Australia's largest rice processing company insists the price it has offered farmers to grow rice this season is "very high", despite an almost 40 per cent drop on last season's price.
Last year SunRice put a record fixed-price contract on the table of $750 a tonne for medium grain variety Reisiq in an effort to encourage more growers to plant the crop.
But this year the company reduced the contract price to $475 a tonne for the same variety.
SunRice chief executive Rob Gordon said despite the drop he's had positive feedback from growers.
"Last year's $750 was in reality a price we needed to pay in the midst of a drought when water prices were extraordinarily high," Mr Gordon said.
"This $475 price reflects a return to normal with water levels starting to be at a more normal level in the Riverina."
The price drop comes at a time when the general security water allocation in the Murray River is at just 2 per cent.
Hope for a better season ahead
"We're still early in the season and the Bureau of Meteorology is calling a wetter-than-average winter and spring so we are hopeful the allocation will build," Mr Gordon added.
"The outlook at the last allocation was there should be a half reasonable allocation by November on the basis of a dry to average set of inflows."
Low water allocations and tough seasonal conditions resulted in the 2020 rice crop being the second lowest on record at just 45,000 tonnes.
Mr Gordon said contract signing started with growers this week and there had already been a good level of interest from farmers eager to return to growing rice.
"A number of people who went to other crops in recent years haven't necessarily had the best experiences," he said.
"This year pricing on cotton and corn is well off and this price is highly competitive for growers' water."
President of the Ricegrowers' Association of Australia Rob Massina farms in the southern Riverina and agreed there is optimism about the season ahead.
"It's all about the availability of water at the end of the day," Mr Massina said.
"If the predicted rainfall comes to fruition that will be the positive kick that the rice industry needs to make sure we can continue to provide Australian rice on Australian shelves."
