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Rice industry seeks water allocation to counter drought, COVID-19 impacts

Grain Central, March 30, 2020

SUNRICE has commenced discussions with the Commonwealth Government around the potential for an allocation of water to be made available to Australian rice growers ahead of the planting window later in 2020 to ensure the continued supply of rice for domestic consumption.

The move comes as the COVID-19 crisis puts added buying pressure on domestic rice supplies at the same time as long running drought has slashed Australian production.

There have also been developments overseas impacting the industry, including in Vietnam where Sunrice operates a rice processing mill.

In a statement to the ASX, the SunRice Group said it was aware the Vietnam Government had introduced a ban on exports of rice in response to concerns around domestic food security due to continued localised drought and COVID-19.

The Group understands the ban to be in place until at least 31 May 2020.

The statement said the SunRice Group intended to flex its international supply capability to meet demand in key markets that would have been supplied from its Lap Vo rice processing mill in Vietnam.

“Australia is not currently self-sufficient in rice. Due to the drought and water policy, the Australian crop sizes of the last two years represent less than 25 per cent of annual domestic rice consumption requirements which has led to an increasing reliance on imported rice.

“In addition, changes to consumer shopping patterns at Australian retailers due to the global COVID- 19 pandemic has exacerbated the current shortage of Australian rice, and caused the SunRice Group to increasingly supplement supply through international sourcing.

“SunRice has significant capability and expertise in international rice supply chains, and is flexing that capability to meet increased demand in Australia.

“The Group is observing increased instability and risk from both a supply and demand perspective across its key markets, primarily due to COVID-19, as evidenced by the Vietnam Government announcement.

“If there is no change to the current outlook for water availability and water prices for annual plantings between now and the 2020 planting window in October/November, there is likely to be another extremely small Australian crop.

“At this stage, SunRice does not anticipate any material change to its guidance for FY2020 full-year Group NPAT as a consequence of the above developments.

“At this stage given the global uncertainty resulting from the COVID-19 pandemic, it is too early to provide any information as to the impact of such developments on the 2021 Financial Year.”

ABARES predicts Australia’s rice production this season will be lucky to reach 54,000 tonnes, even lower than last year’s depleted 59,000t crop and well below the long term average of 600,000–800,000t per year.

Source: Sunrice

 

 

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