This document has been prepared by the RGA to assist you in preparing your submission to the 2016 Review of Rice Vesting.

Transcription

1 The Ricegrwers Assciatin f Australia (RGA) strngly believes that the cntinuatin f the current rice vesting arrangement is in the best interests f the rice industry and the brader cmmunity. This dcument has been prepared by the RGA t assist yu in preparing yur submissin t the 2016 Review f Rice Vesting. Review terms f reference: a. The review will be cnducted in accrdance with the Natinal Regulatry and Cmpetitin Refrm Cmpact, which requires that legislatin shuld nt restrict cmpetitin unless it can be demnstrated that, with regard t the vesting f rice in NSW: the benefits f the restrictin t the cmmunity as a whle utweigh the csts; and the bjectives f the legislatin can nly be achieved by restricting cmpetitin. b. The review will examine whether an extensin f vesting by the Rice Marketing Bard can be justified by the realisatin f premium returns t grwers n exprt sales. c. If vesting is recmmended t be extended, the review will als recmmend the perid f extensin. Further infrmatin can be fund at: r by cntacting Rachel Kelly, RGA n M r E. rkelly@rga.rg.au.

2 WHAT IS VESTING? Under the Rice Marketing Act 1983, all rice prduced in NSW is vested in the statutry authrity knwn as the Rice Marketing Bard f NSW (the RMB). One f the main bjectives f the RMB is t ensure grwers receive the best pssible returns frm NSW rice exprted utside Australia. Taking this int accunt, the RMB has chsen t issue nly ne exprt licence. This licence is knwn as the Sle and Exclusive Exprt Licence (SEEL) and is currently held by SunRice. The RGA is f the pinin that the benefits f this vesting arrangement utweigh the csts, and fr this reasn shuld be cntinued. Our reasning fr this is explained belw. The RGA psitin is based upn evidence prduced frm Grant Thrntn Australia s mst recent independent review f the vesting arrangement, utlined in the Rice Marketing Bard s 4th Annual Reprt t Rice Grwers (Octber 2015). We nte that the dmestic market fr rice is currently deregulated and therefre vesting places n csts n dmestic cnsumers. In additin the cst f implementing the vesting arrangement is fully funded by grwers and nt taxpayers. BENEFITS OF VESTING Price Premium - In particular, Grant Thrntn Australia s mst recent independent review utlines that fr the 2014/15 crp (C14) rice vesting delivered an additinal $ per tnne fr grwers (based n Exprt Price Premium f $82.4M plus a Freight Scale Advantage f $14.3M and a ttal crp size f 829,000 tnnes). 1 This premium is a cnsequence f the fllwing: Ability t Maintain Key Internatinal Markets SunRice s ability t maintain a cntinuus supply f rice t key internatinal markets during the drught, despite recrd lw levels f lcal rice prductin, reinfrces the imprtance f SunRice s glbal business strategy. SunRice understanding and experience in these markets, its ability t prcure stck glbally, and it s investment in ff shre facilities prvides SunRice with an internatinal trading advantage unlikely t be btained by ther lcal cmpetitrs. Branding - SunRice s brands have very strng recgnitin in key markets. The SunRice brand is assciated with an assurance abut the lcal grwing envirnment (clean, green) and the cnsistency f quality f the prduct. The strength f these attributes is maintained due t the varietal develpment and pure seed prgram, the prcessing infrastructure and the ttal supply chain quality assurance (as utlined belw). T SunRice s credit, it has maintained the pwer f this brand in key markets despite strng cmpetitin. Targeted Marketing and Ttal Supply Chain Quality Assurance SunRice s ability t versee prductin frm paddck t plate ensures that its varieties and prducts are develped specifically t service the needs and tastes f the mst high value internatinal markets. SunRice uses price signals t ensure levels f supply fr /14 (C13) additinal $97.93 per tnne delivered t grwers (based n Exprt Price Premium f $95.2M plus a Freight Scale Advantage f $18.5M and a ttal crp size f 1,161,000 tnnes); 2012/13 (C12) additinal $82.44 per tnne delivered t grwers (based n Exprt Price Premium f $65.9M plus a Freight Scale Advantage f $13.5M and a ttal crp size f 963,166 tnnes).

3 specific varieties meets demand. It s versight f the milling and packaging prcess is als imprtant t ensuring the quality f the final prduct. Research and Develpment (R&D) and crp supprt - SunRice cntinue t invest in R&D t nt nly ensure the prfitability f its grwers, but als the quality and characteristics f its prduct. The Pure Seed Scheme perated by RRAPL (a whlly wned subsidiary f Sunrice) prvides grwers with genetically pure, GM-free seed, ensuring crp quality and purity. In additin, the Rice Breeding and Grain Quality Prgram, t which SunRice is a partner, allws fr the develpment f targeted, high quality rice varieties. RRAPL als carries ut a prtfli f ther R&D prjects t deliver higher yields, lwer water usage and better market returns. SunRice Grwer Services ffers grwers a range f services and infrmatin such as guidance n varietal mix t ptimise market returns and crp testing and technical advice. This is a service SunRice is able t maintain partly due t the scale f its business. SunRice als carries ut a large prtfli f prduct and prcess research and develpment t develp new value added prducts and imprved manufacturing prcesses that keep the brand at the frefrnt f cnsumer minds. Scale and Freight Advantage - Vesting prvides the business scale required fr SunRice t cntinue investment in expanding its prduct range and glbal ftprint t deliver the best pssible paddy returns t grwers. SunRice s analysis als suggests that ecnmies f scale deliver lwer milling csts and peratinal efficiencies. In additin, the scale f the vlumes delivered t key exprt markets results in lwer delivery csts per tnne fr exprted rice. In 2015/16 this freight advantage was valued at $14.3 millin ( : $18.5 millin). Buyer f Last Resrt The Sle and Exclusive Exprt Agreement bligates SunRice t act as a buyer f last resrt, meaning they will purchase every last tnne f rice prduced by NSW rice grwers prvided it is f merchantable quality. Meeting the Challenges f the internatinal rice trading envirnment - The Australian rice industry perates within a unique and challenging internatinal trading envirnment, unlike any ther trading envirnment experienced by an Australian agricultural exprt industry. Rice is the wrld s mst imprtant basic fd staple and therefre critical t the security f many natins. These sensitivities mean that rice cntinues t be a highly prtected cmmdity. Cnsequently Australian rice is prhibited frm free entry int many cuntries by trade barriers. In additin, Australian rice must als cmpete against subsidised prduct frm ther key exprting cuntries. Despite this, Australian grwers perate withut any prductin r exprt subsidies. Australia is a relatively small player in the verall rice market, with shares f nly 0.2% f wrld rice prductin, and less than 1% f traded rice. Australia s success n the wrld market is mainly due t Australian rice being regarded as a premium prduct.

4 As utlined abve, vesting allws the Australian rice industry t maintain the quality and value f its prduct thrugh branding, marketing, research and develpment and scale and thrugh SunRice s vertically integrated structure. Other Cmmunity Benefits: Reginal Wealth An increase in prfitability in a rural regin will directly increase spending within that regin, and will have a direct impact n the sci-ecnmic standing f the cmmunity, and n the delivery f essential services. Emplyment - SunRice and its subsidiary cmpanies emply ver 2,100 highly skilled and qualified peple. A large majrity f SunRice s Australian wrkfrce is based in New Suth Wales. These reginal emplyees help t sustain the reginal cmmunities acrss the Riverina. In additin, increased prfits fr a farm business allw many businesses t surce external labur, increasing wrk pprtunities and ppulatins f rural NSW cmmunities. This has many psitive impacts fr these cmmunities. Cmmunity Supprt - In additin t being ne f the main emplyers in the NSW Riverina, SunRice als cntributes t lcal reginal cmmunities thrugh the acquisitin f gds and services frm lcal business and thrugh spnsring a number f lcal cmmunity grups, scial prgrams/events and charitable fundraisers. COSTS OF VESTING The cst f running the RMB is fully paid fr by grwers, a fact that is fully understd and accepted by them. In 2014/15 the cst t run the RMB was $564,000 r 68c/tnne (based n a ttal C14 crp size f 829,000 tnnes). Rice grwers recgnise that the benefits f vesting accrue t them and this cst is an investment in their future. The dmestic market was deregulated in 2006 and therefre there is n cst t the Australian cnsumer r taxpayer f the vesting and single desk marketing arrangements. PERIOD OF EXTENSION OF RICE VESTING Australian rice grwers perate within a highly uncertain envirnment. Uncertainties increase the cmplexity f business, especially when managing extremely valuable land and water prtflis. In the event that the review recmmends that rice vesting shuld be extended, it is recmmended that the perid f the extensin be at least 8 r 12 years. This wuld prvide grwers with sme level f certainty. Nevertheless, it is imprtant that the recmmended date fr any future review fall utside the plitical cycle t ensure rice vesting des nt becme a fcus f any future electin campaign.

5 RGA SUBMISSION DRAFTING TIPS Keep it shrt The submissin length fr an individual shuld be half a page t tw pages, and fr rganisatins, up t five pages. Avid lng attachments. Instead flag additinal infrmatin and advise that this infrmatin can be prvided t the Department n request. Remember that smene has t read all submissins. Establish credibility Outline yur experience with the issue. Use mderate language. Avid bld, underline, CAPITALS r exclamatin marks t emphasise key pints!!! Acknwledge different perspectives. Cntent needs t be useful Keep cntent factual and evidence based. Fcus n the technical r lcalised infrmatin yu can add. Ensure yu ffer slutins t any prblems identified. Terms f reference The terms f reference are nly a guide. Yu dn t need t address them all pick thse f relevance.