We are convinced the rice industry is a great opportunity for us all. It may not seem so to you right now as some back out of growing rice or even farming. The United States is in the right place at the right time and in the right commodity, which as I have pointed out is not just rice but water itself. Water is the ultimate commodity of this century and, like crude oil in the 1960s, is still ludicrously underpriced. “This too shall pass,” I tell people with great confidence.

Over the long-term there is a primary bull rice market that is snorting at us somewhere over the market’s horizon. It will pivot off water shortages, even though Asian governments now continue to fight that bull market tooth and nail with billions of dollars of nearly free agricultural subsidies. Those subsidies may come under review with the new Trump administration, which takes a dim view of all the folks that have sold U.S. agriculture down the river in trade negotiations for many decades.

President Trump knows who voted for him and who vetoed him. The SEC states voted for him and farmers first grew rice in the Carolinas. Not too surprisingly, new Secretary of Agriculture Sonny Perdue is from an SEC state, Georgia. SEC states grow cotton, peanuts and rice. Iowa is too far north to grow any of these southern crops. Rice is a southern latitude crop.

On one hand, some have gotten bullish on rice because of my long-term view on China, India and water. Unfortunately, you cannot make money on your current crop trading long-term trends. On the other hand, you can make money owning irrigated Delta and Gulf Coast rice land if the cost of water is going to go up significantly. It is the only practical way to go “long” the price of water. Water is locally controlled with over 10,000 water districts in the United States alone. There is no Chicago clearing market yet for water.

Warren Buffet once said, “The best investment is farmland.” He also said you should only buy a stock if you are comfortable if the stock price does not trade for the next 10 years. The long-term is for land owners, the short term is for those of us renting the farmland. Some of my customers are bit of both, land owners and tenants. They have their feet in both markets, land and rice. They are losing their shirts on the rice price now but rice land has not been a bad investment play.

Others have said China is about to buy rice from Arkansas. I say, not now. What they are doing in rice works well for them and it does not include South or North American rice sourcing -- not yet anyway. Unlike corn, beans or wheat, China can buy rice from its Asian neighbors and is cultivating South Asia. In the past, China has cultivated sourcing from the Americas, Australia, the EU and the FSU in other grains. Our time will come someday.

No one can count all China’s rice imports, which are closer to 7-8 million MT rather than the 4 million MT of “official” imports. Why? In many cases, they come across land borders rather than the open sea. Grain companies and grain analysts find it hard to count cross border flows in Asia. China dislikes transparency in what it does. After all, transparency is a good thing for the other fellow but not me. Is that not the case? Can you blame them?

The price of water will determine the relative value of rice in the years ahead because it takes twice the water to grow conventional rice versus wheat. Labor costs are much higher for growing rice as well. In vast areas of Asia, rice is more gardened than farmed on tiny patches of ground. Not only is the amount of land fixed but available water on that land is diminishing in many densely populated areas. If arable land has no water, what is it worth then? More and more water is mined like a mineral under the land by uncountable tube wells, particularly in India.

If wheat trades at $4 per bushel, then rice should trade at $8 per bushel. But in India rice is trading at $3 per bushel and in China at $8.10 per bushel. Wheat does not trade like that in Asia, just rice. What the devil is going on here with a grain that feeds three billion people?

The fact is that India has not owned up to the bull market in water, yet. China is preparing for it. That is why China is spending tens of billions of dollars not just funding farmers and farms but also creating modern logistical lines to its poor, interior provinces to allow food to flow from South Asia where the water is. China is building a north-south pipeline for water that may cost $85 billion. It is building a $100 billion-plus roadway from Chengdu to Lhasa, Tibet. It is easier for an autocratic regime to come to terms with water shortages than a democratic one. Democracies are more about vote-getting, not resource allocating.

Over the years, I have harped on China importing more and more rice. It has done that. Also for years I have been saying that the price of rice is way too cheap compared to wheat. So, that makes a rice producer bullish, right? It should not make us bullish or bearish this year or next but optimistic in the long-term. The big “if” is whether we can survive the short term of 2017. A lot of rice acreage will disappear in 2017, most likely. We will know more about that in March.

Do not let your optimism make you always be bullish when it comes to markets. You need to sell all your crop each year. You need optimism to be in business and to own irrigated land but optimism does not make you any money in the market. The market feeds on your hope. Optimism or pessimism in grains has a lot to do with your outlook for exports from the US and your trust in your business survival skills during this time.

WTO trade agreements have eviscerated potential demand for imported grain into Asia. Governments there have spent untold billions ramping up production and barring grain imports. Agricultural debt is soaring in India and China. This trend could go on for a while yet as the US rice industry becomes insolvent and acreage shrinks.

Governments can do the wrong thing longer than you and I can remain solvent -- sad but true.

I gave the keynote address at the Jan. 25 Arkansas Soil and Water Education Conference in Jonesboro. I spoke there because I think water is the key to rice, more so than any other grain. I speak at rice meetings all over the world but this my first invitation to speak at a water meeting. I jumped at the chance. If you would like a copy of my speech and the slides I gave, just e-mail me at [email protected]. That speech covers one of three things we need to market our rice each year:

In my opinion, if you do not pay attention to all three, you’ll not understand what drives the rice market. You may end up allowing your bearishness to turn into business pessimism and bad decisions. You can hold bullish or bearish sentiments on the rice price and still be an optimist.

Business pessimism is a permanently crippling attitude towards a temporary problem. About 80 percent of businesses fail because the entrepreneur never expects to succeed. If your crop price is insolvent or your wage too low, go elsewhere and start again. We are blessed in this country with the right to choose where we live and what we do. Facing down the insanities of the market requires patient gratitude, which is saying thanks to the market by selling some rice now and then. The key to business stamina is ingrained gratitude, shaped by your values and character.

I am speaking also at the 2017 Mid-South Farm and Gin Show in Memphis on Saturday, March 4. I am doing something new there, covering all three parts of your rice market that day. Hopefully my talk will help you understand how the world of rice works.

I am not in the rice business or even the water business. That is your business. I just help you consider the rice market differently than you have in the past. I’m in the training and communicating business located in the rice market space. That’s why we have all those videos and white papers for your education and ours on our website. You can also check us out any day by signing up for a rice trial on www.firstgrain.com. Stop by our Firstgrain booth and visit us there in Memphis at the Cook Convention Center or in the digital space.