dec-newsletter1Greetings to all Shareholders. Another year has almost raced past and Christmas is only days away.

1. SCHEME OPERATIONS
Thank you for your patience with the Waiau scheme shutdown on Tuesday, we have now managed to clear the accumulated gravel from the race. The Balmoral scheme has also had gravel build up, but has been removed without needing to have a complete shutdown.

In the new year we will be starting some engineering modelling and surveying to better understand the river intakes and how we can reduce race cleaning in the future.

2. SCHEME OPTIMISATION
As you know, we bywash water so the last person on each lateral has sufficient water flowing past – typically 1-3 cubic metres per second. This water can be saved and allocated for irrigation by optimising the scheme infrastructure. We are exploring two optimisation methods: 1) pipe; and 2)
additional control gates and automation.

Piping the laterals would result in reduced water loss, greater efficiency and pressurised water delivery to shareholders. 2-3 Head ponds would be required for the pipe intakes, which would require some land access or acquisition arrangements to be entered into. Piping the scheme requires greater capital expenditure, but lower operational expenditure due to pressurised water.

Improved automation and control would not yield as much saved water, because open races still leak some water. Open race optimisation would also require ponds, probably more than the pipe design. Open race optimisation has a lower capital cost, but has a higher operational cost due to the
continued need to pump water.

Early in the new year the Board will consider how the scheme should be optimised. Following their decision, I will be in contact with you all to provide you more information on the preferred approach. There will be one on one meetings and workshops with groups of shareholders on laterals. There are a number of patient shareholders with an interest in further irrigation and we look forward to satisfying that demand in the future. There is also the potential to extend our scheme to offer neighbours water.

3. IRRIGATION SCHEME MANAGEMENT PLAN
As some of you may already be aware ECan has approved the Company’s Environmental Management Strategy, which allows AIC to manage Farm Environment Plans for its shareholders and any other interested farmers within the catchment.

This is a milestone achievement for the Company, as we can proudly claim to be the first in the district to have an EMS approved by ECan. Alastair Rutherford has worked hard to achieve this success. Thank you to those of you who came to the meeting to discuss the implementation of the
farm plans.

4. WAIAU INDEPENDENT IRRIGATORS
AIC has signed a Heads of Agreement for the Waiau Independent Irrigators (WII) to join AIC’s EMS and to work together as irrigators in the Amuri Basin. WII covers all the irrigators in the Leslie Hills Road area on the North Bank of the Waiau River, collectively they take 3 cumecs of water from the Waiau. We see this as an important collaboration for AIC, and believe that the arrangement will be mutually beneficial to all involved. We are also in discussions with Hurunui Irrigators and hope to sign an agreement with them in the new year.

5. LOWRY DRAIN CONSENT
The company has now received a change of conditions to the AIC resource consent to take water directly from Lowry Drain, which allows individuals downstream of Lateral 3 to take water under the AIC consent. The AIC consent is for 1,050 L/s, but only approximately 100 L/s water is being made
available to those shareholders adjacent to the Drain to reduce the chance that taking some more water will affect any established users. The water does not have any shares attached to it and is subject to minimum flows. Use of the water allows further irrigation in that area while we develop
an optimised scheme and also removes some of the nutrients that would otherwise be flowing into the Waiau River.

6. AGM
The proposed constitutional changes were passed at the AGM. These were outlined in the written communication before the AGM and on the Mackay Bailey website. The key change is to upgrade all B and C shares to A shares. There is a need now to revise some water supply agreements and share
certificates.

Another significant change was removing scheme representation from the Director selection process. That means that the Board has reduced from 7 to 6 with Warren Higgins recent retirement. A lunch was held in November to celebrate Warrens 16 year tenure as a Director. There has been
significant changes and advances over that time period and Warren has been an integral member of the Board. I enjoyed working with Warren as a Director and look forward to continuing to work with him and other Waiareka shareholders on optimisation of that scheme.

The water charge increase that was signalled in a newsletter earlier in the year to $72/share has not yet been fully implemented. This will take effect from the next invoice, with border dyke water being charged at $80/ha to reflect the greater use of water and raceman time. We are facing increased costs for legal and technical expertise to work through various consenting and planning processes. There is no real end in sight to this expenditure and it is necessary for the company to continue to be involved in these processes.

7. NUTRIENT WORKING PARTY
AIC is a member of the nutrient working party that has been established to consider how to address the lack of flexibility that low emitting dryland farmers have in the Hurunui catchment upstream of SH1 as a result of a rule that limits the increase in nutrient loss to 10%. AIC’s proposed solution is
that headroom created by AIC after is made available to dryland farmers. There are three other solution options currently on the table, and with continued progress there is the potential for a hybrid or new option to be developed. AIC would prefer to see a solution that does not require the
uncertainty and expense of a plan change process.

8. AIC NUTRIENT LOAD CONSENT
AIC has made an application for a land use consent. The reason for making the application is to obtain investment certainty for current and prospective shareholders in the event that we seek to raise capital when we optimise the scheme. Other schemes in Canterbury have been granted
consents with nutrient loads and centralised management of nutrients and water is promoted by the Canterbury Water Management Strategy.

I have attached a document that provides some information on the consent application. For those of you that hold private consents and/or dryland I encourage you to read it and understand what the application means for you. The area included is all land less than 15 degrees slope between the
Hurunui and Waiau Rivers, and land within the vicinity of the Waiareka scheme on the north of the Waiau. If granted the applications will provide flexibility for land use within the AIC command area.

Please call me in the new year with any questions you may have on the application.

9. IRRIGATORS, ROADS & WIND
There are a number of irrigators spraying water on the road. This has been exacerbated by recent winds, but is still occurring on calm days. Please make sure that water is not sprayed on any road. It is not an efficient use of water, but more importantly it is a hazard for vehicles and the surprise of a thump of water on the windscreen could cause a crash.

As many of you are aware, the strong winds of a few weeks ago caused damage to some irrigators in the area. The unpredictable nature of the Canterbury weather means that we probably haven’t seen the last of these winds, so please be prepared to secure your pivots for future events.

December Newsletter 2014FMG has put together an advice guide for securing irrigators based on the findings from last year’s
September gale. The following three steps were identified as being most important:

  • POINT: the irrigator into the prevailing wind;
  • PARK: it there until the wind dissipates;
  • ANCHOR: it down by tying and protecting any moving parts.

If you have not seen this report or wish to know more please go to https://www.fmg.co.nz/globalassets/advice/fmg-irrigator-advice-guide

9. SEASONS GREETINGS
I wish you and your family all the best for the holiday season. Arthur and Mike will be on the job over Christmas, and they have done everything they can to make sure that water is flowing smoothly over the holidays. I will be back on deck on 5 January. As always, if you have any queries, please do
not hesitate to give me a call.

Andrew Barton – General Manager
Amuri Irrigation Co