INTERVIEW: SunRice hopeful of return to higher Australian production

London — SunRice, which markets 99% of Australia's rice crop, is confident domestic production can recover following two disappointing crops, its CEO, Rob Gordon, told S&P Global Platts in an interview.

"The reality is that planting in October 2020 will be predominantly driven by two factors -- water availability and water pricing. While the outlook is for a wetter-than-normal winter, if water allocations and water pricing remain at current levels then we will see another extremely small rice crop planted in the Riverina [region of New South Wales]."

Gordon said that "while water prices have reduced from the extremely high levels at the peak of the drought due to some positive autumn rainfall, they are still at high levels."

Despite this, "SunRice is certainly optimistic...[and] we have secured enough seed for an 800,000-mt paddy crop to be planted should conditions improve." While Australia produced 623,000 mt of paddy in 2018, output fell to just 67,000 mt in 2019 and 45,000 mt in 2020 due to reduced water allocations and higher water prices caused by drought.

On the topic of further utilization of land in Queensland, Gordon added that "there is plentiful water and arable land suitable for rice production in North Queensland, and we are committed to working with Government and other partners to grow the industry there."

However, the region is focused on Indica production, instead of the high quality Japonica which Australia is renowned for. "The amount of rice produced in North Queensland is only very small currently compared with the production in the Riverina region."

Imports

While SunRice markets 99% of Australia's rice crop, Mr Gordon was blunt about the country's net importer status. "The extremely small crops of 2019 and 2020 represent less than 25% of Australia's annual rice consumption, which has led to an increasing reliance on imported rice."

"We have increased production at our Riverina facilities to respond to additional demand due to COVID-19". However, supply is expected to be depleted if current demand continues in the coming months, with further imports required before Australia's next harvest in April-May 2021.

"Our international sourcing capability was rapidly flexed in response to the small Australian rice crop, with strategic expansion of our supply chains enabling us to backfill key markets and maintain continuity of supply."

Supplying other markets

Gordon said of Australia being notable by its absence at numerous East Asian tenders that "SunRice has participated in a number of these tenders with rice from origins other than Australia. Our ability to participate in those tenders with Australian rice is dependent on Australian rice production being at sufficient levels."

Gordon was hopeful that Australia would be able to participate in Japanese, South Korean and Taiwanese tenders again in 2021 provided that Australian production increases "significantly."

In the meantime, SunRice is facing the challenge of fulfilling annual demand of 1 million mt (paddy equivalent) across 50 international markets. While this has been aided by its acquisition of a mill in Vietnam's Mekong Delta in 2018, SunRice has had to go further to protect its presence in destination markets.

Gordon said of SunRice's growing status as a rice trader "the Group has activated new supply sources across Asia and South America in the last year, bringing the total number of global supply sources to 11 countries."

"We continually assess our supply arrangements on an ongoing basis, to ensure supply of high quality...to meet the needs of our customers."