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Agriculture in the Mitchell catchment – crunching the numbers

By Mary O'Callaghan

October 8, 2018

aerial of a braided sandy river bed
The Tate River during the dry season. Image: CSIRO

THE Mitchell River in Queensland has the biggest flow of any river in northern Australia – and one main road, which is only party sealed, from Mareeba to Kowanyama. The road follows a similar path to the river’s 750 km journey across Cape York into the Gulf of Carpentaria.

That’s when you begin to understand that potential irrigated agricultural development in Queensland’s Mitchell River catchment might have as much to do with accessibility and transport costs as available water. This is also about infrastructure.

The catchment covers an area of 72,000 km², with only 6000 residents and where Indigenous people make up 25 per cent of the population. The main land use is grazing with 95 per cent of the catchment under pastoral land use.

Apart from some irrigated farming in the Atherton Tablelands and surrounds, irrigated agriculture has been constrained by the difficulty of capturing and storing water in the wet season to sustain crops through the dry, and by transport challenges.

aerial of a field with hay bales and mountains in the background
Hay production in the Mareeba-Dimbulah Water Supply Scheme area. Image: CSIRO/Nathan Dyer

After 2.5 years of multidisciplinary research, CSIRO has identified the nature and scale of opportunity for irrigated agriculture in the Mitchell River catchment. That includes the potential for large instream dams – but dams aren’t the only option.

Maximising crop revenue and minimising transport costs are critical when calculating returns on investment in infrastructure.

“You could grow all the sorghum in the world but, because of transport costs and other factors, returns are not sufficient to pay for the cost of development. Therefore you need to grow high-value crops,” says CSIRO’s Dr Ian Watson, who led the team investigating the suitability of land for agriculture in the Mitchell catchment.

The opportunity lies in vertical integration in the catchment – high value crops like sugarcane and cotton grown at sufficient scale to support local processing is what could make farming more viable.

The research was part of the Northern Australia Water Resource Assessment, the most extensive, integrated study of the potential for agricultural development in northern Australia. Commissioned by the Australian Government, CSIRO also investigated opportunities in Western Australia’s Fitzroy River catchment and the Finniss, Adelaide, Mary and Wildman river catchments around Darwin in the Northern Territory.

A dam and a sugar enterprise

The Assessment identifies four more commercially-favourable major instream dams at Palmer, Pinnacle, Rookwood and Lynd, that combined could support 140,000 ha of year-round irrigation.

What might a financially viable agricultural system based around a dam look like?

A case study from the Mitchell Assessment illustrates how a new sugarcane-growing precinct could be developed if one investor took on the whole value chain.

Construction of a dam at the Pinnacles, about 80 km upstream of where the Mitchell and Walsh rivers meet, would cost $755 million and could release 1248 GL/year in 85 per cent of years, enough to spray-irrigate 70,000 ha of sugarcane and mungbeans downstream of the dam.

According to the case study, if an investor constructed and operated a large dam to supply the water as well as a new sugar mill to process the sugarcane, the total capital cost of the dam, irrigation scheme and sugar mill enterprise is estimated at $3.25 billion.

 

As well as being higher in value, raw sugar is a lot lighter than sugar cane, so transport costs are substantially less. The result is a return of about 3.5 per cent, including revenue from the mungbeans and the left over molasses, which can be sold as a cattle feed.

“Selling sugar cane by itself is challenging to get a positive return on the capital costs of a dam and irrigation scheme,” says CSIRO surface water expert Dr Cuan Petheram. “One way of increasing revenue is to also construct and operate a sugar mill so you’re selling the higher value sugar, not the sugarcane—a process referred to as vertical integration.”

Adding a cogeneration plant to the sugar mill would enable the bagasse waste product left after crushing the cane to be used to generate energy. Not only could it power the mill, but excess energy could be sold back to the grid.

“This scenario is getting closer to the typical 7 per cent magical number often used in government guidelines for investment decisions,” says Petheram.

Harvesting water to irrigate cotton

Dams are not the only option for capturing and storing water in the Mitchell catchment. If there was water resource development, an option preferred by Indigenous people in the catchment is water harvesting, where water is pumped or diverted from a river and stored in ‘ringtanks’ adjacent to the river for use in irrigation during the dry season. In the Mitchell, it is physically possible for water harvesting to extract up to 2000 GL a year— although less is delivered through transmission – enough to irrigate 200,000 hectares of dry-season cotton in 85 out of 100 years.

harvesting sugarcane
About two-thirds of the Mareeba-Dimbulah Water Supply Scheme is in the upper Walsh River part of the Mitchell catchment. Image: CSIRO/Nathan Dyer

This was explored in a second case study, in which multiple landowners could each harvest water from the river to irrigate ‘mosaics’ of several hundred hectares of land.

High value medium season length crops such as cotton or peanuts could potentially achieve a 7 per cent rate of return, provided water could be reliably pumped more than 8 years in 10. However, for cotton a local cotton gin would be required, without which the enterprise is not profitable. And, as in the sugarcane case study, a cotton gin needs a secure supply of cotton to be viable—in this case, 10,000 ha.

A challenge for a cotton industry based on mosaics of irrigation, Watson says, would be achieving sufficient scale for a local gin, and the coordination and trust between growers and the gin investor, particularly during the initial ‘learning’ stages.

Next steps

Any development hinges on the support of the Indigenous peoples of the catchment who have been engaged in the Assessment from the outset. They have continuously occupied and managed the catchment for tens of thousands of years and retain significant, and growing, rights and interests in the land and water.

“Indigenous communities are not always averse to development,” says Watson, “but they expect to be front and centre in the planning.”

Ecological impacts downstream of any development footprint would need further investigation as part of future feasibility studies around specific proposals.

How the perspectives of Traditional Owners, investors and developers interact will be crucial in building an ongoing social license to operate.

Troy Setter, CEO of the Consolidated Pastoral Company, says his company is starting on some cropping on properties in the Mitchell catchment, and these reports are timely.

“This gives all of us interested in development of northern Australia – not just the farmers and government but other industries, support services, support infrastructure and communities – one, the confidence, and two, the starting point of a roadmap which needs to be laid out on how the variety of stakeholders can work together on an executable plan.

“The information hasn’t been available on this scale before, and the information gives a variety of options which haven’t been available.”

He adds the next stage of planning is an opportunity for both state and federal governments to show their commitment, although any plans, and commitment to resources and funding, are well beyond the election cycles.


Read more about the Mitchell catchment from the full report and technical reports, including the case studies and extensive Indigenous engagement undertaken as part of the Assessment.

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