More on rice-dependent farms and STAX…

“Obviously, any farm that has been producing rice -- and has a historical production base in the crop -- will lose significantly.

“Look at the Hoxie farm (see Table 2.1 on study's page 9) where they were getting direct payments of $10 on soybeans. Now, they’ll get an ARC payment (if they choose ‘individual’) of $7.44. That isn’t such a large loss -- except the Hoxie farm would only receive that ARC payment 27 percent of the time.

“As we continue to evaluate the effect of the Senate bill on Arkansas crop farms we’ll be looking at the STAX program for cotton. We have a Leachville farm that is fully planted in cotton and the McGehee farm with about 2,400 acres of cotton.”

On the analysis being used by Southern farm advocates to bolster their case for a stronger safety net…

“We’ve made all our analyses available to the Arkansas delegation. They’re aware and understand the implications of this significant change in the commodity policy landscape for Arkansas crops. Attention has shifted to the development of the House bill where there are indications of a much more regional approach than the one-size-fits-all Senate bill.

“The rice sector’s baseline over the next 10 years, to the extent they’re losing the flow of funds coming from direct payments, will see a loss of around $100 million per year.

“And looking at the individual farms --removing the $90-range direct payment and replacing it with a program that has a one-in-three chance to provide $15 or $17 -- depicts a huge change in the commodity policy landscape.”

It would seem like the rice industry might say “well, you’re taking away direct payments, give us something else. Open Cuba for trade.”

“Yes, there are many things they could say. … Opening up trade to Cuba could be an important offset. … Unfortunately, Cuba trade isn’t (driven by) the farm bill. That policy is in other legislation.

“My concern about Cuba, though, is that we also need to also keep the focus on improving U.S. rice sector productivity. The South American rice industry -- Uruguay, Brazil, Argentina, Paraguay -- are all competing strongly with us in the western hemisphere.

“That Cuban market should be an important one for U.S. rice. It’s a large market and our proximity makes us competitive. It would be easy in terms of timing of deliveries and the ability to get the rice to them.”

Feedback from farmers and advocacy groups…

“The farmers and groups understand the Senate farm bill is absolutely no good for Arkansas. It will be a challenge if the Senate bill dominates in conference.

“The cornerstone, however, for either the Senate or House bill will be crop insurance. Well, Arkansas farmers recognize this and are signed up for crop insurance. But the product available -- the combo products in particular, yield and revenue protection -- really don’t get at the important systemic risk the Arkansas farmers are facing. That is particularly true for rice and all the irrigated crops in this state. Pumping costs and all the other energy-priced and weather-related inputs are far more important for these irrigated crops than the Midwest crop systems.

“There are margin insurance products in development. But we may not see these insurance products earlier than 2014, if then. That means we may have rice farmers hanging on in 2013 and 2014 with inadequate crop insurance.

“And we’ve seen what has happened to rice price volatility lately. India has come into the market and knocked prices down by $100 per metric ton milled rice. There’s a lot of uncertainty. India’s in-and-out approach to rice trade has been destabilizing for the world rice market -- and the United States exports about half our rice.

“The need for developing solid risk management tools for the rice sector has never been more important. There is a need to address the convergence problem with the rice futures market, not only for hedging purposes but also because this futures market is used to generate an expected price for the revenue crop insurance product. The bottom line is that crop production in Arkansas is facing a challenging future.”