Rice production

IBISWorld forecasts that rice production will sink by 36.4% in 2025-26 to a total of 303.13 kilotonnes. Rice production is highly reliant on water, with allocations from water authorities largely dictating the amount of rice that farmers can grow. The USDA's Canberra office expects a substantial decline in Australia's rice production for the 2025-26 season, attributing this to sharply reduced irrigation water availability at planting time and increased competition from higher-value/return-per-ML crops. ABARES points to limited allocations and rising water costs discouraging rice area, with lower global rice prices further dampening planting intent. Unless water supply conditions improve quickly, a marked contraction in rice acreage appears to be set, underlining a growing trend where scarce irrigation resources are directed towards crops with stronger financial returns.

Rice production is highly volatile since rice is a heavily water-reliant crop. Water authorities, like the Murray-Darling Basin Authority, allocate water permits to farmers to restrict their use of water from river systems in agriculture. This system is designed to protect Australia's water systems and ensure that the amount of water used each year is sustainable. The amount of water allocated to farmers each year varies in accordance with the amount of rainfall that has already occurred and is expected to occur over the next twelve months.

Rice production in Australia is projected to decline at an annualised rate of 6.4% over the five years to 2025-26, reflecting a volatile period characterised by shifting water management and seasonal variability. This decline follows a period of severely depressed output from 2018 to 2020, driven largely by low rainfall and tighter water allocations under the Murray-Darling Basin Plan. Given that nearly all rice in New South Wales is irrigated using basin water, these policies had a pronounced impact. While above-average rainfall during La Niña events from late 2020 to mid-2022 briefly supported a recovery, similar weather in late 2024 only partly mitigates ongoing supply constraints and less favourable weather. Despite a modest production lift during wetter years, the industry remains highly sensitive to both water availability and market demand, as evidenced by this year's subdued outlook amid reduced rainfall and faltering downstream orders. This pattern underlines the ongoing vulnerability of Australian rice to both climatic and economic pressures.