MURRAY Darling Basin water prices have slumped by up to 25 per cent as the nation's biggest buyer - the Federal Government - is locked out of markets.
Cash-strapped irrigators in Victoria and NSW are facing state government embargoes or trading halts on the sale of their water to the Federal Government.
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The restrictions on trade have led to a slump in the price of high reliability water shares from a top of $2400 a megalitre in June to between $1800 and $2100 last week.
The NSW Government has refused to lift an embargo it imposed on all sales to the Commonwealth on May 29, which has stopped Murray Irrigation Limited brokering a 43,000-megalitre deal on behalf of irrigators worth about $50 million.
One of the key restrictions on Victorian water trade was eased last week when the Victorian Upper House voted to remove the state's 10 per cent cap on the volume of water entitlements held by "non-water users" such as the Federal Government.
As reported in The Weekly Times last month, 280 Victorian irrigators were awaiting the removal of the cap to sell or separate 50,277 megalitres of water from their land, much of which was on offer to the Federal Government. But questions remain on how much of this water will be further delayed as the 4 per cent cap halts trade to the Federal Government.
The Victorian Government struck a deal with the Federal Government in June to immediately exempt 60,000 megalitres from the state's 4 per cent cap, with a longer term target of 300,000 within the next five years.
However, the Victorian Government has refused to exempt water entitlement held within 700 metres of backbone channels, which are being modernised as part of the state's $2 billion Northern Victorian Irrigation Renewal Project.
A spokeswoman for Federal Water Minister Penny Wong said trades were being delayed by the NSW embargo, Victoria's caps and South Australia's revised trading arrangements following market reforms.
