This, he said at an Ag Outlook Seminar at the Mid-South Farm & Gin Show at Memphis, is a result of USDA “doing a great job of managing the world price.
Important to note, he says, is that “half of total rice sales and two-thirds of long grain have been to the Western Hemisphere nations,” with NAFTA and other trade agreements playing a key role in the upturn in exports over the past 10 years.
Private surveys, Bell says, are indicating a 5 percent drop in U.S. rice acres this year, with about a 6 percent decline in the Mid-South. “But I really question whether we’re going to be down as much as everyone is saying. I think we can put together a really nice scenario for rice. If we can get long grain down 9 percent, as projected, and exports continue at present levels, I believe we could see much higher prices in the 2003/04 year.
“I’ve seen forecasts of $3.80 to $3.90 per bushel for long grain with a loan deficiency payment (LDP), and I do expect we’re going to see prices above the loan rate in the cash markets, which will be a big change.”
A major influence, Bell says, will be what happens in Brazil. “I’m expecting them to buy 2 million tons of rice this year – they’re already making purchases – and that would change our situation dramatically. On a world basis, with three years in a row of production shortfalls (25 million tons this year) I think we can make a case for a real recovery in rice prices.”
A caution going into the 2003 crop year: “Medium grain prices have been higher, and we will have a very good settlement in our pool. But growers shouldn’t overdo it and plant a lot of medium grain. There’s just not that much market, and if we plant too much, the prices we’ve been seeing lately will disappear.”
Rice acres in 2002 were down slightly from the previous year, but the crop was of excellent quality, and hit a record 126 bushels per acre, Bell notes.
“Growers had to battle stinkbugs in 2001, but they didn’t show up last year, so we ended up with a fine quality crop, which gave us a much better marketing opportunity. Although the supply was only a bit higher than the year before, prices were pushed down this past summer to the lowest level since the mid-1980s. This was particularly true for long grain, because a lot of people had switched out of medium grain as a result of a major brewer stopping purchases of the Bengal variety because of an alleged flavor problem. That had a big impact, causing people to plant more long grain; we ended up with a big supply and prices fell.”
Rice breeders, Bell says, are doing “an excellent job” in developing long grain varieties that are much higher in yield, and “within the past several months I have become much more a believer in the potential of hybrid rice in the U.S.
“RiceTec and BASF, with their Clearfield system for combating red rice, are pointing the way to potential for even higher yields, and I think these hybrids will become an important part of rice production in the South.
On the political/economic scene, he says what happens in Iraq can have an impact on U.S. agriculture. “If we go to war and prevail, as we expect to do, I think there likely would be a huge food aid program sponsored by the U.S., which would include rice, wheat, vegetable oil, and other commodities. Iraq is one of the major rice importers in the world – before the 1991 conflict, they were the largest importer of long grain rice from the South.”
The faltering economy is a big question mark, Bell says, with the potential “to really play havoc with us in agriculture.” We’re already seeing an impact in higher petroleum and natural gas prices. I’m not for building more deficits. Longer term, I think going back to a lot of deficit spending could have a really negative impact on American agriculture.”
Bell credited the National Cotton Council with “great work” on the 2002 farm bill. “If someone had told me it would have ended up as well as it did, I wouldn’t have believed it. This was due, in great part, to Larry Combest of Texas; without his perseverance and commitment, it would’ve never happened. I think we’re all sorry that he’s leaving Congress. But we have a great friend in Sen. Thad Cochran of Mississippi, and he will be critical to agriculture’s future.