Over the past three years the rice industry has increasingly borne the brunt of the intense drought conditions. Dwindling water storage levels in the Southern Murray Darling Basin and therefore water allocations has led to some of the smallest consecutive crops on record in 2019-20. This small crop led to strong demand for the limited rice available, record prices and increasing innovation resulting in world leading yields.
On 5 March 2020 the Yanco Agricultural Institute hosted the 2020 Rice Industry Field Day. This one-day event, Research now for tomorrow’s rice, was a collaboration between DPI, Ricegrowers' Association of Australia, SunRice, AgriFutures Australia and Rice Extension. DPI Staff showcased exclusive behind-the-scenes research through informative sessions to over 150 rice growers, industry representatives and advisers including sessions on agronomy, nutrition, rice breeding and quality programs.
Growing wheat immediately after rice is a great opportunity to improve the productivity of rice farming systems in southern NSW. However, many growers perceive it to be a risky and unprofitable strategy, with a 2016 survey of rice growers finding that only 32% regularly grew wheat straight after rice. DPI has published Primefact recommendations on growing wheat straight after rice with a combination of advice from successful growers and the results from crop monitoring and research trials.
Another year of substantial falls in rice production can be generally linked to limited General Security (GS) water allocations and the declining water storage levels in the Southern Murray Darling Basin. The two rivers that produced the bulk of the nation’s rice, being the Murray and Murrumbidgee rivers, received 0% and 6% GS allocations respectively in 2019-20 79. High Security license holders fared somewhat better, with near total allocations however, due to the high tradeable water prices on offer, most of these allocations made their way to higher value cropping alternatives such as horticulture and viticulture.
As a result, rice production declined by 26% to just 45 thousand tonnes in 2019-20 which was the lowest level since the 2007-08 season. The last two seasons production combined produced the lowest amount of rice across two seasons in recent records. On a more positive tone, producers managed the significantly improved yields at 10.6 tonnes/ha, indicating the added incentive to maximise grower returns in a water constrained season 10.
Historically low production levels meant that rice merchants and the largest Australian rice processor Sunrice, needed to offer very high prices in order to incentivize production with the limited water allocations on offer in 2019-20.
As a result of declining production and dwindling domestic stocks of rice, national rice exports slumped by 51% in 2019-20 to $135 million. In volume terms the decline was greater, although this was offset by a 21% rise in export prices to $1,622/tonne and in line with increased farm gate prices offered to growers last season 94. NSW was the major producer of rice nationally, and Sunrice was the sole exporter of NSW produced rice. With dwindling local stocks, it is estimated that rice produced in the Riverina accounted for between 22% and 28% of the company’s international market supply in 2019-20 130. As a result of ongoing local production issues, the share of international sourcing is likely to increase leading up to the 2020-21 harvest.
Imports of rice are usual practice, particularly long grain rice which is generally not produced in significant volumes in Australia. National rice imports increased by 47% to $379 million to bridge the gap between local supply and demand. There were significant increases in imports from all the top five trading partners of Thailand, India, Cambodia, Pakistan and Vietnam 94.
In contrast to the Australian rice industry, global rice production, use and stocks were all estimated to have reached record levels in 2019-20, following a familiar trend since 2004-05 after a brief fall in global production. Although following similar trajectories, global production outstripped consumption for the past fifteen years leading to ending stocks of 181.6 million tonnes 138. India and China’s rice stocks have been increasing since 2008-09 when they accounted for 62% of global stocks to the current level of 83% of global stocks.
Australia’s rice industry is mainly centered around production of Japonica varieties, or short/medium grain rice. Global trade in Japonica varieties only account for an estimated 5-6%, a more niche segment of global rice trade 139. Based on rising farm gate and export prices, Australia’s rice industry is supply elastic, which buffers it from some of the current fundamentals of the global rice industry as a whole.
Rice production in 2020-21 is likely to receive a significant boost with an increase in water allocations on the Murray and Murrumbidgee, with General Security allocations at 12% and 44% as at the beginning of September 2020 respectively 78. This combined with some increases in average carryover entitlements and good follow up rainfall boosts to storage levels, points to a forecast 473% increase in production and 258 thousand tonnes.
Global rice production is again tipped to outstrip consumption, leading to estimated record level carryover stocks of 185 million tonnes of milled rice in 2020-21 138. While NSW grown rice is currently pricing at historically high levels, any substantial increase in local supply is likely to draw downward pricing pressure from historically high stocks to use ratio of 37.4% 138.