To end the year on a positive note, it might seem odd to cast our gaze towards southwest Louisiana. But terrible late-season flooding can’t dampen the happy fact that the farmer-backed South Louisiana Rail Facility (SLRF) is seeing continued success.
When first profiled (http://bit.ly/2hQ6B0z) two years ago, the operation was loading strings of railcars with rough rice and pointing them towards Mexico. That side of the business is still going on but now ships have been brought into the mix.
“As for going from rail to ships, it was a product of one thing kind of leading to another,” says Chris Krielow, producer, rancher and member of the SLRF. “The same group of guys is now loading boats for shipping to Mexico. It was a logical expansion.”
Why logical? When IFG Holdings opened a grain export terminal at the Port of Lake Charles, the farmer members took notice. “That’s only minutes away from many of us in the big southwest Louisiana rice-producing parishes (Jeff Davis and Acadia). At the same time, the people we’ve sold rice to in Mexico have the ability to unload rice at Vera Cruz.
“Through our work with IFG and the buyers we’d already established, it was a no-brainer. We just put the two together. It allowed us to do a much larger volume of business with paddy rice.”
It isn’t just southwest Louisiana growers that are benefiting. There are now member growers in southeast Texas delivering to the port at Lake Charles. “It isn’t any farther from them than it is for some of the Louisiana growers. We had 155 members originally and, last count, I believe we’re up to 173 members. Farmers looking for alternate markets have signed on.
“We’re still doing the rail loads, as well. But to give you an idea about the relation to bulk shipping, one of the ships can hold an equal amount to about 250 rail cars. That puts it in perspective.
“By the way, the rail facility is available to anyone wanting to sell any commodity. We’ll load any bulk commodity brokers want us to handle. To this point, it’s only been rice but we’re not limited to that crop.”
Krielow is extremely keen to explain “there’s nothing negative about what we’re doing. Zero. This is simply an opportunity for growers who are hurting. We found a way to open up a market and, with a lot of hard work from a lot of people, that’s what happened.”
Are rice inspections still done at the rail facility?
“They are. So you understand: we’re just a bunch of farmers. We don’t personally sell rice to the buyers. That goes through a licensed broker and that’s who we have an agreement with. The broker then makes deals with the end buyers. We still have a middleman.”
Once a deal is struck, “our group is given the target: ‘Hey, we need X amount of rice to fill this order.’ The beauty of the South Louisiana Rail Group is we’re able to inventory our rice and let the broker know what we can provide.”
Quality is of utmost importance. “There aren’t many, but we do have different varieties going in. However, each load is carefully graded by a third-party grader and procedures are carefully followed. Every truck is probe-sampled and graded ahead of being dumped. If there are any issues with the rice, the truck is turned around.
“The thing is the members are close-knit. Everyone knows the set of parameters for acceptable rice and everyone is on board. You know, ‘Don’t show up if your rice doesn’t meet the parameters. You will be turned away.’”
Whenever the rice is prepositioned before it goes on the shipping vessel, the Federal Grain Inspection Service (FGIS) grades the rice again. “They’re the ones who issue the certificate of grade.”
When was the first ship sent down?
“We were able to secure three in 2015. So far, for the 2016 crop year we’re working on our fifth: August, September, October, November and, as we speak, we’re working on the December boat. We’re also working on future business, future shipments.”
What about the impact of the 2016 flooding in south Louisiana?
“It affected many of us, mostly guys south of I-10, and I’m part of that group. It was very devastating to some but it’s fortunate the floods happened in mid-August instead of August 1. By then, most of us had the biggest percentage of our rice harvested.
“That doesn’t mean guys weren’t hurt terribly, though. There’s rice we didn’t put combines in. This is my forty-second crop. I’ve lost soybeans crops, wheat crops. But this is the first time I’ve had a rice crop ready for harvest, spent the money on all the inputs, and then didn’t put a combine in some fields – about 8 percent of my acreage. I know some guys that had as much as 25 percent of their acreage unharvested and that’s tough to overcome.”
Southwest Louisiana is mostly rice and crawfish, says Krielow. “We’re not in a big row crop area. You’ve got to get 60 or 70 miles – probably closer to 100 miles – before you see soybeans and corn of any magnitude. We have flat land with clay bottoms and hardpan that can hold water.”
How big could the operation’s exports get?
“As it stands with the port, we’re close to what we’re capable of. It isn’t because we can’t produce more rice but because the berth at the port is limited. They’re exporting a tremendous amount of corn and soybeans out of the Midwest. Most people don’t even know that’s happening.
“We’re trying to make the best of a bad situation. Farmers all over the Mid-South know exactly what I’m talking about. Regardless of what the local price is – or what we’re able to sell the rice for – we all know grain prices are unfriendly. So, yes, this is a good thing but we’re still a long way from where we need to be to be profitable.”
Unfortunately, says Krielow, “we’re a time where the milled rice export business is slow. We’re blessed to have the capability of exporting this paddy rice. It gives us a slight premium. By no means is this some pot of gold at the end of the rainbow.”
What about the potential opening of the Cuba market? Since it’s capable of loading ships now, it seems the SLRF would be right there waiting with wide eyes.
“Yes, Cuba is very close to us, very close. Now, Cuba will use paddy rice but I’m more interested in seeing what happens with milled rice. I think that would be the greatest thing to happen to south Louisiana farmers. It would be great to have our mills running wide open to supply that market.
“All these things we’re doing and considering come because we’ve got gifts from God. Look at how close we are to the water. We’re just able to take advantage of what’s been put on our plate.”