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Rice vesting to end

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Australia’s last commodity single desk, rice vesting is set to end on July 1, 2025 after a recent announcement by the NSW Government.

The rice vesting arrangements were established in response to grower preferences around the marketing of their rice in the 1920s, and have contributed to the development of a vertically-integrated industry with significant grower influence.

Under the Government’s Bill, vesting for the southern growing region will end July 1, 2025, with the Rice Marketing Board to be wound up by July 1, 2026. The NSW Government’s already announced position to exclude the northern rivers growing region from current vesting arrangements from September 1, 2024 will be retained.

The Government claims that under the future arrangements, growers will be afforded greater choice and flexibility to pursue a range of markets, including export markets, and that it will also benefit the long-term sustainability of the industry in the face of lower water availability and a more variable climate.

Despite SunRice’s long history of advocating to retain vesting, SunRice Group chairman Laurie Arthur said in a statement to the ASX that overall, the move was “the right decision for our growers, the SunRice business and the future of the NSW rice industry.

“Although SunRice has previously advocated for the NSW rice-vesting arrangements in their current form to be retained, we believe that the NSW Government’s proposal for a partial deregulation between southern and northern growers, over a prolonged timeframe, would have created uncertainty for our industry at a time when we need greater flexibility to adjust to a new operating environment,” Mr Arthur said.

Mr Arthur said the industry was already “expected to undergo substantial change” with the Federal Government’s Murray-Darling Basin water buyback policy “increasing the likelihood of significant water recovery before the next proposed vesting review date.”

“The impact of this reform is likely to have an unfavourable impact on the availability and cost of water in southern NSW and accordingly on the Riverina rice industry.

“To retain a strong rice industry and to maximise returns for our growers in Australia, we consider that a dynamic and flexible model now makes better sense for the industry.”

In a 2023 ABARES independent report into NSW Rice Vesting Arrangements it identified that the buyer of last resort provision restricts SunRice’s ability to rationalise its processing capacity to better match current and likely future rice production levels in southern NSW, and that the uniform pricing requirement restricts SunRice’s ability to offer better terms to more efficient growers with more reliable access to water allocations to encourage them to continue to produce rice.

SunRice recently flagged a need for growers to reduce the size of the Australian crop to enable them to focus Australian paddy on premium markets; only time will tell if they take a geographical approach to areas of supply and receivals.

Tullakool grower Shaun Thomas was in two minds on the change.

“I think some of us need some friendly competition, because I don’t think they’re really doing good enough for the growers in terms of price.

“I’m not sure if it is a good thing, and like the pool system for me, it’s easy, you get paid the same as everyone else. So, I’m not sure where I sit with it, to be honest.

“I think if they’re not compelled to buy our rice any more, they will be a lot tougher on the testing stand, and they’ll be very picky on what they take to ensure they have quality paddy.”

The Koondrook and Barham Bridge Newspaper 6 June 2024

This article appeared in The Koondrook and Barham Bridge Newspaper, 6 June 2024.

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