Panic buying is adding to the pressure on rice supplies at a time when drought and water reform have led to one of the smallest crops in the industry's 70-year history in Australia.

Key points: Panic buying is adding pressure to an industry already battling drought and water restrictions

Panic buying is adding pressure to an industry already battling drought and water restrictions This year, Australia will see one of the smallest rice crops in the industry's 70-year history

This year, Australia will see one of the smallest rice crops in the industry's 70-year history Reduced activity from grower-led company SunRice has hit the New South Wales economy hard

The grower-led company SunRice will produce about 5 per cent of its average rice production this year, and is relying on overseas product to meet demand domestically and for export markets.

Chief executive officer Rob Gordon said panic buying of rice had put enormous strain on the company's facilities.

"We've got orders for 250 per cent of normal and obviously we don't have the spare capacity to be able to produce that, but we are flexing our supply chains," Mr Gordon said.

"We are importing rice from different parts of the world for the Australian market even though we normally sell Australian rice here.

"Clearly that will be very clearly labelled so consumers can understand that we've had to source rice from somewhere else."

Mr Gordon said the company would secure enough rice from overseas suppliers to satisfy demand for an estimated 1.2 million tonnes in sales to about 50 countries this year.

SunRice CEO Rob Gordon said an $11 million bran stabilisation plant would help drought-proof the company by producing stock feed. ( ABC Landline: Sean Murphy )

This will be further complicated by the Vietnamese Government announcing that all rice exports will be banned from May 31 to protect its domestic supply, affecting the company's milling operations in that country.

Fewer than 70 Australian growers will harvest crops in the coming weeks, out of close to 800 producers in a good season.

Prolonged drought and water reform is likely to see production fall below last year's 54,000 tonnes, the second lowest crop on record.

A blow to the local economy

In a good year, SunRice injects up to $500 million into the New South Wales economy in wages and payments to growers and local suppliers.

This year the company laid off 250 workers, and the impact of that reduced economic activity has hit the Riverina region hard.

The Mayor of Leeton, Paul Maytom, said governments needed to understand that the value of rice to local communities extended far beyond its farm-gate return.

"It should not be about who can pay the highest price for water; it should be about what will it cost our communities if we cannot sustain that diversity of irrigated agriculture that we have, which then moves into the value-added side, which then moves into employment and then sustains our whole community," Mr Maytom said.

Reduced crops have had a major impact on the region's economy. ( ABC Landline: Sean Murphy )

Under water reforms, the environment and permanent crops, such as almonds, grapes and citrus, get water allocated before annual crops such as rice, cotton and cereals.

SunRice chairman Laurie Arthur said annual crop irrigators felt under siege.

About 500 have joined a $1.5-billion class action against the Murray-Darling Basin Authority, but he is urging calm.

Mr Arthur is one of the state's biggest rice growers and a former national water commissioner.

He said he understood grower frustration, but hoped state and commonwealth governments would make more water available for low-security irrigation.

"One of the reasons the irrigation community supported the reform process was the concept of property rights, transparency of process and a framework of water entitlements that give the sector confidence to invest to world's best practise," he said.

"Some of those have been delivered and some have demonstrably not been delivered.

"The government now holds 28 per cent of all the allocations in the Basin, so they are enormous users, and I believe they have the ability to correct the situation."

There are a number of big reports on water reform policy due in the coming months.

Rice growers in the Riverina have been operating with zero water allocations. ( ABC Landline: Sean Murphy )

They include reviews of the water market, water sharing, socio-economic impacts and water for the environment.

New Minister for Water, Keith Pitt, said the reports would provide important insights into water reform and the Murray-Darling Basin Plan.

"I am committed to ensuring the Government acts on their findings and that the time for reviews is coming to an end," Mr Pitt said.

"Irrigated agriculture underpins the Basin economy. The Government will work with the industry through these challenging times and ensure it is well-placed to respond when we are through the current health crisis."

Watch this story on ABC TV's Landline on Sunday at 12:30pm or on iView.