The growing popularity of Japanese cuisine in Australia is driving up demand for speciality rice in southern New South Wales.
While the Riverina and Murray Valley specialises in medium grain rice production, premiums on short grain Japanese style rice is helping to drive grower interest.
Earlier this month, SunRice announced a higher price for the 2014 Koshihikari crop grown in the region.
The company’s chairman Gerry Lawson indicated it’ll be calling on growers to increase the area planted to the variety later this year.
With markets in Canada, the UK, South East Asia, South Korea and now Russia, SunRice hopes the industry can triple production for sushi rice in the next three years.
Craig Young, the company’s senior marketing manager, says its wants to improve the sushi experience from paddock to plate.
“We’re researching and working across the whole business to make sure that we’re always improving and understanding what our customers want.
“So we’re working with some sushi chefs on understanding their needs and what they look for, so we can make sure we incorporate that into our process, whether that be in breeding, growing, milling or storing.”
Peter Snell, senior rice breeder with the NSW Department of Primary Industries, is working on two new lines in the breeding program and says they’re showing some promise.
Questions
1, Using the demand/supply model explain the change happening in the market for short grain ‘Koshihikari’ rice. Make sure you explain the equilibrating process on prices and output of the change. [5 marks]
2. Using the demand/supply model, explain the impact on prices and output on the medium grain rice market stemming from the likely response from rice growers? Make sure you explain the equilibrating process on prices and output of growers’ response. [5 marks]
3. Given your answer in question 2, and assuming the demand for medium grain rice is inelastic, use the demand/supply model to explain what will happen to total expenditure on medium grain rice stemming from producers’ response. [5 marks]
4. Assume the government is concerned about prices rising too high for consumers and decides to introduce a price ceiling scheme. With the aid of appropriate diagram show the effect of a price ceiling scheme along with the problems associated with such policy. [5 marks]