What is in this article?:
- Mill CEO explains outlook for U.S. long-grain rice.
- Iraq a key to deal with larger crop?
- How will new PLC program impact rice producers next year?
Iraq a key
Finding a home for the additional 28 million hundredweights will be a challenge, said Glover. “To give you some kind of idea … we’re going to have to see a 44 percent increase in U.S. long-grain exports in 2014/15.”
Iraq, Glover believes, could be key in moving the rice. “The good news is that after a three-year absence, Iraq came in and began buying U.S. rice in 2013/14. Another bit of good news: Iraq annually imports 1.4 billion metric tons of rice. So Iraq alone could handle the 28 million hundredweights.”
The rice most recently shipped to Iraq was required to be bagged in the United States. This, said Glover, means upper Mid-South mills are at “a freight disadvantage. The Louisiana mills, the Gulf Coast mills, are the ones that realized those sales (to Iraq). We have a $50 to $55 per metric ton freight disadvantage.”
Prior to 2010, Iraqis would take unbagged rice from the Mid-South. “We would ship it, in bulk, all the way to Iraq. Over there, they’d pack it at the port and distribute it. Why they’ve changed their preferences, I don’t know. But I assure you we’re trying to get them to go back and take our rice like they did in 2010.”
To sell the larger crop, the price for U.S. rice must be competitive. How will that play into the new farm bill programs? Glover worked through an example.
“The USDA’s most recent projection for long-grain cash farm prices in the upcoming year ranges from $12 to $13 per hundredweight. If they’re correct, under the new (Price Loss Coverage, PLC) farm bill program, you’ll receive a payment.
“Work from the mid-point of (the USDA projection) of $12.50. Under the PLC program for rice, there is a ‘reference price’ of $14 per hundredweight. We used to call that the ‘target price.’ Compare that to the average farm price ($12.50) and that means a difference of $1.50 per hundredweight (or $0.675 per bushel). Under the old farm bill, that was known as the ‘deficiency payment.’”
Unfortunately, said Glover, the payment has been “sucked up into the Budget Deficit Reduction Act and there will be a sequestration of 7.2 percent taken out of that amount.” The sequestration would mean 11 cents less per hundredweight.
Bottom line, said Glover, is under such a scenario the PLC payment would likely be $1.39 per hundredweight.