WHAT'S COOKIN' IN THE RICE INDUSTRY.

Although rice production in Arkansas differs drastically from that of California, one fact rings true for rice growers across the board: Times are tough. But there are bright spots in the industry, including new varieties and crop protection products, as well as creative ways for producers to market their rice. There's also hope that increases in government payments and provisions in the next farm bill will offer much-needed relief.

"Rice prices are very low. They're about half of what they were four years ago," says Earl Manning, Midsouth regional editor emeritus for Progressive Farmer. "In 1997, rice sold for $10 per hundredweight, and now it's below $6."

Low prices were a contributing factor to the decrease in U.S. rice acreage last year, Manning reports. "Two years ago, 3.5 million rice acres were planted, whereas almost 3.1 million rice acres were planted in 2000," he says. "I don't know what will happen this year. There's not much incentive for rice producers to increase acreage."

Arkansas produces about 40 percent of the nation's rice, followed by California, Louisiana, Texas, Mississippi and Missouri, according to Vicky Boyd, editor of Rice Farming magazine. "California produces mostly medium-grain varieties, whereas the other states produce mostly Southern long-grain varieties," she notes.

Another difference between California and other states is that many rice herbicides are not registered for use in California. "It's more difficult to grow rice out West," Boyd says. "But many stick with it because other crops don't pay, whereas they get a fairly good rice crop year in and year out."

Although U.S. rice acreage dipped last year, yields increased throughout the six major rice-producing states. "Typical yields in the Midsouth range from 120 bushels to 180 bushels an acre," Boyd says. In California, the average medium-grain yield in 2000 was about 8,300 pounds per acre. (Note: For statistics on rice acreage, prices and exports, see "U.S. RICE PRODUCERS STRUGGLE AGAINST WORLD MARKET COMPETITION".)

THE BIG PICTURE

Along with weak prices, U.S. farmers are faced with an abundance of rice on the world market. "On a global basis, there are strong grain supplies, particularly in rice. Farmers continue to ask, `We've been at the bottom of prices for three years or so. When are prices going to turn?'" says Bill J. Reed, vice president for corporate communications and public affairs for Riceland Foods Inc., a farmer-owned marketing cooperative formed in 1921 and based in Stuttgart, Ark.

Federal payments are another issue impacting producer profitability. "Rice growers are hoping for additional emergency government payments this year," Reed says. "With prices in the tank for practically all commodities, these payments are critical to the economic viability of many farmers."

Boyd adds that the next farm bill will be critical for rice producers. "they're hoping it will have a safety net for them, she says. Good or bad, it will be something to monitor closely."

To combat low prices, producers are attempting to keep their cost of production as low as possible. This isn't easy, considering that rice is a complex crop. "Rice requires high management skills and high input costs," Manning says. "It costs as much to grow an acre of rice as it does to produce an acre of cotton." The average cost to produce an acre of rice in the Midsouth is about $550.

Water is one cost over which producers do not have a lot of control, especially in hot, dry years like the last two. "Water is a costly input because all rice is flood irrigated," Reed notes. "Pumping water from surface reservoirs or from underground sources is expensive," he says. "Growers welcome varietal developments or management techniques, such as precision leveling, that can save them money on water or other inputs."

Farmers also are looking for varieties that produce higher milling yields. Milling yield relates to the amount of whole kernel rice compared to broken kernels. "Whole kernel rice has more value," Reed says. "Consumers want to purchase pure white, whole kernel rice, with few or no broken kernels." Broken kernels can be ground into flour to produce items such as baby foods and waffle mixes where whole kernels are not important.

PROMISING PRODUCTS

Genetically engineered technology is a hot topic among rice producers. "They would like to have an effective management tool for red rice -- a weed that is public enemy No. 1 of rice -- but they are concerned about public acceptance of biotech varieties," Boyd says.

Aventis Crop Protection is developing genetically engineered rice that tolerates Liberty herbicide. "Aventis hopes to have EPA registration for Liberty herbicide for use on rice possibly as early as late 2002," Boyd says.

Clearance for the grain in Europe and Japan is not expected earlier than 2003, however, says Andy Hurst, product manager for cotton and rice herbicides for Aventis. "Liberty is cleared for food and feed use in the United States," he notes.

Another product receiving attention from producers is the Clearfield production system for rice from BASF Corp. The Clearfield system is composed of Clearfield rice varieties and Newpath herbicide, which has not yet received registration from the EPA. Chad LeBlanc, market manager of rice for BASE says the Clearfield rice varieties were developed through conventional plant breeding and thus are non-GMO.

"Growers are interested in Clearfield because they wouldn't have the same marketing concerns as with a genetically .modified variety," Boyd notes.

Boyd also points to Command 3ME from FMC Corp., which recently received a full federal label (normally referred to as a Section 3 label) from the EPA. "Growers were able to use it on a limited basis for the past two years under a Section 18 emergency-use label from EPa,," says Ed Cherry, FMC's director of government regulations and agribusiness affairs. "They're very excited about it because it provides economical pre-emergent control for some tough grasses that other approved products weren't controlling effectively."

Producers also have expressed a high level of interest in hybrid rice, which was available for the first time in the United States last year. XL6, a standard long-grain rice from RiceTec Inc., Alvin, Texas, was planted on 11,000 acres of commercially grown rice in Arkansas and Missouri in 2000. General Manager John Nelsen says RiceTec anticipates 50,000 acres of XL6 will be planted this year.

XL6 offers several benefits to growers. "It delivers an average 20 to 25 percent grain yield advantage over the best conventional rice varieties," Nelsen says. "XL6 also can save a grower $25 or more an acre on nitrogen and $15 an acre on fungal treatments."

Nelsen notes that XL6 seed costs about $50 an acre more and that the grain produced averages a discount of $60 an acre at the mill because of broken kernels. "The strengths of XL6 outweigh the weaknesses," Nelsen says. "In 2000 XL6 provided producers, on average, a net benefit of $55 an acre."

RiceTec advises producers that, for now, the best risk management practice is to plant XL6 on 10 percent of their rice acreage. "There's a learning curve involved," Nelsen says. "It is a good companion product."

MARKETING METHODS

Riceland Foods provides a variety of crop marketing opportunities to its 8,000 farmer-members in the Midsouth. Since its formation, the co-op has offered a seasonal marketing pool allowing producers to harvest rice during the fall and deliver it to the coop, which would market the rice pool throughout the year. Reed says the goal of the marketing pool is to move the entire crop during the course of the year while earning an above-average return for the farmers.

"The law of averages says the farmer participating in a marketing pool will not sell at the bottom nor at the top of the market -- both of which are unknown until the marketing year is complete," Reed explains.

The emergence of the rice contract on the Chicago Board of Trade (CBOT) has provided Riceland the opportunity to allow individual farmer-members to price rice based on the futures contract. Reed points out that in 1997, Riceland developed self-pricing rice marketing programs that operate in the same manner as its marketing programs for soybeans and wheat, including booking contracts, basis contracts, hedged-to-arrive contracts and cash purchases.

"Riceland members now have the option to either rely on our Riceland marketing exports to determine the price for rice by participating in our seasonal pool, or they can use our self-pricing programs based on CBOT to market their crop on their own," Reed says.

THE PERSONAL TOUCH

Because rice production requires intensive management and is very exacting, Reed says the services that companies extend to farmers are critically important. "What works for one farmer or field might not work for another," he explains. "So marketers have to address grower needs on a personal basis."

One way Riceland is focusing on its members' needs is through the Internet. "A significant portion of our farmers are online," he says. "Therefore, we're offering them the opportunity of accessing personal account information via the Internet."

The company views the Internet as an opportunity to provide additional services to producers. "We post a weekly market review on our Web site (www.riceland.com) or email or fax it to members who wish to receive it that way," Reed says. "We also include our newsletter online and post our 2001 marketing programs on it."

Boyd agrees that more and more rice producers are using the Internet, but traditional communication methods still hold a lot of weight. "Local radio is the way to go to catch farmers early in the morning when they're driving out to their fields."

Manning points out that many rice growers throughout the South rely on crop consultants because of the high level of management skills needed to grow rice. "They're an important group for companies to target when marketing inputs for rice," he says. "Other valued information sources are university specialists and advisers from seed and crop protection companies."

Debbie Coakley is a freelance writer based in Warrenville, Ill.