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NSW Government to phase out rice vesting by 2025

Grain Central, May 29, 2024

Harvesting rice in the Riverina. Photo: Ricegrowers’ Association of Australia

THE DAYS are numbered for agriculture’s last single-desk commodity arrangements after the New South Wales Government yesterday announced plans to end rice vesting by 2025.

Under the government’s bill to be tabled in parliament next month, vesting for the southern growing region will end 1 July 2025, with the Rice Marketing Board to be wound up by 1 July 2026.

The news comes one month after the NSW Government committed to retain the arrangements for Riverina growers until at least 2029, and create a new export framework for the Northern Rivers rice industry.

Plans to exclude the Northern Rivers growing region from current vesting arrangements from 1 September 2024 are still on track.

In a surprise move, major advocate for rice vesting and the single export licence holder, SunRice, has welcomed the news and cited that a new framework could provide certainty and new opportunities for the industry.

NSW Minister for Agriculture Tara Moriarty said the decision to deregulate the industry in 2025 has been made following engagement from stakeholders representing the NSW rice industry, and comes at a time when growers are well-placed to take advantage of the new marketing opportunities.

“The NSW Government. while drafting a bill to modernise the state’s rice-marketing arrangements, received requests from rice growers in southern NSW to end statutory rice export marketing, the ‘vesting’ arrangements, sooner rather than later,” Ms Moriarty said in a statement.

“Discussions with rice growers across the state demonstrated to the government there was agreement that a transition in rice export marketing be brought forward to 1 July 2025.

“Growers in the Northern Rivers region have long advocated for a change to vesting, and southern growers have recognised the need for greater commercial flexibility to respond to future challenges.”

Ms Moriarty said the decision to remove rice vesting also aligns with the recommendations in the recently published ABARES Independent Report into Rice Vesting which highlighted long-term issues with the single-desk arrangement.

“Our government listens to its agricultural stakeholders, and that’s why the forthcoming Parliamentary Bill will deliver greater flexibility to develop the rice industry based on regional preferences.

“The NSW Government will support industry as it navigates and manages the transition and acknowledges the contributions made by the rice industry during this process.”

NSW Minister for Industry and Trade Anoulack Chanthivong said the decision comes at a time when rice growers are well-placed to take advantage of the new marketing opportunities.

He said under the future arrangements, growers will be afforded greater choice and flexibility to pursue a range of markets, including export markets.

“This decision opens the door to more export opportunities for NSW rice growers and that means businesses that are more productive, create more jobs and pay higher wages.

“We’re committed to making it easier to get this state’s world-class products into global markets where they attract a premium that flows back to regional NSW in the form of more jobs and better opportunities.”

Certainty for industry

Despite being a key supporter of the current framework, sole export licence-holder SunRice has welcomed the “certainty” a final decision on vesting will bring the rice industry.

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.

“Without some of the regulatory constraints of vesting, we believe that SunRice will be able to work more directly with growers to give the industry the best chance of long-term sustainability as we navigate through new challenges, including water reform, that have accelerated the need for the industry to transition.”

Mr Arthur said a new operating framework would enable SunRice to “assess new contracting and pricing options for growers, which should enable the business to be able to better match supply with demand from our premium markets”.

“These new structures should enable both large and smaller rice growers to participate in the industry in a way that better suits each grower’s circumstances while ensuring more consistent supply, which is in the best interests of our growers, shareholders and the SunRice Group.

“We believe this reform will strengthen our ability to secure good quality Australian rice, which, along with rice from our diversified international supply chain, will help drive value for our shareholders.”

Ricegrowers’ Association president Peter Herrmann and policy manager Neil Bull met with NSW Minister for Agriculture, Tara Moriarty, recently to discuss the proposed changes to rice vesting. Photo: RGA

Remove complexity

Yesterday’s decision also addresses concerns from industry which came following the NSW Government’s announcement to create a new export licence for the Northern Rivers rice industry.

SunRice and industry body, Ricegrowers’ Association, highlighted possible issues having two export licences in a state governed by a single-desk arrangement.

“Complicating the regulatory powers of the Rice Marketing Act gradually over a period of time would have caused increased uncertainty in our industry, which is already facing numerous challenges like water reform,” RGA president Peter Herrmann said.

“Though yesterday’s announcement is not in keeping with our current policy position, the RGA believes the proposed legislation and the planned removal of vesting arrangements can provide new opportunities for Riverina rice growers as we traverse economic and water-reform challenges.”

Northern Rivers welcomes decision

Transitioning away from a single-desk arrangement builds on the announcement last month to prove an export pathway for the growing Northern Rivers rice industry.

The creation of a new export licence was touted to provide more economic opportunities for an industry that was working to progress the dryland rice market and research.

Northern Rivers ricegrower and NSW Greens MP Sue Higginson said removing the vesting system was “a critical step forward” for the industry.

“The rice vesting model has benefitted a single group of growers associated with a multinational corporation and had led to perverse practices of established interests that rely on the irrigation waters of the Murray Darling Basin squashing innovation and environmentally conscious changes to the industry, including climate adaptive dryland rice growing in the Northern Rivers region,” Ms Higginson said.

“With the end of this monopoly, there is new opportunity for ethical, sensitive and competitive products to move this vital agricultural sector into the future and ensure that rice production in NSW is not strangled by a corporate monopoly.”

Transition group formed

Mr Herrmann welcomed the NSW Government’s commitment to assist the industry to transition away from the current framework.

“Critical to the success of the proposed export arrangements will be ongoing consultation with industry stakeholders, which Minister Moriarty committed to yesterday.”

As part of this pledge, the NSW Government has also announced the formation of an expert Rice Transition Group to be led by the NSW Department of Primary Industries.

The Group will focus on R&D opportunities to support alternate supply chains; ensuring seed supply is maintained; unwinding the affairs of the Rice Marketing Board once vesting ends; and investigating regional development opportunities.

 

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