The RGA’s Position
In June (2021) the RGA Central Executive passed the following motion to support vesting and it’s continuation in its current form. This position was reinforced by new motions at RGA Branch meetings held in March 2021.
The Ricegrowers’ Association of Australia supports vesting based on updated analysis of the arrangements, which identified no loss of competition in the domestic market while providing net benefits to growers, their communities and the industry. This position is unanimously supported by the Branches and a recommendation from the RGA’s Productivity and Industry Affairs Policy Committee.
The RGA has historically supported the continuation of the current vesting arrangements, and in particular the provisions of the Act that retains the sole and exclusive export licence (SEEL) for rice.
The RGA’s position was founded on the basis that:
The benefits of vesting to the community as a whole, outweigh the costs.
These benefits, and in particular the realisation of price premiums for growers, can only be achieved by restricting export competition. This position was further reinforced by a recommendation from the RGA’s Productivity and Industry Affairs Policy Committee, which was strongly backed by Central Executive.
The RMB commissioned a report, which has independently verified the 2019-20 export price premium and freight scale advantage as calculated by the SEEL holder. The RMB report concluded the following:
Under very difficult circumstances, SunRice was able to deliver NSW rice growers:
In addition to the very small volume of rice grown in NSW, SunRice also had to contend with rising global rice prices and unfavourable foreign exchange fluctuations throughout 2019-20.
While the Export Price Premium and Freight Scale Advantages are the primary benefits that accrue to NSW rice growers under the SEEL, there are other benefits to NSW rice growers that result from the scale of SunRice’s operations, such as, but not limited to, the operation of the Pure Seed Scheme; high rates of utilisation of infrastructure, and ‘buyer of last resort’ provisions. However, the benefit of scale was more tangibly demonstrated, under some of the most difficult trading conditions ever faced by SunRice (and by default NSW rice growers), by the way in which the company was able to secure rice from international sources and thereby secure its export market positions.
It was also observed that international rice markets do not fit the classic economic model where market forces are expected to deliver enhanced economic outcomes. There is no global rice market and various government interventions including tariffs, quotas and world trade obligations mean that rice is not freely-traded like other commodities. Rice is also a non-homogenous product with strong preferences in individual cultures for different varieties of rice.
We also know that rice is the first commodity to be excluded from free trade negotiations by trading partners.