Advice On Irrigation Investment

Press, Volume CIX, Issue 32265, 7 April 1970, Page 14

Advice On Irrigation Investment

Dr R. W. M. Johnson, principal research economist of the Agricultural Economics Research Unit at Lincoln College, concludes that investment in irrigation is likely to follow similar patterns in profitability to those of other forms of large-scale and on-farm investments in agriculture.

He- said in submissions to the irrigation committee of the Water Allocation Council yesterday that a general result of work done at the college in recent years had shown that the rate of return on large-scale agricultural development schemes had been consistently lower than the result in “on farm - ’ development A recent analysis of 60 blocks developed since the war by the Lands and Survey Department showed that the rate of return on average was only 1.8 per cent For “on-farm” development raising the productive capacity of land within an existing farm unit, Dr Johnson quoted figures showing returns ranging from 8.7 per cent to 28.5 per cent These results, he said, all showed that where existing farmers went in for pasture improvement alone the rate of return on extra capital investment was generally high. The evidence available for top-flight farmers who had already reached full potential before applying irrigation water indicated rates of return to capital investment of 25 per cent or more.

Fanners of average managerial ability would also get a fairly high return on irrigation investment of say 10 to 20 per cent, but it had to be remembered that they ought to be able to get such a return from pasture development alone. A careful evaluation of irrigation proposals was required to ascertain whether irrigation had greater merit than other new forms of agricultural technology on the individual farm. Dr Johnson said that the committee should investigate further the apparent contradiction between the national interest and the individual interest so as to frame appropriate terms of reference for profitability assessments of irrigation schemes.