Most observers - and USDA analysts - believe farmers planted more acres of rice in 2014. USDA's June 30 Acreage report said 2014 plantings are forecast up 558,000 acres from last year when growers put in one of the smallest crops on record.
Because much of the increase occurred in Arkansas, long grain prices have been falling and have dropped by about $1 per hundredweight in recent weeks, says Michael Salassi, J. Nelson Fairbanks Endowed Professor of Agricultural Economics at Louisiana State University.
"Going through the summer the main thing that will be affecting price is that increase in acreage in Arkansas," he said in remarks shown here from his presentation at the Rice Research Station Field Day on June 25. "All of that is in long grain so you should expect to see long grain prices kind of move down. Medium grain prices should move up."
Salassi said the deadline for signup for the new farm bill is months away, but farmers should be preparing for the decisions they will have to make once USDA completes the regulations for the new Agriculture Act of 2014.
"There are some decisions that are very important for farmers and for rice that you need to start working through the numbers now so that when the time comes to make those decisions, you're going to make the right choices.
One of those will be the ability to reallocate base. Growers cannot build base, but they can reallocate base acres depending on what their planting history has been from the 2009 to 2012 crop years.
"Whatever the planting distribution was in those years, that will be your opportunity to switch your base," said Salassi. "So owners have the opportunity to keep base as is or if it's advantageous to you to reallocate that base. Remember, in this farm bill, no matter which option you choose payments are still made on base acres."
Salassi also listed the new income support programs in the farm bill. Those will include Ag Risk Coverage or ARC, which is a revenue-based program that is based on previous revenue; Price Loss Coverage or PLC, which is focused solely on price similar to the old target price program for rice; and the opportunity to update program yields, which is open to PLC program participants.
Next year, growers will also be able to participate in the Supplemental Coverage Option, which can be used to cover some of the crop insurance deductibles.
For more information on the new farm bill, visit http://www.ers.usda.gov/agricultural-act-of-2014-highlights-and-implications.aspx#.U7smjPldWSo