IRRIGATION WATER PRICING AND FARM PROFITABILITY IN THE BURDEKIN DELTA SUGARCANE AREA

The Burdekin delta in north Queensland is one of the most important areas for irrigated sugarcane production in Australia. Conjunctive use of groundwater and surface water is commonly practiced in the area and cane yields are amongst the highest in the nation. Some soils are highly permeable and given current furrow irrigation technology can use high amounts of water, so costs could rise considerably if higher water charges were imposed. This paper describes a farm level mathematical programming model developed to determine optimal levels of irrigation water applied to a farm comprised of the average proportions of major soil types. A biophysical simulation model has been used to determine cane productivity for these various soils at various levels of irrigation. Average amounts of irrigation water applied and yields over a 20-year period are used as input to an optimisation model which estimates cane profitability per hectare for each soil type under current and alternative water pricing arrangements. Optimal farm plans are compared between two Water Board areas with differing water charge structures. The optimisation model estimates the profit-maximizing amounts of irrigation for the various soil types. Sensitivity analysis has been performed with respect to parameters affecting farm profitability, including cane price and proportion of land containing each soil type. Optimal irrigation levels across soil types are determined for various water pricing policies. The optima