River plan a big drain on farming

Darren Gray April 16, 2012

The impact of substantial falls in the value of agriculture could cascade through the economy.

The impact of substantial falls in the value of agriculture could cascade through the economy. Photo: Darren Seiler

AGRICULTURAL production in just three key sectors in northern Victoria could be slashed by almost $120 million a year if the water cuts proposed by the draft Murray-Darling Basin Plan are implemented, the Victorian government has warned in its formal response to the plan.

The impact of substantial falls in the value of agriculture could cascade through the economy, threatening country schools, medical facilities and shops, it says. Towns would suffer as residents drifted away and unemployment would rise, the submission warns.

It also says that the most affected sector in dollar terms would be the northern Victorian dairy industry - rebounding after the drought with production rising and farms reopening - which could lose annual production of $54 million.

Tens of millions of dollars could also be wiped from other sectors including mixed grazing ($38 million), and the grape industry ($24 million).

''These declines in agricultural production are likely to significantly reduce social cohesion, levels of income, access to other sources of finance, and human capital. This can in turn reduce productivity and capacity to manage agricultural land,'' it says.

''The Basin Plan is likely to result in significant shifts in service availability and use, such as reduced viability of some schools, shops, medical facilities and allied health services.

These effects could also be expected to be accompanied by a general decline in community confidence, optimism, health and perceived wellbeing,'' says the submission, which will be presented to the Murray-Darling Basin Authority today.

The document does not estimate the impact of the draft basin plan on major horticulture industries such as citrus and stone fruit, but Victorian Water Minister Peter Walsh said that these sectors would also suffer.

While the submission estimates the production losses for three key agricultural sectors at almost $120 million, Mr Walsh said the economic impact would be far greater than that sum, because the forgone $120 million would not be flowing through the economy creating a ''multiplier effect'' as it was spent again and again.

The Victorian government argues that the social and economic costs of the proposed plan - which proposes to boost environmental flows down the river system by 2750 gigalitres - are far too high. It says it rejects the plan in its current form.

The submission lists six key reasons why the Victorian government opposes the draft plan. They include the that the transfer of so much water to the environment each year would have ''too great an impact on regional communities and industries'' and the authority did not adequately investigate other options for achieving environmental outcomes with less water.

Public consultation on the basin plan closes today.

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