Price Determination in the Australian Food Industry A Report
Price Determination in the Australian Food Industry A Report
Price Determination in the Australian Food Industry A Report
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RICE<br />
Analysis of <strong>the</strong> determ<strong>in</strong>ants of prices and costs <strong>in</strong> product value cha<strong>in</strong>s<br />
RICE – OVERVIEW<br />
Background<br />
• The rice <strong>in</strong>dustry is predom<strong>in</strong>antly export-focused with much of <strong>the</strong> <strong>in</strong>dustry managed by a<br />
s<strong>in</strong>gle <strong>in</strong>tegrated grower-owned cooperative, Ricegrowers, which trades as Sunrice.<br />
• The <strong>in</strong>dustry structure has historically been production driven, with process<strong>in</strong>g and market<strong>in</strong>g<br />
mostly grower-owned but <strong>in</strong> <strong>the</strong> past five years <strong>the</strong> <strong>in</strong>dustry has developed a strong market<br />
focus aimed at maximis<strong>in</strong>g <strong>in</strong>dustry value.<br />
• The <strong>in</strong>dustry presently reta<strong>in</strong>s a s<strong>in</strong>gle desk export regime <strong>in</strong> New South Wales (where <strong>the</strong> vast<br />
majority of rice is produced) under <strong>the</strong> direction of <strong>the</strong> Rice Market<strong>in</strong>g Board.<br />
The <strong>in</strong>dustry’s product mix and use<br />
• The <strong>in</strong>dustry has experienced a steady upwards trend <strong>in</strong> production over <strong>the</strong> past 30 years with<br />
<strong>the</strong> growth <strong>in</strong> export markets demonstrat<strong>in</strong>g <strong>the</strong> competitiveness of <strong>the</strong> <strong>Australian</strong> production<br />
sector.<br />
• The market mix of <strong>the</strong> <strong>in</strong>dustry <strong>in</strong> 2002 saw only 18 per cent of <strong>the</strong> <strong>Australian</strong> crop consumed <strong>in</strong><br />
<strong>the</strong> domestic market us<strong>in</strong>g a range of market channels, <strong>in</strong>clud<strong>in</strong>g grocery retail.<br />
• Whilst medium gra<strong>in</strong> is <strong>the</strong> major crop variety produced, <strong>the</strong> majority is exported.<br />
• Australia supplies about 20–25 per cent of <strong>the</strong> traded world market for medium gra<strong>in</strong> rice <strong>in</strong>to<br />
discern<strong>in</strong>g consumer markets.<br />
• Australia imports a range of rice varieties with no trade barriers <strong>in</strong> place except quarant<strong>in</strong>e<br />
restrictions on brown and paddy rice.<br />
• Demand for quality medium gra<strong>in</strong> rice has risen <strong>in</strong> recent years as markets such as Japan have<br />
opened with more liberal trade.<br />
Major drivers of pric<strong>in</strong>g<br />
• Rice is a globally traded commodity. Returns to <strong>the</strong> <strong>Australian</strong> <strong>in</strong>dustry and <strong>the</strong>refore net<br />
farmgate returns are heavily <strong>in</strong>fluenced by <strong>the</strong> returns from <strong>the</strong> <strong>in</strong>ternational market for rice.<br />
This reflects <strong>the</strong> high proportion of exports coupled with <strong>the</strong> effectiveness achieved <strong>in</strong> mill<strong>in</strong>g<br />
and market<strong>in</strong>g.<br />
Figure 105. Indicative price of rice, medium gra<strong>in</strong>, US$/tonne,<br />
bulk 4% ex-Spout Sacramento, 1996–2003<br />
$<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
1996 1997 1998 1999 2000 2001 2002 2003<br />
Source: Creed Rice<br />
<strong>Price</strong> <strong>Determ<strong>in</strong>ation</strong> <strong>in</strong> <strong>the</strong> <strong>Australian</strong> <strong>Food</strong> <strong>Industry</strong> A <strong>Report</strong><br />
99