit more flavour of what you mean by complementary measures.
Mr Murray : Okay. If we go back 10 or five years, what was then the Murray-Darling Basin Commission—and then the second version came out under the authority—used to do what they call the Sustainable Rivers Audit. They basically measured the health of rivers within the basin under five different metrics. One of those metrics was hydrology, one was invertebrate pests and another one was non-invertebrate pests. I think turbidity was another one, and there was something else. In virtually all the catchments, the health of the river based on hydrology was the best performing of all the metrics, and yet we developed a Basin Plan all about hydrology. We adopted the approach that said, 'Just add water and we'll fix the problem,' and it just does not work, because it does not address some of these issues. Fish numbers was a concern virtually everywhere. As I said, if you release water that is too cold to breed, it is not going to work. If you let carp continue to dominate, it is not going to work. If you do nothing to manage the riparian zone so that you are always getting more and more silt into the system during run-off, you are not addressing turbidity. If the reason why native fish are not thriving is that someone in the past possibly took their paddle steamers, went up water-skiing or whatever and desnagged the river—desnagging can be a perfect example.
We have a whole lot of areas where we have acquired water supposedly for wetlands, being the Narran Lakes, the Gwydir Wetlands, the Macquarie Marshes and the like, and we have let that water go there but then we have done nothing to manage the feral pests down there—there are pigs and all sorts of weeds through there. We are not getting anywhere near the best bang for the buck. Macquarie Marshes is a classic. We lend a lot of water down there for environmental purposes, but most of the Macquarie Marshes is actually in private hands and it grows cattle feed. It is basically fairly wild flooding, cattle grazing production, and there is nothing wrong with that per se, but if public funds are going into buying water for environmental outcomes and you do nothing to manage those wetlands then it is a bit of a joke. Again, there are a whole lot of things that we could do there to better manage those. The first step would be to buy up or enter into lease arrangements or management arrangements with all those landholders and I think that has to be market based. We stand here as irrigators and say: 'Effectively, if you want our water entitlement, you have to acquire it one way or another. You can't take it off us.' Those same rules should apply to landholders as well. They are just a snapshot of a few.
Ms SWANSON: In relation to some of the items that Cotton Australia has raised, I am interested in those efficiencies. How have you managed to achieve 40 per cent? Is that through genetically modified crops? Just talk me through it, because that is a sizeable improvement.
Mr Murray : It is a combination of many things. Through our research, we have a fairly enviable record of being, on average year on year, improving our average yield by three per cent. The plant breeders take a different view to some other people, but there is a rough rule of thumb: about half of that is achieved through better varieties, including the involvement of GM traits, and about half of that is considered to be better management. Better management covers everything from better fertiliser management to monitoring your water use. Today we saw a lot of sophisticated tools for moisture management and irrigation scheduling and what we saw is a drop in the ocean of what is actually out there. People will apply that and that obviously has a value. The breeding has a value—working out when best to plant and best to manage, as Lochie was explaining. Cotton is an indeterminate crop, so when do you make the decision to shut down that plant and when do you defoliate? All of that comes together. The cotton industry has been fortunate over its modern history in that, in general, it has been profitable enough to invest back in good research, good people and good technology, and that builds the whole circle of progression.
Ms SWANSON: I know this is a 'how long is a piece of string' question, but how much more does it have in it? Is that just dependent on more research and development?
Mr Murray : I think the plant breeders today think that the yield potential of cotton without some major left-field thing happening is around 20 bales a hectare—somewhere around that mark. Our average yields are probably these days in the order of 10 to 12, with our good growers regularly hitting 14 or 15. There is easily another 25 per cent improvement there, probably over the next 15 or 20 years—something like that.
Mr KEOGH: I go back to your point about the criticism that people growing cotton are big water consumers. They have the water allocation and they will go to the highest yielding product. Is it right to say that it is a product that exists in a band that is the highest yielding, but, if you do not get the high level of water available to your farm, you are not going to be able to get a high-yielding crop? Having said that, we have seen dry-farm cotton farming today.
Mr Murray : Not far from where we were today, a very good dryland farmer achieved 12 bales a hectare last year. It rained very regularly—a perfect time for him—and there are beautiful soils and very good management. It is not that you cannot grow a good dryland crop, but, on average, a dryland yield is roughly one third of an irrigated yield. On a world scale, our average yields are three times world average, so we are well and truly in front of the world, in front of the pack, in what we do. That is where we drive it and we will continue to try to drive it in that direction.
Mr KEOGH: When you make that comparison, are you talking about irrigated crops, dry farming or just the average across both?
Mr Murray : Basically, the International Cotton Advisory Committee that collects all the data says, 'This is the average level of irrigation on dryland production for your country. This is the average level around the world,' and we must be just under 2,000 and the world average is just over 500. That is where the differences are.
Mr KEOGH: Looking at the comparison between irrigated cotton and dry farmed cotton, there is a cost factor in irrigation. Whilst you are getting a much higher yield, your costs are also a lot higher. Is that right, not just in terms of water costs but energy costs and equipment costs and all of that?
Mr Murray : Absolutely. It costs you a lot more to grow and irrigate a crop, but the gross margin is greater as well. At the end of the day, if you have limited land, you are going to get the best return out of irrigated cotton if you have the water. One area where we are changing a little bit and people are still playing around a little bit is planting. Normally when you have an irrigated crop you do what you call a 'solid plant', which is generally one row of crop planted with a one-metre space between them. When water got very, very short during the drought, people started playing around a little bit with widening that planting, so they might have only put a plant every two metres or every three metres and kept that ground in the middle bare so no weeds or anything were sucking water out. It actually captures extra water there, you are capturing any extra rainfall over your hectares and any water that you apply is going over a smaller amount of crop.
People were getting really, really high water use efficiencies under the indices. They were turning each megalitre into more cotton by doing that, and that has some people thinking: even when we are in a time of, relatively, plenty of water, if land is not our limiting factor are we better off spreading the crop over the whole amount of land? The result, largely, depends on how much rain you actually get in season. If you do not get any rain, it is probably not going to make any difference at all, or very little difference, but if you have an opportunity under that model to capture a reasonable amount of rainfall it can make a lot of difference. I think that is one area where in five years time we will probably see a change in the average planting density to capture that water efficiency.
Mr KEOGH: Is there a change in plant density in dry farming compared to irrigated farming?
Mr Murray : Yes, in dry farming it is typically never a solid plant. It is already spaced out to try to get that rainfall capture. As I said, most irrigators are not land poor, but they are probably not at the stage where they can basically halve their density over their whole property yet. But I do think that is one area where we will see some big improvements in water use efficiency in the future.
Mr KEOGH: You mentioned that with the irrigation you have that higher gross margin, but you have the higher cost going in. Does that higher gross margin also reflect, to some degree, a higher risk that, if your water allocations are being cut, you cannot get access to enough water or there has not been enough rain through the season, you might not get the yield that you want and you have already invested all that capital?
Mr Murray : I suppose my approach is that at the start of the season in my various water accounts, be it water held on farm, water in my soil or water in headwaters storages, I have X amount of water that is available to me at that time. I know that in an average season I am going to have to apply, at least, X number of megalitres, so I will plant my crop proportionately to that. I will probably also, depending on my attitude to risk, take a little bit of a gamble as well. I might plant an extra 10 per cent or 20 per cent depending on what I think might be the way the season pans out.
Like any risk, sometimes you win and sometimes you lose. The industry just wears that and says: 'This year it paid off. It rained'—or there was another flow in the river—'and I was able to irrigate everything.' In this particular season, most farmers had enough water to fully irrigate their crops, even though it was very hot and water use was higher. Some people maybe missed out on their last watering and, to be quite honest, that might have cost them two bales of hectare, so it is a significant cost. But in another year they might well have easily got some extra flow and benefited greatly from producing more.
Mr KEOGH: So in the irrigated system you may have some higher peaks and lower troughs, whereas in the dry farming you would have peaks and troughs but they are within a lower band?
Mr Murray : No, because your rainfall varies enormously as well. Out on the Darling Downs, where this year there was a historically large dryland plant, the crops have been miserable. It just did not rain over summer. That is actually true in the Namoi valley where you are heading tomorrow and other places as well. Both of them have risks, but farmers and people who visit Crown casino are built of the same stuff, really.
CHAIR: Just on water allocation, in the Murrumbidgee they start releasing preliminary allocations in July. I do not think they had finalised their allocation for the financial year period when we were there in February or March. How does it work across most of the cotton area and how do you plan ahead for next year's crop?
Mr Murray : With ground water, unless something goes really, really badly, you know that pretty well year-to-year you are going to have the same allocations. That is very secure, and the great advantage of that is, with cotton, it is quite possible to lock in and take out contracts two or three years out. At the moment, the price is historically at the higher level. People who know that they are going to have water into the future have locked in at least some of their crop at higher prices. So for groundwater it is pretty simple.
For surface water it varies a bit. It depends on your account-management rules. In northern New South Wales, typically, let us say a person might have 1,000 megalitres of entitlement but they might have storage in their headwater storage of 150 per cent or, in some cases, 200 per cent. They also might have a rule that says, 'I can't use any more than 125 per cent no matter how much I water have in my account.' It is called continuous accounting. It allows people to try and balance these things out, particularly in the northern part of the basin where our rainfall and therefore water availability is extremely variable.
Prior to taking on this job I was the CEO of Gwydir Valley Irrigators. If I have a general security licence in the Gwydir it has an average reliability of 36 per cent. If you go back over the data for the last 30-odd years, you will never find a year when the allocation was between 35 and 70 per cent. So it is either a boom or bust, even though the average is 36. There, with the continuous accounting model, when I got water I put it in my account. It stays in my account until I use it. I can try to balance things out. So if I have 1,000 megs of entitlement and, on average, I think that is going to generate me 400 megalitres of water but I know one year it will produce me nothing and in another year it will produce me 1,000, I might try to choose to only grow enough cotton, year in year out, that consumes roughly 400 megalitres. Then I will try and balance it out. That is good because it provides my business with a little bit of consistency. I can balance my labour and I can balance my machinery out of that.
The cotton industry, and northern New South Wales irrigation and into Queensland irrigation, has set up the rules to manage that risk about highly variable water reasonably well. The rules vary from valley to valley but the concept of being able to manage that variability is well-entrenched.
CHAIR: I do not come from the area and am new to this. During the millennium drought, did it get to the stage where there was just no water?
Mr Murray : When I was in the Gwydir Valley I think we had two years in a row when there was zero general security allocation. I think we had one year that was five per cent. Copeton Dam I do not think got over 35 per cent the whole time that I was there. I left and it filled—I don't know what that says! It does just bounce around. And, yes, there are times when there is zero water.
People have, often, a range of sources. Using the Gwydir example again, most people have general security licences and supplementary licences—general security licences of water held in the headwater storage created from flows that occur in the upland areas; the supplementary ones are any river flows accessed through river flows below the dam wall. Fortunately, through that millennium drought, there was still a little bit of rainfall storm activity that generated some supplementary flow, so that got a bit of base production going. As I said earlier on, if we look across our industry, we have produced as little as 600,000 and as much as 5.3 million and it is all about water.
Ms SWANSON: You have been broadly supportive of water use efficiency techniques, but could you tell us a little bit more about the Commonwealth On-Farm Further Irrigation Efficiency program of which you have been critical?
Mr Murray : Yes. The concern about the COFFIE program is a number of things. It is all about getting that water for the 450 GLs of upwater. Firstly, we would very strongly suggest that if you are serious about getting environmental outcomes you will get better environmental outcomes out of adopting some of those complementary measures that we discussed rather than acquiring water. Further criticism of the COFFIE program is that it is out there now when we still have not quite—we are getting very close—met the requirements of the 2,750 plan anyhow. So let's get that over the line first.
The third issue is that it is underfunded and pretty unattractive to irrigators anyhow, particularly compared to the other Healthy Headwaters and Sustaining the Basin programs anyhow. So, for whole lot of reasons, we would say park the COFFIE program until we have actually decided what we should be doing about the 450. If, at the end of the day, and it is not what I support, we are still looking at entitlement acquisition, then that program will have to be severely tweaked to make it worthwhile.
Mr KEOGH: We have had evidence that you will get some producers or water users who are innovators. They want to go out, try stuff and get those efficiencies. There are others who are sitting back and waiting, saying, 'Show me what actually works. Lead me through it,' or basically, 'Do it for me,' almost. Whether it is the final 450 or other irrigation schemes where we are trying to find efficiencies, do you get the sense that there is still scope to find efficiencies with producers who have not yet jumped into a scheme, who have not yet started putting efficiency measures on farm because they are late adopters?
Mr Murray : Absolutely. Despite what you will hear from some actual irrigators, the job is never completely done anyhow. Some people say, 'I've done all I can do.' Well, that is rubbish. The technology may not be there yet, they may not be doing it fully or it just may not be economic, but there is always something more, even for those top 10 or 20 per cent.
Mr KEOGH: There is more they could do?
Mr Murray : They will be doing more in the future as well. It is the typical bell curve, I suppose. The top 10 or 20 per cent are out there doing things and then taking the risk. Sometimes those risks pay off and sometimes they do not, but they are innovating. The next 40 to 60 per cent are looking and they will slowly be brought along, and they are the ones who I think with some modest carrots can accelerate the adoption. The bottom 20 per cent are going to go broke and they are going to be taken over by someone in the top 80 over time.
It is interesting. I was a bit late to Scott's presentation, but sometimes we as industry advocates look at something and think it is a no-brainer: 'There's a three- or four-year return on this. Why aren't they investing in it?' It is often the case that an irrigator or landholder has so many different options right across their business as to where they invest their money. Sometimes when we are looking at irrigation efficiency or energy efficiency we think it is a no-brainer to do it, but they have other priorities. Something that can help give them a little bit of a poke or a shove I think is great value.
Mr KEOGH: In terms of trying to find the 450 in the COFFIE program in addition to, say, looking at complementary measures, it may well be possible to find some of that water by better targeting the program to get those late adopters, if you like?
Mr Murray : It could well. My understanding is they are using a multiple of 1.5 over the market price at the moment. I don't think too many people will find that attractive.
Mr KEOGH: It is not enough, yes.
Mr Murray : If at the end of the day we have to go down that water recovery model, COFFIE is going to require some serious tweaking to make it attractive.
Ms SWANSON: I am of the belief that it is the early adopters that we need to be supporting and rewarding, and potentially the cohort that comes after them. If the people who are really lagging behind need that much support, then potentially that is problematic.
Mr Murray : As I say, forget about the bottom 20 per cent or 30 per cent. They are going to go broke. It is the same with drought relief and lots of other things. We do not want to be providing disincentives for the top ones, but those in the top 10 or 20 per cent who are really out there will benefit from a few modest carrots as well. But it will also bring the next group through a little bit quicker.
Dr McVEIGH: Is it a better form of extension than traditional forms of extension in decades past—state departments of agriculture having a man or a woman in a ute on every farm in the state, for argument's sake?
Mr Murray : I think so, particularly for our industry. The Queensland government has a very modest water use efficiency program called RWUE—rural water use efficiency. They work closely with industry, but their model is basically trying to improve extension. In the last round of that we stood out because we as the cotton industry did not involve ourselves because we just did not see the value in doing so. We are an industry where everyone has their own private consultants. We long ago weaned ourselves off state government extension officers. There was no real value in going back to that model. I have just started talking to them, because they are thinking of extending it. I said, if the cotton industry participates, the way we would do it is again with some very modest grants—we are talking about $10,000—to adopt some of this technology rather than spending money on a man in a ute, because that will make zero difference in our industry. Other industries may well be different, with different cultures. There was a question to Tim along those lines. I think it is as much about an industry's culture as is it about anything else, profitability or otherwise.
CHAIR: The interaction between the coal seam gas industry and the cotton industry might be a little bit out of our terms of reference, but have you got any comment to make on how that is panning out or how it could be done better?
Mr Murray : I came into this role about six years ago, and at that stage the Queensland industry was really full on into the development stage. Most of that development has occurred west of our areas, but there is one company that holds the ability to come onto some really good cotton land. It was a very, very hot topic. There is a continuum, as in anything, and some of our growers are on the 'chain myself to the bulldozer' end while others think: 'Bring it on. I can manage it. I can interact with these companies and we can all benefit.' If the average person was at the bulldozer end, I think over the last five or six years in Queensland they have probably moved a little bit to being able to coexist.
I will make a couple of points. There is always a lot of talk, including from the previous federal member for Groom, about industry coexistence, saying agriculture and CSG can coexist. That is not the case. An individual farmer and an individual resource company may be able to coexist if it is a genuine arrangement, but industries themselves? No. We cannot impose that. People are going to have different views and different plans. From Cotton Australia's point of view, after a lot of debate we basically came up with a policy that says you need to be able to demonstrate that the water resource is protected and you need to be able to demonstrate that the land is protected. If you can demonstrate those things, then the landholder should get a fair shake out of the deal.
In Queensland the government, to their credit, set up what they called OGIA, the Office of Groundwater Impact Assessment, and that has been seen pretty much as an honest broker about the groundwater impacts. I think that has a lot of credibility. It has given a little bit of confidence to most people on that continuum that there is every chance of managing those impacts on groundwater, on the resources that we rely on, which is the Condamine alluvium. That is not the resource that they are actually pulling the water out of, but there is a degree of connectivity. It is a sensitive issue. It is an issue that we are certainly nowhere near agreement on. It is a very hot issue that you will probably have raised with you tomorrow in the Narrabri area, where the development is four or five years behind here and, therefore, the debate is four or five years behind. There is still great concern down there.
CHAIR: You do not see the water produced as an opportunity for the industry?
Mr Murray : It is a modest opportunity in the scheme of things and it is certainly an opportunity that should be used. There is absolutely no justification for the original approach of just sticking it in evaporation ponds and letting it evaporate. It does need to be cleaned up. It does need to be available as a resource. Is it going to change the world for our industry in a positive sense? No. It will make a modest contribution. Bear in mind also that water is only going to be available for somewhere in the order of 20 to 30 years. So individuals making investment decisions need to bear that in mind. That is not to say that they cannot make money out of it, but in their business plans they need to realise that sometime in the not too distance future their business will not have access to that water.
Dr McVEIGH: I was going to go back to some of the comments that we discussed during our visit to the NCEA at USQ this morning. There was reference to the NCEA's lead role in the then Cooperative Research Centre for Irrigation Futures. There was also reference to the Water for Profit program. From a cotton industry perspective, can you pass on any observations about those two efforts—the strengths, the weaknesses? What are the lessons for a Commonwealth government in the future if, for argument's sake, it wanted to continue that sort of investment?
Mr Murray : The positive thing about the Rural R&D for Profit is the collaboration across industries. I think that is really strong and certainly should be encouraged. For the average grower—and, to a large degree, myself—I am not too worried about whether the research comes out of a solely CRDC funded and managed program or if the Rural R&D for Profit brings that together. At the end of the day, it is about the quantum of that research. Likewise, we had a bit of a discussion on the bus about the CRCs and the fact that right at the moment there is no cotton CRC or a dedicated irrigation one. They did great work and certainly helped drive a lot of improvement. Again, as long as that money is still being redirected and effectively spent somewhere, I am not too worried about the method by which it is spent.
Dr McVEIGH: In asking that question, I should declare that some years ago I conducted some work under the CRC for Irrigation Futures myself. I just want to put that on the record.
CHAIR: Thank you.
Mr Murray : What is particularly pleasing—and often it does not happen—is to see the commercialisation of that research flowing through today and being used.
CHAIR: Is Cotton Australia the registered organisation for cotton research?
Mr Murray : Yes, under the PM act, or whatever it is, we are the body that provides the advice from growers on the research priorities for the industry and the CRDC to take into account.
CHAIR: And you are happy with the way that system is working for the cotton industry?
Mr Murray : Yes; look, that is why we met the other day. We are actually a very close-knit family of an industry, but every now and then we have the odd barney with our brothers, sisters or cousins. On the whole, it works pretty well.
CHAIR: Are there any final questions for Michael?
Mr Murray : Can I just make a comment—I was reading the submission from Professor Quentin Grafton. He also had a recent article in a journal. He comes up with some things that I think are quite flawed, including in his first paragraph:
For the purpose of this submission we define water use efficiency as irrigation efficiency. Irrigation efficiency is the physical ratio of the amount of water beneficially consumed by growing crops to the volume of water either extracted from the water resource…
That does not take into account that it is really about what you actually produce with it. It is not the amount that you put on; it is what you produce. I think that needs to be very clear. He also suggests that there is some evidence internationally that improvements in water use efficiency lead to greater use of water. That assumes, to a degree, that water is a non-limited good. But in Australia, and certainly within all the developed irrigation areas, every drop of water is already allocated, either to the environment or to agriculture. In the broad numbers on the Murray-Darling Basin Plan, average diversions are, I think, 32,000 gigalitres, and approximately 13,000 gigalitres are extracted—so roughly 40 per cent to 60 per cent. If we have an irrigation efficiency program and move some of this productive water from agriculture into the environment, and make it more like 70 per cent to 30 per cent or 75 per cent to 25 per cent, there is no more water. We can do all we can with irrigation efficiency, but the total amount of water that can be consumed by agriculture cannot increase, because this bucket is empty. That is not picked up. He may be right about the Nile Delta—maybe they can just have unlimited access to water that is flowing down the Nile—I do not know. But certainly in all of the developed areas, and absolutely within the Murray-Darling Basin, there is no more water. Whatever is here, we have to become more efficient with. That just needs to be taken into account.
Likewise, not so much in his submission here, but in his paper, he suggested that there was no evidence to say that less water was being consumed. What we know, absolutely, is that under the Basin Plan, 500 gigalitres of water has been acquired through water use efficiency programs and shifted from this glass here into that glass. It is now available for the environment; people can have their whole range of opinions on the value of that, but it is undeniable that there is less water available and therefore we need to drive every bit of efficiency with what remains.
Dr McVEIGH: I will make one comment on Michael's demonstration there. I do note that there was some system loss when you poured from one glass to the other!
Ms SWANSON: That is seepage!
Dr McVEIGH: That is seepage, yes!
CHAIR: It goes back into the system, though, so that is okay. Thank you very much, Michael, for giving evidence today and also for the time you have spent with us previously. If you have been asked to provide any additional information, would you please forward it to the secretariat? You will be sent a copy of the transcript of your evidence, to which you can request corrections to any transcription errors. Thank you very much.
: No worries, thank you.