Criterion: Investors splash into water, our most valuable liquid asset

Résumé détaillé

Looking beyond current moist conditions, irrigators face a water shortage as they move to thirsty permanent cropping such as almonds. ... Read More The post Criterion: Investors…

Liquid asset: With increased irrigation demand and reduced supply, water rights are tipped to soar in value. Pic: Getty Images

With the agristock reporting season underway – starting with Graincorp (ASX:GNC) and its as-expected numbers last Thursday – investors and cockies are focused on the forecast El Nino pattern that is meant to produce dry conditions.

So far, rainfall in key growing areas has exceeded earlier predictions and dam water levels are in line with last year. Cheery farmers are backing up the ute and stocking up on fencing wire and fertiliser at their local Elders (ASX:ELD), which reports on Monday.

But the generous precipitation doesn’t alter the longer-term picture of irrigators turning to water-sapping permanent crops, while supply is falling.

The complex supply and demand dynamics point to ongoing growth in the value of water rights, which in Australia can be traded independently of land ownership.

Via 20 to 30 brokers, rights are tradeable in a liquid – groan! – and transparent market that turns over around $1 billion a year. Rights valuations can vary wildly according to rainfall conditions.

For retail investors, pure-play water rights owner and trader Rivco Australia (ASX:RIV) is the only listed vehicle for them to get exposure to the most valuable of commodities.

In 1994 the federal government and the states agreed to de-link water rights from farmland ownership, to enable “best and highest” use of the water.

A decade ago, Rivco’s backers created the company – then known as Duxton Water – to exploit undervalued rights.

Début de l'article, extrait de Stockhead. Pour lire la suite, ouvrez l'article chez le média.