I purchased a few more shares today and convinced a couple of...

I purchased a few more shares today and convinced a couple of family members to buy a small parcel....we intend to load up when the capital raising happens.

How would you interpret this paragraph? (Page 16 of CEO's 2019 AGM Presentation)
"Despite backfilling markets using our international supply chains, the low crop in C19 will result in under recoveries across the Riverina milling system. We have previously referred to this as a 'supplement', however a more accurate description would be a loss of income from the Asset Finance Charge and Brand Charge, and under absorption of overheads due to lower volumes, resulting in a loss to the Australian Rice Pool segment. We now anticipate this loss could be similar to or lower than that in FY17. Despite this, Sunrice still expects to declare a dividends"

A couple of thoughts:
* the farmers were receiving $411 per paddy tonne and under a fixed contract will receive $750 for Reziq rice for example. Lets say for argument sake the supplement average is $350 per paddy tonne across all types of rice....
* Riverina supply was 623,000 paddy tonnes CY18 and 54,000 paddy tonne in CY19
* Sunrice are carrying over approx 300,000 paddy tonne which will ensure milling assets are utilised this year...
* Even if Sunrice limit the paddy tonne requirement to 50,000, that would still be a supplement of approx $17.5 million .
* Maybe the market has over reacted, as I dont think Sunrice would come out and say they expect to pay a dividend if things were disastrous etc..


Im not an expert on the company but it feels like the supplement to be paid to the farmers is limited to the Asset Finance Charge ($14.8 million) and Brand Charge ($8.6 million).

Does this mean that Sunrice will cap contract values or limit the supplement to approx $23 million??? what determines this?? If NPAT was $32.8 million in 2019, $23 million off that is a big hit and this might occur for a number of years.... There also continues to be currency challenges in PNG which could impact profits.... In terms of forecasting a NPAT maybe they break even or produce a small profit this year.... I think it's all going to depend on the total supplement to be paid to farmers.....

Sunrice will not secure alot of rice if the supplement average is $350 per paddy tonne and limited to the AFC and Brand Charge. Will this be sufficient to maintain milling/processing operations in the Riverina?

I dont see Sunrice walking away from the Riverina given the significant investments made in milling and processing but i wonder what is the breaking point where they look to secure more and more rice from their international footprint (like their new milling/processing operation in Vietnam and do walk away from the Riverina? In this sense, if the current predicament continues for an extended period, B Class Shareholders are propping up the A Class Shareholders (the farmers) as profits are being used to pay the supplement when rice could be sourced from other countries at a cheaper rate....

I just dont understand it, any thoughts or corrections to the above are welcome....