There are some bright spots on the horizon for the rice industry, but the 2000-01 growing and marketing year can't get behind Richard Bell quickly enough.
“As far as I'm concerned, I wish the 2000-01 year would just go away. We should just get through it and get on to the next one. We had soaring natural gas prices, petroleum factors, difficult marketing decisions, low prices, and poor margins. We had a huge California rice crop preceded by a smaller one. And we ended up with a trashy soybean crop,” said Bell, Riceland CEO, who spoke at the annual Riceland meeting in Stuttgart, Ark.
For the year, there were three goals Bell wanted to focus on: Competitive seasonal pool payments, avoiding losses in taxable business and protecting the balance sheet. All were accomplished, he said.
There were highlights for the year. Among them:
- The wheat-marketing program. “We did extremely well with the wheat marketing program. Wheat has become an important crop.”
- It was another good year for rice flour.
- Soybean crush management. “It was difficult early because there were no margins at all. It took a lot of strong management with crush margins in Chicago but the ending numbers were good.”
Bell said one of the key highlights of the year was Riceland's efforts in Cuba. During the last 18 months, company representatives made eight trips to Havana. While some Americans continue to complain about dealing with Fidel Castro, it seems Riceland's efforts are bearing fruit (see story on Page 11).
Another highlight is the rice expansion in Wal-Mart Supercenters. The past year volume was 36 percent more than the previous year.
“Wal-Mart is going into areas where we're strong — like Chicago and Wisconsin. The more stores they build, the more volume we get. This is a significant development for us.”
Along with highlights, there were some major challenges, said Bell. One was the medium grain market. As the year began, a major brewery that uses medium grain rice put a limit on Bengal southern medium grain. It claims that a tenth of the time the variety has a lilac bouquet.
“I've never been able to smell that, but they claim it's there.”
Medium grain stocks increased also because California had a huge crop. West Coast end-of-year stocks were up 68 percent over the previous year. South stocks were up 29 percent for a weighted average of 55 percent.
“Medium grain production is down 21 percent from a year earlier because Arkansans went back to long grain due to the poor (medium grain) market and the large California crop. That helps explain the 26 percent increase in long grain.”
Challenges were also present in edible oils (including rice oil); soy lecithin (“because Europe won't accept GMOs, we've been pushed out of that market”); white rice milling margins that aren't as good as the previous year; and energy co-generation.
Bell, however, sees some promising things. Soybean processing margins are 25 cents per bushel better than a year ago. Rice milling margins for white rice have improved — “partly due to lower prices for raw material.” Edible oils are beginning to do better. Soybean quality is up, natural gas prices are lower, and the drought in Central America has benefited U.S. farmers and companies.
Challenges for the coming year include the large rice crop, and insect damage to rice and soybeans. “The stinkbug will affect our ability to market. I think some people were caught off guard by the pest, and others thought they'd get by without spraying.”