Last week AGnVET Services held the inaugural AGnVET Water Broking conference, with the theme ‘Understanding Water Risk’. We had a great line up of speakers who provided our attendees with plenty of information which challenged some views and expanded their knowledge about new water risk products such as weather and water derivatives.
There was a wide range of attendees, including permanent croppers (almonds, citrus, hazelnuts), annual croppers (cotton, tomatoes, corn), miners (gold), water fund managers, irrigated property investors, ag consultants and irrigation corporates.
Summary of points made and events at the conference:
- Climate change is real (see chart with 800,000 years of history). Need to be aware of the changes for your industry and more particularly the opportunities that are provided.
- Growth in permanent crop plantings below the Barmah Choke (on the river Murray) mean that there are difficulties getting sufficient water delivered at times of peak demand (given three week delivery time from storages)
- Weather derivatives are a great way to hedge risk (eg insurance against frost risk, minimum rainfalls in crop or over the catchments, insurance against days over 45 degrees, say, in an orchard etc). We were shown an online quoting system that should go live shortly
- Water derivatives (call and put options) are now available as another risk management tool and water futures are probably the next new product in the pipeline
- We saw a generalised risk framework across the whole business and then a process to develop and manage a water risk strategy.
- Discovery centre tour about the Snowy scheme and its history, including a briefing on Snowy 2.0.
- Some brilliant poetry and comedy from Murray Hartin to finish up.