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Strong prices may boost rice acres

MEMPHIS, Tenn. – With soybean prices topping $9 and strong prices forecast for 2004/05, will rice growers switch acres to beans?

“There’s a much stronger farm program for rice than for soybeans,” Riceland Foods Chief Executive Officer Richard Bell said at the Mid-South Farm & Gin Show at Memphis. “If we get decent planting weather, I think we’ll have more acres of both medium and long grain rice.”

The past year saw a turnaround in the rice business, he says, following two years of market lethargy.

The loan deficiency payment (LDP) for rice drove price during the harvest period last year, Bell says. “With an LDP of $1.20, there was an advantage to both buyers and growers. We averaged about $4.15 for our growers.”

Part of the uptick in rice was due to Brazil entering the market, he notes. “They come in about every third year, usually when they have a short crop, and that leads to higher prices.”

Demand for medium grain rice has been particularly strong, Bell says. “Adding in the $1.05 LDP, it’s been bringing $5.50 to $5.75, and that’s a pretty good price.”

Even so, he says, Mid-South acreage of medium grain is down from previous years. “We very much need new medium grain varieties for the Mid-South.”

And he worries that, with strong prices, California growers will plant heavily to medium grain, resulting in overproduction.

Usage projections point to a reduction in world rice stocks, Bell says.

“India, a major competitor, has basically withdrawn from the market. We’re seeing some increase in medium grain exports by Australia, but not large.”

And, he says, U.S. domestic use is continuing to grow.

Haiti, which has been in strife, has been a good market for U.S. rice, Bell says, and Cuba “has been a good market for two years, with a continuing positive outlook for sales there. We have a big advantage over Asian suppliers in terms of shipping time and a dramatic advantage in shipping costs.”

U.S. rice interests are hopeful, he says, that they will be able to sell to Iraq, once a major customer for American rice. "I'm a bit irritated with Washington's policy over doing business with Iraq," he says. "We were told that countries that participated in the coalition to overthrow Saddam Hussein would be the ones to do business with Iraq -- and yet they ended up letting Vietnam sell rice to the Iraqis."

He looks for a 2004/05 price of “at least $4 per bushel, taking into consideration the loan deficiency payment. “The LDP will be lower, but I look for the market to be higher, with a continued premium for medium grain over long grain.”

Counter-cyclical payments “won’t be of much value – except in postage costs to the Post Office for mailing them,” he says. “But it’s an election year, and I guess they figure those small checks will count for something.”

More than 15,000 farmers, ginners, and agribusiness representatives attended the two-day show sponsored by the Southern Cotton Ginners Association and Delta Farm Press.

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