Rice Quality: Something Has to Change Because ‘Our Bins Are Too Full’ – Commentary

Rice harvest. ©Debra L Ferguson Stock Photography

My grandmother lived alone, worked outside of her house as a foster grandparent at a children’s orphanage, worked daily in her garden, cooked everything from scratch, hosted quilting parties, played “42” dominos and more up until the age of 92.  She always said, “You are never too old to learn something new.”  How very true the statement.  As I look back on 2016, the current state of affairs in the US rice industry and what lies ahead for 2017, not only are we never too late to learn something but it might be a case of better late than never.

It is no secret that US rice supplies will be their highest in 30 years at the end of the 2016-2017 marketing year, according to the USDA’s leading rice economist.  A situation that tells us we will have more unsold rice in storage since the 1980s that will result in price depression well into 2017.  While the USDA projects exports to rise 4% due to our low prices making us more competitive, low prices do not guarantee strong purchases and increased demand we are now learning.

Recent developments in the marketplace are disturbing to rice farmers.

  • A 60,000 ton rough rice tender in Costa Rica earlier this month excluded the US as an acceptable origin and instead solicited rice from Argentina, Brazil, Paraguay and Uruguay.  What happened?
  • Business is booming for Mercosur exporters at price levels better than the current New Orleans quotes.
  • Nicaragua recently announced the purchase of 20,000 tons of Paraguayan rough rice, a country that has only been seriously producing rice for 15 years and has no real government support while relying on private sector research.
  • Uruguay is selling to Cuba, Argentina recently announced another export sale of 15,000 tons to Iraq, Uruguay has sold a considerable volume of rice to Iraq during 2016 and recently shipped 60,000 tons to Iran.
  • The Mercosur exporters are cleaning out the bins in preparation for the 2017 harvest that will begin the end of January.

Not long ago, it would have been unheard of for Costa Rica and Nicaragua to purchase rough rice from any origin other that the United States.  What is happening?  The USA prides itself on shipping high quality rice to discerning buyers all over the world yet our neighbors, our regular buyers do not like us any more.  So what is at the root of this new development?

No one has forgotten 2010, a large harvest filled with quality problems caused by climatic conditions.  2010 has gone down in recent history as a turning point in our export efforts.  As foreign buyers imported US paddy with low milling yields, high chalk content and especially the blend of 15-20 varieties being loaded on vessels in New Orleans, their complaints grew stronger and louder.  Throughout Central America, Colombia, Peru and even segments of the Mexican market have been increasingly critical of US rice quality.

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Some years our quality is better than others depending on Mother Nature, of course.  However the mixing of varieties loaded for export in New Orleans is contributing to market loss.  More than 5 years ago, the US Rice Producers Association loudly proclaimed the need to export identity preserved rice to meet the customers’ needs and while a number of IP shipments have been organized, we still have along way to go.

 If we are unwilling to make these adjustments and recreate our export logistics then we can not be surprised when we see other suppliers selling our customers what they want to buy.  No longer can we afford to have a take it or leave it attitude.  Our bins are too full.

In 2014, the USA Rice Federation invited members of the Central American Rice Federation known as FECARROZ to their Outlook Conference in Little Rock, Arkansas.  The group explained their concerns to the audience about US rice and why our problems were forcing them to look at other origins.  In January of 2015, an article published in Rice Farming magazine and written by the USA Rice Federation told the US rice industry that they are the “problem solver for the industry” and “while we understand what is driving the decision, we want to do what we can to change their minds and get them all back in the US rice camp.”  It’s obvious there has been little or no problem solving to date as evidenced by developments in 2016, other than a few identity preserved shipments at the insistence of the US Rice Producers Association.

We pride ourselves on advanced rice farming technology, research and transportation logistics. But along the way we failed to listen to the market in terms of quality.  The success of the identity preserved rough rice exports out of the Port of Lake Charles from SW Louisiana and East Texas farmers have not gone unnoticed especially by the foreign buyers.  The 160,000 tons loaded out of Lake Charles this calendar year has been the single most positive development in 2016.

Will it take a newly appointed task force? Only if it seriously addresses the issue instead of dancing around the truth. Since 2010 we have dug ourselves a deep hole, and it is going to take a sincere, customer-by-customer effort to regain the trust and the reputation that US rice once had.  The US rice industry has too much talent available not to correct the problems and no one is ever too old to learn.

Best Wishes for a Happy & Healthy Holiday Season

 




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