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SunRice announces two-pool system to limit production

Grain Central August 1, 2024

SunRice’s results have included some record highs. Photo: Deniliquin Freighters

AUSTRALIA’S single desk rice marketer, SunRice, has announced details of a two-pool system for crop year 2025 aimed at cutting the upcoming rice production by 30 percent.

In a letter released to the ASX, SunRice chairman Laurie Arthur said the company has full carryover levels following several strong crop years, and grower returns could be substantially reduced if CY25 production reached current estimates.

“The industry finds itself in a unique situation that is unparalleled in the last decade,” Mr Arthur said.

“Due to favourable growing conditions, over the last three years, our growers have grown on average a crop size at or above our optimal milling and storage systems, resulting in a healthy but full effective carryover position.

“In addition, a number of factors continue to weigh on anticipated paddy returns, including increased medium grain rice supply from Northern Hemisphere markets returning from drought conditions and the disruption to the global shipping industry, particularly in the Red Sea.”

Mr Arthur said for CY25, SunRice has proposed a two-pool system that will target a total of 500,000 paddy tonnes, comprising 450,000 paddy tonnes of medium grain and 50,000t of specialty varieties.

He said under this system, Pool 1 returns will be set at the regular rice pool range, while at this stage Pool 2 returns “are expected to be significantly lower than $200/t”.

Under the system, a growers’ Pool 1 allocation will be 75 percent of a farm’s average three-year final delivered tonnage.

If a grower wishes to produce more than this allocation, excess tonnages will attract the Pool 2 returns, which currently sit well below the CY24 rice pool range of $370-$430/t.

“[A] two-pool system is designed to help maximise returns for all growers, rather than diluting returns given the current supply and demand outlook.

“We realise the returns for Pool 2 may be unattractive; however, this expected outcome also illustrates the impact that a crop size in excess of 500,000 paddy tonnes could have on the overall paddy return under a single pool system given the current environment.”

Specialty varieties EOI

In addition to the two-pool system, SunRice is open to expressions of interest from growers keen to produce specialty rice varieties.

The EOI process will be for around 50,000t of specialty varieties, including Koshi, Topaz, Opus, Langi and Doongara.

“Priority allocation for special varieties will be given to those growers who have grown the relevant variety in the past three years, in line with their average seed orders.”

Source: SunRice

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