Throw the Bathwater; Keep the Baby: Reform of the Statutory Marketing Arrangement for Australian Rice

Abstract

<p>Marketing of rice in the Australian State of New South Wales (NSW) is regulated by a statutory marketing arrangement (SMA) – the last such scheme in Australia. A key feature is the coupling of vesting (by which all rice grown in NSW belongs to a statutory board) with a single export desk. The rice industry argues only this process can ensure export price premiums (EPP) and freight scale advantages (FSA). The SMA is subject to periodic review, which has strongly advocated deregulated. Furthermore, there is increasing grower demand for liberalisation of the export market, and others argue the scheme is unconstitutional. However, the NSW Government has continually renewed the arrangement. This article contends that the single desk arrangement no longer accounts for the EPP and FSA advantages cited by the industry. Vesting provides non-economic benefits and it is argued that it should be retained, but the single desk abolished. Blanket dismantling of SMAs and deregulation in other agricultural commodities have had damaging social and economic consequences. These have been avoided by the rice industry through adaptation of their SMA over the last century. While the industry needs to accommodate greater competition and transparency, this is best achieved through reform rather than wholesale repeal. </p>