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Rice: exports, better quality needed

Record U.S. rice acreage in 2010 didn't translate to an excellent crop. Millers complain about the 2010 rice crop quality. USDA investigating Brazilian rice subsidy claims.

During the 2010 U.S. rice harvest, rumblings about poor quality began early and continued throughout. At the Mid-South Farm and Gin Show, farmers were told the crop’s quality issues continue to reverberate.

“If you go back to the summer … we had record rice acres – particularly in Arkansas (with nearly 1.8 million acres) and Missouri (with 253,000 acres),” said Riceland’s Carl Brothers, senior vice president, Market and Risk Management.Pressure came on and U.S. prices, for the first time in some time, went below Thai prices. Immediately, in the late summer, we sold 120,000 tons to the Iraqis and displaced the Thais there.”

The harvest was “very disappointing. Not only were the field yields disappointing but the milling yields and quality were very poor. In fact, I’ve been with (Riceland) for 46 years and it’s the worst crop we’ve handled. We’ve had more difficulty with the (2010) crop with our customer base, with our milling operations, than with any crop I’ve experienced.”

Further, “we have less rice on hand because of the yields and milling yields. The rice prices rebounded. … But as U.S. rice prices increased, we missed the last three Iraqi tenders. And we’re really falling off the pace needed to move this crop.”

The Iraqis chose to do rice business with South America, Vietnam and Thailand. “The Vietnamese and Thais, particularly, have a freight advantage on us. We need some of that Iraqi business, in my view, to disappear this crop.”

However, exporting poor-quality rice to reliable customers could bite the United States. Brothers pointed to Haiti as an example. “There is a vessel now loading out of Uruguay that is going to Haiti. It has my attention for two reasons: one, it’s cheaper than what we’re currently selling; two, the quality of the South American crop is good.”

Meanwhile, “we have some of the worst U.S. rice I’ve ever seen. I’m worried that when that rice hits, the Haitians will get very upset in the difference between South American and U.S. rice. It couldn’t be a worse time for Uruguay coming into the Haitian market.”

For the Dec. 1 stock report, USDA numbers “came in with long-grain at 273 million bushels. That’s up 19 percent.”

While some claim the crop is overstated, Brothers disagreed. “When I look at projections of the crop and the increase – and the disappearance of the crop which should have been massive between harvest and December (and it’s still up 19 percent on stocks) – that doesn’t suggest to me that the crop is overstated.”

Brothers also commented on recent claims that, against WTO rules, Brazil is subsidizing rice. “I was first aware of that about a week to 10 days ago. We have brought that to the attention of the USDA to investigate. It was reported to me that it’s an export subsidy, which is illegal. … I’m told it is $60 per ton (and) is under investigation by the USDA, at this moment.”

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