Is there a light at the end of the tunnel for rice prices? Richard E. Bell, president and CEO of Riceland Foods thinks so.
Speaking at the recent 2002 USA Rice Outlook Conference in Little Rock, Bell said he would be “really disappointed if we do not have price improvement sometime after the first of the year and perhaps in a major way. It's happened in wheat. It's happened in corn and soybeans. And the global fundamentals are changing.”
With prices hovering at the lowest levels in many years, that's about the best news that U.S. rice farmers have heard lately. Bell was also optimistic about the development of new export markets for rice.
“We in the rice industry have really gained from the emergence of NAFTA,” he said. “In the 1970s a large part of U.S. sales were to Vietnam and other destinations with long freight hauls. Now about half of all U.S. rice sales are in our backyard. Four of our top five customers for exports were in Mexico and Central America. And nine of the top 15 export customers for rice were in the Western Hemisphere.”
Most of the sales to these area “are commercial sales, not aid sales. So we really need to focus our efforts on the Western Hemisphere.”
Bell believes that Cuba could eventually emerge “as one of our top three export markets. It is probably going to be more of a rough rice market than it is a milled rice market. I don't see anything wrong with that as long as we're selling rice. But we have the opportunity to control situations by investing in milling operations in Cuba someday.”
Bell also disagreed with an assertion that imports of rice were significantly hurting U.S. producers. “Last year, the United States imported about 400,000 tons of rice and exported 3.1 million tons, which gave us net exports of 2.7 million tons. The imports that are coming in are actually fragrant rice and basmati rice out of Asia. We've made some valiant efforts with research programs, but frankly, we are not able to put that kind of rice on the table.”
Bell noted that domestic consumption growth “continues to do well.”
If the U.S. rice industry is to take advantage of Western Hemisphere markets, farm programs must supply stability, according to Bell.
“Our competitors in the world market say that we are competitive in the world market only because of our subsidies. I'm not bashful about getting help from our government. There's nothing wrong with that. All the other countries are doing it. We're not getting any more than anybody else. It's just that we are more visible.
“We are going to have to attract capital and technology,” Bell added. “We have to put products on the table that people want. Genomics, new plant breeding technology offers great potential to do that. To continue to grow, we're going to have to have stability. And the farm program is very important to us in providing that.”
Bell said current farm policy has both helped and hurt the rice industry. “The 1996 FAIR Act had a big impact on rice production because the grower no longer needed to plant the crop to receive a payment.”
That impact, noted Bell, has been most pronounced in Louisiana and Texas, where there has been a growing trend for landlords to kick rice-producing tenants off their land and take government payments themselves.
On the other hand, “There are some good features in the 2002 act. I was an advocate of the countercyclical payment.”
Bell said the $10.50 target price for rice is too low for rice producers. “That's because we didn't have the political horses that we needed to get it done,” said Bell, noting that several key Southern legislators were not invited to participate in conference hearings on the bill.
“But the loan rate is there. The marketing loan feature is there. There is an opportunity to update bases and yields.”
Disappointments in the act were the no-planting requirement, and the payment schedule for the countercyclical payment. On the latter, Bell said, “It's going to take us several years to get in the correct cycle so that those payments will be useful to people who receive them.”
He added that making oilseeds a program crop “may have helped farmers in Iowa and South Dakota, but may have taken away money from the South.”
Bell said the two biggest issues facing the rice industry “are water and environmental issues.”
To get ready for future farm bills, “We have to regroup and rebuild our political base, starting with the elections that have just concluded,” Bell said. “But I'm encouraged. We have something to build from.”
Bell also suggested that the U.S. rice industry present a strong, unified voice to Congress.
“We can't just get along, go along with Congress,” he said. “If you're not careful, you just end up being the lowest common denominator. The rice industry has had some creative suggestions for the process in the past.
“I know we still have this problem with dissension in the industry. People in Washington say the best thing we can do when we come to Washington is to speak with one voice,” Bell said.
Bell noted that both rice organizations (the U.S. Rice Producers Association and the USA Rice Federation) “are saying the same thing in those meetings with Congress,” and could be better served with one organization representing them. “But my view is that it is more of a staffing problem than a substantive problem.”