Economics of Underground Drainage David Armstrong AK Consultants 23 July 2010

Background Focus today is on underground drainage rather than surface drainage Assessment based on 3 examples Bishopsbourne, Hagley & Westwood. Analysis assumes “strategic” rather than “comprehensive” drainage

Strategic drainage Underground drains to low areas With “feeders” to wet spots NOT a grid or regular network of u/g drains

“Brookdene”, Bishopsbourne Under-ground drains since 1989 Mostly strategic; some paddocks almost comprehensive

Costs & returns In 1989, $300-$350/acre over the whole paddock. = $540-$630 in 2010 dollars ($1,300-$1,600/ha) Oak paddock, drained 1998/99 6 ha, cost $6,000; $1,000/ha ($400/acre). No drainage, 1,500 kg/ha peas With drainage, $0.34/kg (1998/99). Benefit was worth $7,140 in total

Costs & returns Oak paddock, potatoes a few years later. Most harvested in October after a wet autumn Yield averaged 20 t/acre, value $160/t after harvest costs. Without drainage the potatoes would have rotted. Benefit was worth around $40,000

Costs & returns Bush paddock Area of 12 hectares $400/acre (total cost $12,000). Potatoes grown – yielded 24 t/acre. Impossible without the drainage. With drainage Stewart has watered potatoes to soften the ground before harvesting

Costs & returns Car Park paddock Has had several potato crops Poppies sown last year (2009) Yielded 2.4 t/hectare. Without drainage no potatoes, and poppies would have failed completely last year.

“Brookdene” Without drainage 10% yield loss over the entire paddock. 1 year in 10, complete crop loss. 2 years in 10, 50% yield loss on 25% of paddock A verage at 23% yield loss every year. Rotation now Poppies, then rye grass for fodder Peas, then grass for 18 months Grass grazed for 18 months Total Gross is $11,500/ha over 3 years. 23% = $2,650/ha; $1,000/ha

“Brookdene” – other benefits Sure to get a crop, 90% of budgeted yield Sow on time Crop all of each paddock Spray when needed Good for soil structure Pugging, wheel ruts & compaction reduced Disadvantage – paddocks dry quickly Minimal maintenance requirements

“Mill Farm”, Hagley DPI experiments in Comprehensive systems; 15 m spacings, 40 m spacings plus moles at 2 metres. Cost was about $1,500/ha – on these results marginal. But showed that drainage works! No Drains15m Comp40m + moles Barley (2 years)3.3 t/ha5.9 t/ha6.1 t/ha Poppies (1 year)$2,009/ha$2,384$2,788

“Mill Farm”, Hagley Since 1992, 220 ha drained with strategic drains Average 60 metres/hectare. At $9/m; $540/ha. Mainly Cressy Association soil types: Clay loam over clay with gravel layers. Grow a range of irrigated crops; poppies, cereals, onions and grass; plan poppies each 4 th year.

“Mill Farm”, Hagley Without drainage – poppies risky With other crops, average 20% yield benefit. A 20% yield benefit with poppies and onions pays for drainage in 1 crop.

“Highbrae” & “Oakleigh” Strategic drainage. Generally Cressy Association soils. 7 paddocks drained, average 110m drain/hectare. Cost around $1,000/ha

“Highbrae” & “Oakleigh” East Bush paddock drained Poppies 2008/09; otherwise risky. Gross from poppies, $5,000/ha. Costs recovered with 1 poppy crop. Gravel Pit paddock. Drained Grew seed potatoes 08/09. Potatoes impossible without drainage.

“Highbrae” & “Oakleigh” Drainage allows planting of 20% of each paddock that would be too wet. Crop rotations 2 poppy crops in 4 years, with peas & grass. Then 3-5 years pasture. Drained paddock – 20% higher lamb marking percentage last spring.

Economics summary Economics depends on whether the drains work! On these 3 farms strategic drains work: Cressy & Kinburn Association soils Gravel layers drain well. Strategic drainage, cost around $1,000/ha Benefits, vary from year to year; General view average 20% extra yield

Economics summary Irrigated crops; poppies, potatoes, onions 20% extra yield covers cost in 1 year Slower payback with lower value crops

Other issues Drainage of agricultural land is a Landcare operation – costs fully tax deductible in year of expenditure. Drainage of swamps is NOT a Landcare operation, so not eligible. Discharge of drainage water could reduce the quality of surface water and breach EMPCA. It is likely to be subject to greater scrutiny in future.

Conclusions 1. Sites like these case studies – underground drainage has been a very profitable investment; costs recovered in 1-2 years. 2. Depends on soil type; will it drain? Cressy & Kinburn soil types will drain (gravel layers help). 3. Generally restricted to land used for irrigated crops.