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'Bran' new enterprise: Riceland joins Japanese firms to develop rice oil venture.

ONE OF THE LARGEST AGRIculture commodities ventures in Arkansas has struck a rare trade agreement with two Japanese firms to produce rice-bran oil.

Riceland Foods Inc. of Stuttgart joined with Itochu Corp., an international trading company with an estimated $155 billion in 1992 sales, and Tokyo Oil Mills Inc., which has a 55-year track record of processing rice-bran oil.

The grand vision of the alliance is to become the world's major supplier of rice-bran oil. The landmark deal marks an inroad into the heretofore sacred rice market of Japan, which has withstood numerous export overtures in the past.

Hopeful rice exporters view the agreement as a vehicle to penetrate Japanese trade barriers and ultimately lift or at least ease the impact of restrictive tariffs.

Under the agreement, Riceland will supply rice bran and extract and process the oil, and Tokyo Oil Mills will provide technical assistance. Itochu will lead marketing efforts in the United States and on the international scene.

The trade triumvirate will invest about $10 million to develop bran milling operations in Jonesboro and Stuttgart and oil processing facilities in Stuttgart.

Construction should begin this month, with rice-bran oil production starting next summer. The new operations will generate 10-15 new jobs.

The partnership, dubbed Rito, projects 15,000-16,000 tons of annual oil production and sales of $16 million-$20 million.

Confidential negotiations were initiated in 1990, when Hisashi Hitotsumatsu, president of Tokyo Oil Mills, first contacted Riceland officials.

Touted as the largest miller and marketer of rice in America, Riceland began laboratory studies on rice-bran oil production in 1989.

During the milling process, bran is removed from brown rice to produce white rice. The approximate yield of rice-bran oil is 20 pounds per 100 pounds of rice.

Riceland now markets its rice bran for livestock feed production and will continue doing so after oil production begins. The company first extracted rice-bran oil on a commercial scale in 1991.

Health considerations likely will be a key to selling rice-bran oil to a domestic market that has shown little interest in the past. According to recent university studies, the value-added product may lower harmful cholesterol levels.

Japanese consume 50,000 tons of the oil yearly and have long favored rice-bran oil as a household cooking oil and for frying potato chips and rice cookies.

Itochu is no stranger to Arkansas companies. The firm is also the chief international marketer for Springdale-based Tyson Foods Inc., considered the largest poultry company of its kind in the world.

Riceland processes about half of the Arkansas rice production at its six mills in Stuttgart and Jonesboro. The farmer-owned cooperative also operates a soybean processing plant and edible oil refinery at Stuttgart.
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Title Annotation:Industry Report Supplement; Riceland Foods Inc.; Itochu Corp.; Tokyo Oil Mills Inc.
Author:Waldon, George
Publication:Arkansas Business
Date:Jul 5, 1993
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