There are fears government intervention in the water market could have "dire consequences" for some Murray-Darling Basin irrigators but horticulture groups that lobbied the federal Water Minister for action on soaring water prices say it can't come soon enough.

Key points: Some farming groups are urging the Federal Government to intervene to reduce water prices

Some farming groups are urging the Federal Government to intervene to reduce water prices They are concerned about how prices are being influenced by investors who don't use water for irrigation

They are concerned about how prices are being influenced by investors who don't use water for irrigation But water brokers say restricting investors' ability to trade could be bad for some farmers

Federal Water Resources Minister David Littleproud declined to comment last week on suggestions he was considering restricting investors in water that don't irrigate from buying water on the temporary market or accessing carryover.

The Australian Competition and Consumer Commission (ACCC) is already inquiring into the fairness of the water market in the southern Murray-Darling Basin, with an interim report due in May.

Mr Littleproud met representatives of horticulture commodity groups in Mildura last Tuesday to listen to their concerns about what they say are inequities in the market and the influence of investors on increasing water prices.

Boundary Bend Limited CEO Rob McGavin says the water market is behaving illogically. ( ABC Rural: Kath Sullivan )

Rob McGavin, CEO and co-founder of Boundary Bend Limited, the country's largest olive producer, said those at the meeting wanted Mr Littleproud to address the "unintended consequences of some of the trading rules".

"Some of the stories were quite heart-wrenching, not just from a financial point of view but from an emotional and mental health point of view," Mr McGavin said.

"There is a lot of stress out there with people undecided what they should do, and some people don't have a choice because they just can't afford to water, so they need to make decisions about walking off the land, pulling their trees out [and] trying to mothball them effectively.

"In Victoria, if we're really lucky, allocations might get to 50 per cent [this season], which means that even if you own all your own water, you still need to get 50 per cent on the temporary market so it's hitting people really hard."

Boundary Bend Estate relies on buying temporary water each year to meet its needs, having decided during the Millennium Drought that owning permanent water entitlements did not give it enough financial security in dry times.

Mr McGavin said while low inflows and increased horticulture development had contributed to the increased cost of temporary water, he said the market had begun to behave illogically because investors were buying temporary water intending to profit from trade, rather than to use the water for irrigation.

He said irrigators were forced to buy water "well before they use it".

"But people who own entitlements, who are leasing it out to the market, don't have to lease it out in any sort of a timely manner," he said.

Horticulturalists are concerned that investors who don't use water to irrigate are pushing up prices. ( ABC Rural: Larissa Romensky )

Intervention could have 'dire consequences'

Water brokers say some irrigators benefit from the role of investors in the market. ( ABC Rural: Larissa Romensky )

However, some say irrigators benefit from the role investors play in the market and that restricting their ability to trade would leave farmers reliant on their products worse off.

Ben Williams, president of the Australian Water Brokers Association, said the grievances of "one section of the irrigation community" were "getting a great deal of air time both in the media and at state and Commonwealth government level".

"There's a lot of people who, over the course of the past three or four years, have signed up to forward-allocation contracts, for instance with water market investors or so-called speculators.

"That has provided those irrigators with absolute certainty that they know how much water they're getting, when they're going to get it and at what price," Mr Williams said.

"If you were to exclude water funds and so-called speculators from holding allocation and being able to carry over, you would limit the ability for them to be able to offer those products to irrigators in subsequent years or within the season.

"I think it will have dire consequences for a number of irrigators who rely on those products to manage their water requirements throughout the year and between seasons, and also their cash flow.

"Last year, as an example, forward contracts were signed up to between $500 and $600 per [megalitre] for water delivered this year.

Water brokers say uncertainty about potential government intervention is affecting trade. ( ABC News )

"Those deliveries are happening now and have been happening since the start of the season.

"So, in a market that has the spot price at $790 to $805 [per megalitre below the Barmah Choke], some irrigators who had the foresight to sign up to forward contracts at $600 are certainly in the money."

Mr Williams said growing uncertainty about potential government intervention in the water market, and the lack of clarity about what it might involve, was affecting trade.

"There are a number of irrigators who are holding off purchasing allocation water in the hope that either state or federal government intervention may make some difference in terms of the price on the allocation market," he said.

"I don't think there's much secrecy around what the groups that met with the Minister are wanting — that's a known — [but] how government would achieve those desires remains to be seen.

"There's some level of concern around how they would go about any changes to entitlement characteristics for individuals within the market."

Minister won't reveal plans

David Littleproud and local federal MP Anne Webster meet representatives of peak horticulture groups. ( ABC Mildura-Swan Hill: Christopher Testa )

Anne Webster, the federal Nationals Member for Mallee, took part in the meeting and said she was "expecting to hear back from [Mr Littleproud] for short-term solutions in the very near future".

"We've been asked to keep that under our hats at this point in time but we hope to make an announcement soon, but we've just got to wait and watch this space," Dr Webster said.

"Our expectation is that we'll be able to see some action."

A spokesman for Mr Littleproud said the Minister intended to keep Tuesday's discussions confidential and would not comment on whether restricting non-irrigators' ability to buy water products was under consideration.

However, even before the meeting, Mr Littleproud had not ruled out taking action even before the ACCC inquiry was finalised but said any changes would be "made together [with the states] and in a sensible way".

Mr Littleproud also defended holding the talks behind closed doors, saying there was "nothing secret about it".

"I don't think anyone should feel they should have to hold back because there's media there," he said.