Caught in the fallout of Producers Rice Mill’s Oct. 26 termination of its pricing pool, some farmer members of the co-op are reeling.

The mill’s move — which leadership says was prompted by “unprecedented” quality issues in the 2010 crop — has left them angry and fearful they’ll be short of money to pay off loans.

For more, see Pricing pool terminated and CEO explains milling concerns, actions.

“Let me tell you: this is a bad situation all around,” says producer Kenneth Graves, president of the Arkansas Rice Growers Association and a member of Producers. “I sympathize with farmers whose rice was affected by all the heat (during the summer) and that’s bad for the mills, too. Both sides have been hit.

“But the mill is taking care of the mill. The farmers are taking the brunt of this. Back in the day when farmers went with an LDP when rice was low, the mills made extra money by buying the low-priced rice. That (benefited) them. Now, when times are hard for the farmers, the mills are still being taken care of.”

Graves says farmers “are mad. They had to sign up acres with the co-op by the end of June. So, they committed ‘X’ number of acres.”

Largely based on those commitments, the co-op “markets a lot of the rice ahead of time and fills sales orders they need to. And if the farmers don’t bring the rice in, as promised, the co-op gets upset.”

Now, with the mill having taken members’ rice from the pricing pool and placed it in a seasonal pool, farmers “have lost control over their rice,” says Graves.

Another common complaint: even those with rice that milled well, or even decently, will also endure the expected financial hit to come.

“Depending on the variety, a lot of the rice is sampled and then co-mingled,” says Graves. “Well, if a farmer brings in bad rice and another brings in some good milling quality rice, it can all be dumped together. So, the farmers who had good milling rice can’t pull their crop from the bad. That puts the farmers with good rice in the same bad price boat — and many don’t think that’s fair.”

(For the mill's response to this, see Mill chairman explains pricing pool timeline, responds to rumors)

While there are no suggestions as to how the mill could keep from mixing loads, not everyone’s milling quality was terrible, agrees a veteran, east Arkansas rice farmer. “Everyone I’ve talked to said some of their rice didn’t mill well. But half, or more, milled okay. I even had some rice I got a milling premium on. Not all the milling was bad…

“Jerking farmers into the seasonal pool — not knowing what price you’ll get, or when — could be the straw that breaks the camel’s back in a lot of cases.”

According to the fine print of the mill’s membership documents, “they can (terminate the pool),” admits Graves. “But this is really going to hurt young farmers who have only been working fields for a year, or two. They’re trying to pay off initial loans, get in a financially solid situation and get their feet on the ground. This will hurt them badly.”

Indeed, the pool termination puts a spotlight on the financial tightrope too many vulnerable producers are perched on.