RICE growers may soon see SunRice fall into foreign hands and, as a consequence, the loss of the single desk. 

Sunrice chairman Gerry Lawson could not hide his dismay last year when the takeover of the rice processor by Spanish suitor Ebro Foods was defeated by shareholders.

SunRice had told its shareholders the company had to be sold because its debt was too high and Ebro was offering an attractive price.

It was clear SunRice directors wanted to unlock the value of the shares.

Four of them have more than 200,000 shares, putting them in the top 20 shareholders.

When the vote was put to shareholders in May last year, the company's debt was about $300 million. A number of growers were clearly angry they were not told about the high debt.

Many believed SunRice also needed to stay in Australian hands and work for the betterment of Australian rice growers.
The Ebro deal was scuttled by angry A-class grower shareholders who thought the company could be turned around now that farmers had water to grow crops. And they have since been proven right.

As Deniliquin grower John Bradford, a leading opponent of the Ebro takeover, said, once the drought was over, SunRice would get back on its feet and pick up from where it left off some years earlier.

"We always said that once we start producing rice again, we would be back again," Mr Bradford said.
"Now, we have quickly got our markets back."

The SunRice board is running the line the drought and the Ebro bid has opened up a Pandora's box on the company's structure.

In June, the board announced a review of the company's capital structure and its board make-up.
At the same time, it put a moratorium on the issue of new shares.

Mr Lawson told the company's annual general meeting in Jerilderie two months ago, the uneven spread of investment in SunRice by active growers was an issue.

He said SunRice would "consider how best to approach the matter of growers who deliver paddy to us and again access to our brands and premium markets, yet have opted to have no investment in our business, or a very low level of investment".

Other issues on the agenda include the number and mix of directors.

But he would not be drawn further on what the review would recommend.

Softening up shareholders was a report distributed to selected growers just before the AGM by stockbroking firm Bell Potter, whose directors also ran Australian Food and Agriculture Company Limited - SunRice's second largest shareholder.

Bell Potter wants the rice processor listed on the Australian Stock Exchange because it would "broaden the potential investor base, provide better access to capital, likely improve the liquidity in the shares and create a more transparent market".

The SunRice board considered listing on the ASX as an alternative to selling to Ebro but clearly favoured the Spanish offer.

Mr Bradford has tipped the structural review will favour listing on the ASX to essentially end up with the same result: a foreign takeover.

Rice growers only need to look at the history of its three nearest peers - the Australian Wheat Board, the Australian Barley Board and GrainCorp - to understand what will happen to their industry if SunRice lists on the ASX. The wheat and barley boards and GrainCorp listed on the ASX in a bid to unlock share value but also raise capital to expand without necessarily borrowing more money.

But the move also diluted the grower share base. Extra independent directors were appointed to all the boards and - certainly in the case of AWB and GrainCorp - they played important roles in removing grower control.

Once grower control is removed, there is a strong chance the company will end up in foreign hands.
Both AWB and ABB Grain were sold off to foreign interests within about a year of grower control being ceded.