Commonwealth to be biggest water customer

Investors in agribusiness schemes should understand the Federal Government's buyback of water rights will have a significant impact in the next 10 years.

State Water NSW general manager George Warne said the Federal Government has set aside $13 billion to return water back to the environment.

"Our biggest customer in the next 10 years will be the Federal Government and not the cotton growers as everybody thinks," he told a Dealer Group agribusiness conference in Melbourne.

"For farmers' water supply, there is an elephant in the room and it is the Federal Government."

Warne said farmers have come to learn not to waste water because there is less available.

"Farmers' water entitlements have been cut dramatically," he said.

"And the value of water is up five to tenfold."

As a result, farmers are now only growing crops when there is water available rather than attempting to grow something every year, Warne said.

But some farmers will give up the struggle and sell their water allocation to the Government, he said.

"The buybacks will affect industry and local economies.

"Meeting environmental (water) needs is going to be very tough when parts of Australia are in a drought."

This will create a new landscape for rural Australia and farmers will have to adapt or they won't survive.