Rabi Maskey and Rob O’Connor

1. Irrigators’ considerations for investment in farm irrigation systems: learning from farm case studies Rabi Maskey and Rob O’Connor

2. Irrigation delivery system • Supply wheel • Upgraded/automated main supply channel • Solar powered control box • Plastic lined main supply channel

3. Farm Water Program (also known as On-farm Irrigation Efficiency Program) is about achieving farm water savings through improved farm irrigation The water savings are shared between farmers and the environment, with at least half the water savings transferred to the State or Commonwealth environmental water holders Invest over $200 million of government money Approximately 400 projects been funded Farm Water Program

4. The program assess the water savings – based on Soil type Types of crop grown Technology to be adopted Half of the water savings transferred to government For example: Say a landowner saves 100ML Then he/she will receive (eg. $1800/ML X 50ML= $90K) on transfer (90 ML) the balance (eg. up to $1800/ML X 50ML= $90K) after the completion of the work Farm Water Program

5. On-farm irrigation systems • Centre pivot • Pipe and riser • Improved border check irrigation • Laser grading

6. On-farm irrigation systems Re-use system Computerised scheduling system Linear move system

7. Is the irrigation investment financially viable to my situation?

8. Identify whether or not irrigation investments are viable from irrigators’ perspective Identify the reasons for irrigators’ participation in the Farm Water Program and the learning from it How the learnings are shared with other irrigators and the broader industry Outline of presentation

9. 5 case studies Examined ‘without’ and ‘with’ project situations Partial budget analysis & discounted cash flow analysis Project life 20 years 7% real discount rate Economic criteria used: Net Present Value (NPV) Benefit-Cost Ratio (BCR) Internal Rate of Return (IRR) Period to break-even (years) Sensitivity analysis Case Study approach

10. Summary of five case studies

11. Project costs • Notes: *Assumes 20 year life project with 7% discount rate • **Once off decommissioning costs, pasture re-establishment costs, removal of lucerne • *** Includes yearly licence fee

12. Project benefits

13. 7% discount rate (opportunity cost of capital) Year 0 1 2 3 4 5…. 20 most costs (now) most benefits some costsbring it to today’s $ (Present value of the investment) Case Study approach

14. Benefit cost analysis with incentive Benefit cost analysis without incentive

15. Learnings The key benefits from investments are: • Production benefits • 2 t DM/ha/year (dairy) • high value crop rotation and increased production (cropping); • Water savings • ↓ 2.0ML/ha/year (dairy) • ↓20% of water application (cropping) • Save time chasing water for both cropping and dairy, i.e. automation of irrigation infrastructure

16. Learnings • Capitalcosts can range from $1,625 to $4,120 per hectare depending on the type of technologies • Energy costs could be a significant ongoing operating cost for pressurised irrigation systems. For example, the energy cost for a pipe and riser system is likely to be in the range of $7-10/ML and $25-40/ML for a centre pivot system • The Farm Water Program provided funds for irrigators to implement irrigation upgrades quicker than would have been possible without these incentives

17. Learnings • The size of the productivity improvement is the key to the viability of irrigation infrastructure investment • Water savings and labour savings only(without productivity increase) are unlikely to make the irrigation infrastructure investment viable

18. Extending the learnings Farm walks

19. Irrigation Expo Workshop for service providers

20. Publications

21. Thank you.