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Rice On The Move
Industry Views Show Hopes, Challenges To Expand Markets
(Part One Of A Two Part Series)
BETTY VALLE GEGG-NAEGER
MidAmerica Farmer Grower
DEXTER, MO.
With no two years alike in the rice business, Dwight Roberts, US Rice Producers Association (USRPA) President & CEO, recently addressed the present trends.
“Always in the rice market and rice politics you can find a lot of positives and a lot of negatives and weigh the two to see where we’re headed,” he began.
A big issue recently was the Farm Bill, which finally was resolved. While it’s not necessarily to farmers liking, especially with the elimination of the direct payment, it does provide some protection to the farmers and now the implementation process will take considerable time.
“I don’t expect they’re prepared for farmers to sign up until we get into harvest time, maybe August, September at the earliest,” Roberts added. “That’s been a big issue in the last few weeks, and we’ll continue to monitor it. There will be a considerable amount of information going out through the universities, and some public meetings with regards to the farm bill implementation.”
Roberts said the US Rice Producers Association continues to focus heavily on Mexico and Central America, which are by far the most important markets for long grain rice. USRPA spends much time in Mexico and hosts many Mexican buyers here throughout the Delta and along the Gulf Coast. USRPA is involved in a new rail facility in Louisiana that has become a big success. It gave farmers in the area an alternative to participate in the paddy rice market in Mexico that they had not been able to because of their location and freight rates to the river.
Mexico and Central America, the most important markets for long grain rice, are focused on heavily by the US Rice Producers Association.
Photo by John LaRose, Jr.
Mexico is over an 800,000-ton market, by far the most important market for long grain. Mexican consumers do not eat on a per capita basis as much rice as other countries. They’re a corn and bean based society but because of the sheer population of around 120 million people, the overall consumption is very significant. Mexico’s per capita consumption hovers around 18 pounds per person.
“It’s a big market and a growing market as people become more aware of the benefits of eating rice, whether you’re rich or poor or anywhere in between,” he noted. “We expect the Mexican market to continue to be a big positive for our rice farmers, and we expect that market to grow.”
The rice producers association does educational work in Mexico through schools and community groups, impressing upon young children and their parents the benefits of eating rice and how it combines with other foods.
“Rice goes with anything, vegetable or meat or whatever, and it doesn’t change the economics of the monthly food bill so there’s a lot to be gained. That’s a message we do in Mexico and throughout Central America,” he added.
The six Central American countries from Guatemala down to Panama also are very important markets for U.S. rice. A 600,000-ton market, that, along with Mexico, becomes a 1.4 million-ton market for U.S. long grain rice. With the free trade agreement the United States has with Columbia, that quota now goes up three percent every year.
“We’re up to 83,000 tons duty free, and along with Venezuela, the Caribbean and Haiti, these are the markets most important for our long grain farmer,” said Roberts.
The USRPA would like to see some changes in Cuba. Now that the farm bill issue is settled rice producers will give more attention to the Cuban market.
“It’s obvious to me that there are some developments going on among a select few with regards to Cuba from folks in south Florida who can be quite influential,” Roberts pointed out. “I thought it was interesting to see in the press that candidates for governor in Florida, which is a very sensitive, political state, have come out in favor of working towards normalization, ending the embargo. We would like to see it tweaked to improve trade and business with Cuba, but I think you’re going to see another legislative effort here in 2014 both on the Senate and the House side to introduce some language that will change some of the terms we currently have for doing business in Cuba, so that’s something that’s on the radar screen and it’s very important.”
No other industry has been affected as much as the rice industry when it comes to markets such as Iraq, Iran, Cuba and so forth, and that’s a bitter pill to swallow for rice farmers, who get less support in Washington DC.
“Our hands are tied on some of these key markets and we don’t have a level playing field in a number of instances,” he added.
Roberts also discussed the rice market in Thailand because Asian rice, the cheaper Asian rice, is the dark cloud hovering over much of the western hemisphere. The rice scheme began in Thailand about 2011.
“They guaranteed very high prices to the farmers in a presidential campaign, the candidate was elected, the market turned on them and they had to pay very high prices for the rice,” he explained. “Paying $600 or $700 a ton to the farmer and dumping rice on the market at $325-350 a ton is not a level playing field. They’ve had tremendous protests and unrest in Thailand over the last few months and rice is right in the center of this. A few days ago there was a big attempt to withdraw money. Customers were kept out, unable to withdraw their money in three major banks in Thailand. That strikes at the heart of this issue because the government was apparently planning on loaning money to the traders, to the exporters, to be able to buy this rice then turn around and sell it at lower prices on the international market. That’s causing a major banking scandal in Thailand. This is an area that affects prices everywhere. It affects our business in Iraq, it affects our business in west Africa, shipping rice to all of our markets. We’ve seen Asian rice coming into areas of Latin America, which previously did not happen, not in astronomical numbers but it sure is something of concern in Mexico as cheaper milled rice, out of Vietnam and Thailand is going in there, as well as into northern Brazil, we are told. That’s something that we at the US Rice Producers keep our eyes on, keep a conversation going with the USDA and others over that particular issue.”
The recent rice report, the USDA Supply Demand Report, or NASS report, does support a good firm market for today on remaining old crop. The numbers are not as bullish as they should be, with the increased domestic consumption of a million hundred weights. They lowered the carryover at 16 million hundred weights, which is still too high.
“Before we get into new harvest, I think you’re going to see a single digit when it comes to the carryover number,” Roberts predicted. “That doesn’t necessarily mean we’re going to have super high prices but it’s sure going to firm up the market as we start talking about new crop and the bids that are going on there. We’ve never had numbers this low since the early 1980s, before my time in the rice industry. That’s definitely something to watch.”
The USRPA needs more exports, and needs export numbers a little higher. A dollar that’s not quite as strong in a number of markets makes for good export numbers so that’s going to be something to watch closely.
“Here in the futures market, the March and May are very firmed up at 15.50, 15.60, so we’ll watch that situation,” Roberts summed.∆
BETTY VALLE GEGG-NAEGER: Senior Staff Writer, MidAmerica Farmer Grower
Editor’s Note: Watch for part 2 in next weeks issue #19, of MidAmerica Farmer Grower.
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