‘‘I would be very surprised if anyone’s budget can make rice profitable this year.’’ That is the stark view of Finley-based independent agronomist John Lacy, even after SunRice to increased rice prices.
SunRice made the decision last week to offer more fixed price contracts at $500 per tonne for medium grain Reiziq and up to $650 per tonne for the specialty variety Koshi that meet the company’s quality specifications.
Mr Lacy said while the new prices would prevent some growers from operating at a loss, the margins were still too tight for rice to be a viable cropping option especially with predictions the Murray Valley will not get a general security allocation until at least mid-September.
And with continuing dry conditions, that is not guaranteed.
At the time of going to print yesterday, water was trading at a minimum of $360 per megalitre.
Mr Lacy said it meant buying water was too far out of reach for most growers.
‘‘I have inserted the new SunRice prices into my margins based on last year’s crop, and it’s still not viable to grow rice,’’ Mr Lacy said.
‘‘All 15 farmers in the first of my Finley Discussion Group meetings said the margins would be too tight. I expect to hear the same at the other meetings this week.
‘‘One farmer said based on his yield of 9.9 tonne to the hectare last year, 12.5 megalitres of water used per hectare and a contract price of $650, he expects he’ll break even at $365 per megalitre of water.
‘‘That’s about where we are now, and therefore he will not go ahead (with a rice crop).
‘‘To grow Koshi rice, farmers are looking at about $295 per megalitre to make back a reasonable profit.
‘‘The only hope we have is to get really big rainfall in the catchments up north and that will bring the allocation forward.
‘‘A majority of farmers did not carry over water and therefore totally depend on rain to save their crops.’’
Mr Lacy said while things look pretty bleak now, he is still hopeful the unpredictability of weather can turn in favour of growers.
‘‘Although the Bureau of Meteorology is looking at us going further and further into drier conditions, the rice industry does have some later sown varieties that don’t have to be sown until November.
‘‘But even then our only saving grace is more rain or a water allocation.
‘‘It’s not 100 per cent bleak for some though; those with spray irrigation and turkey’s nests are still able to get the sprinklers on.’’
The other advice Mr Lacy said he has received from industry leaders is for farmers to consider pooling their resources with neighbours to grow a crop together.
Mr Lacy is not alone in his assessment of the industry, with Berrigan farmer Michael Hawkins also indicating that few would be enticed into growing rice simply because of SunRice’s new prices.
‘‘What they’ve (SunRice) released won’t get anyone too excited,’’ he said.
‘‘I was excited with the presentation from SunRice (at the recent Ricegrowers Association conference) about developing markets in Japan, but on the negative side the price it released won’t attract grower interest.
‘‘The water usage to grow this rice is too high.
‘‘We’re on zero allocation and rice is competing with cotton, corn, livestock, wheat and canola.’’
SunRice’s new crop 2019 (C19) fixed contract offer will be for rice that meets the company’s quality specifications and offered on a ‘hectares planted’ basis.
SunRice chairman Laurie Arthur said the new prices were developed in direct response to the increasing challenges with growing rice in the current conditions.
‘‘We did find that with some of the early water pricing and being on a zero allocation, it is a difficult proposition (to grow rice),’’ he said.
‘‘The decision to offer further C19 fixed price contracts has been made following a rigorous review and the board is very clear that providing certainty for the 2019 crop price is in the best interests of the SunRice business, and both A and B Class shareholders.
‘‘Obviously, as some of the people who have been around for a while will tell you, things can still change but of course people are concerned about the drought. They are concerned about the shape of the year, particularly as there is fierce competition for existing resources.’’