On Sept. 20, Louisiana’s two U.S. senators introduced a bill aimed at helping rice farmers in their state who have been hit with a double-whammy of unusually low prices and some vagaries in the language of the new law.
The bill offered by Sens. John Breaux and Mary Landrieu raised some eyebrows in Washington, coming so soon after the passage of the new farm bill.
From the start, rice producers have been unhappy with the new law’s target price of $10.50 per hundredweight (vs. the House bill’s $10.65). They – and other producers – are also upset that its counter-cyclical payments will be spread over two crop seasons.
Under the new farm bill, as with the 1996 law, farmers receive loan deficiency payments when world market prices drop below U.S. loan levels. In this case, the world market rice price, which is determined weekly by USDA, has remained flat while domestic prices have declined.
“I don’t like to use the word ‘panic,’ but, when prices began falling, some of our growers kept on selling their rice,” said Paul “Jackie” Loewer, Jr., chairman of the Louisiana Rice Producers Group. “With the LDP remaining constant and domestic prices falling many of them didn’t receive enough money to pay off their loans.
“This is what we call the loss of domestic premium, which the safety net in the old and new farm bill does not address,” he said. “So, while we also anticipate a maximum counter-cyclical payment for 2002 crop spread over three payments and two crop years, it still does not make up the difference in loss of premium.”
Once the rice began rolling in to local elevators and prices began dropping, Loewer said his cell phone started ringing with calls from Louisiana’s congressional delegation, asking what they should do.
“We held meetings to develop a case statement to present to them,” he said. About half of the audiences came from ag-related industries that feared what the loss of farm income would do to their businesses.
The situation may be different in other states where farmers are more “co-op-oriented” and rarely sell all their rice at one time, says Loewer, “although their situation may be closer to ours when they finish the harvest.”
Louisiana farmers supported the farm bill even after a midnight farm bill conference reduced the rice target from $10.65 to $10.50 per hundredweight, he noted. “We knew that if we didn’t get a farm bill then, the chances of getting legislation later would be that much worse.”
Louisiana farmers are “self-conscious” about asking for more help, “but given the numbers we’re looking at, we had to do it.”
Besides low prices, southwest Louisiana growers historically have had lower yields and lower margins than other areas. With the planting reductions of recent years, the new law forces some growers to accept a lower base if they try to update yields or be stuck with lower program yields.
As more such “Catch-22-like” situations emerge, this could become even more of a winter of discontent for farmers.