Competition watchdog looks at water trade

The competition watchdog will examine Australia's water market, with the federal government open to intervening to help tip the balance back in farmers' favour.

The Australian Competition and Consumer Commission will look at players in the Murray-Darling Basin's $2 billion water market, with transparency and effectiveness in focus.

The inquiry will also examine carryover water - water that can be held over from one season to the next- as well as the efficiency of water movement, and the effect speculators have on the market.

Federal Water Minister David Littleproud said the inquiry would investigate whether the water market was working for farmers.

"We are going to ask the ACCC get under the bonnet of this market to ensure that farming families do get a fair crack," he told reporters in Canberra on Wednesday.

Over the past year, farmers in the southern basin, where up to 90 per cent of water trading happens, have grown increasingly vocal about the market as drought continues to bite.

Irrigators have argued non-farming speculators have driven up the price of water, which is being passed on to consumers.

Mr Littleproud said farmers had major concerns with how the water market is operating.

"They believe the market has evolved to a point where 14 per cent of those that owned licences don't own land," he said.

"Is that really the intent of what we want this market to be?"

The ACCC's interim report is due in May next year, with the final findings set to be handed down in November 2020.

Mr Littleproud said he was open to government regulating the market if the competition watchdog recommended intervening.

"I hope the ACCC will go out and kick some dirt like I did, sit around in the sheds and listen to farmers and their concerns," he said.

Meanwhile, federal and state water ministers still haven't agreed on a communique after meeting on Sunday.

Mr Littleproud put the unusual delay down to wording, saying there was no one state with an issue despite NSW Deputy Premier John Barilaro describing the plan as "untenable".

"This is not one individual," the federal minister said.

"There's no individual state that has an issue. Everyone has differing views and it can come down to one word."