Opposition Primary Industries spokesman Steve Whan.THE single desk arrangement for Australian export rice should be extended beyond 2013, Opposition Primary Industries spokesman Steve Whan said in parliament yesterday.
Primary Industries Minister Katrina Hodgkinson, on leave this week after a car accident last weekend, is expected to soon announce whether the vesting arrangements that give Leeton company SunRice exclusive rights to export on behalf of Australian growers will be renewed.
It is due to expire in mid-January.
Introducing a notice of motion in the Upper House calling on the government to renew vesting arrangements as a result of its statutory five year review, Mr Whan said although the single desk was a fairly unique arrangement in agricultural commodities, it was one that had worked well.
Scrapping it would not benefit the industry and previous reviews found the vesting arrangement was justified, he said, although there was “a push by some interests” to end the monopoly.
SunRice chairman Gerry Lawson has penned a letter to growers and shareholders outlining benefits of renewing the Rice Vesting proclamation, which was seen as a rebuttal of arguments put forward by Colin Bell, a director of Burrabogie Pastoral which owns considerable holdings in the Riverina, to list the company on the Australian Securities Exchange (ASX).
“In recent weeks, a campaign has been mounted to dismantle the current vesting arrangements for NSW-grown rice,” Mr Lawson said in the letter, dated October 11.
“This comes at a time when our industry is still recovering from the effects of drought.”
Benefits of the current system included enabling SunRice to deliver a price premium for NSW rice in global markets, he said.
“Our analysis indicates that for the 2011-12 crop year, SunRice received an average price premium of $40.3 million or an additional $69 per tonne over and above the prices of our overseas competitors,” he said.
“This could not be achieved without the export freight and scale advantages and marketing strength provided by vesting and our exclusive export rights.”
Mr Bell has argued that comparisons with Californian rice prices are misleading.
But Mr Lawson said it was important to highlight that a mixture of pools and cash markets operated in California so there was no single farm gate price for Californian rice.
Mr Bell commissioned a report, which The Land covered in September, saying the single desk meant ricegrowers in Australia were getting less for their product compared with growers in California.
“The Californian pricing cited in recent correspondence has been contrasted with prices SunRice attained in export markets at a time of transition for our company,” Mr Lawson argued.
“Australian paddy prices have borne the costs of upscaling from a 205,000 tonne crop in 2010 to 800,000 tonnes in 2011, and 963,000 tonnes earlier this year.”
He said comparing SunRice’s price for the entire pool against a price available for just part of the Californian crop was misleading and simplistic.
Rice payments were supplemented by about $140 million over seven drought years.
“This enabled us to secure the volumes of Australian rice needed to underpin SunRice’s presence in key markets, keep Leeton mill open, maintain other critical regional infrastructure and retain our core employee base,” he said.
Mr Lawson said vesting underpinned SunRice’s “buyer of last resort obligations”, which provided security or growers.
“Given the outcome of the vesting review has the potential to adversely reshape SunRice as a business and result in the contraction of an industry that is only two crops out of a debilitating drought, it is important that everyone understands what is at stake,” Mr Lawson said.
Public meetings in southern NSW and branch forums conducted by Rice Growers Association in June gave unanimous support to the vesting powers continuing.
A spokeswoman for Ms Hodgkinson said NSW Trade and Investment was conducting a review into the Rice Marketing Board’s vesting powers.
“The review report will be delivered to Minister Hodgkinson in the next few weeks.
“A decision will be made after the Government has had opportunity to consider the review report,” she said.
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