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 Jun. 21, 2012 Source: Rabobank news release U.S. plantings of rice have fallen almost 30 percent in the last two years according to a report released today by Rabobank's Food & Agribusiness Research and Advisory (FAR) group. The report, titled "U.S. Rice: A Sticky Situation," shows that long-grain rice producers, primarily centered around southern U.S. states, have turned to other crops that have proven to provide better returns. The report notes that production and marketing for rice in the southern states, where most U.S. rice is produced, have been difficult in recent years for avariety of reasons - among them decreased demand because of product quality problems, increased pressure from overseas producers and overall high inputcosts. These factors, coupled with extreme weather conditions in the past few years, have caused growers to shy away from rice as a crop alternative. "The long-grain rice industry has faced a lot of challenges in recent years, evident by a strong pullback in plantings from growers who just aren't seeing enough returns," said James De Jong, agricultural analyst with FAR and the author of the report. "However, we believe that while challenges for the sector exist in the medium term, there are opportunities to make the long-grain market more favorable in the long term." De Jong's report provides a comparison between southern U.S. rice growers and California rice growers, the latter having more stable rice plantings in recent years. The report credits California's rice growers for uniquely positioning themselves to keep up demand by focusing on strong markets - specifically short- and medium-grain rice - along with establishing an identity preservation program that promotes quality. These factors along with favorable weather conditions, ample water supplies and excellent soil conditions have allowed California growers to benefit from high prices. California rice accounts for approximately 20 percent of U.S. rice production. "California rice growers and millers have created a great system and as a result, a great niche for themselves," said James De Jong. "They have a market-driven approach that has allowed them to remain competitive by providing the right varieties and quality for their customers." Countries that produce long-grain rice, such as Vietnam and Thailand, along with several others in South America, have steadily increased their competitiveness and product quality over the years, while southern U.S. rice farmers have struggled to do the same. The result has been a lesser quality product that is not in as high demand. While weather is unpredictable, De Jong says that the long-grain rice industry in the U.S. can make changes that will allow it to compete with other markets as California has. "The long-grain industry will need to do some heavy investing, focusing on ways to develop varieties that have high yields and high quality," said De Jong. "Furthermore, long-grain rice farmers may need to work to change how they grow, handle, store and ship rice." Off the farm, long-grain ricevarieties would need to be kept in separate dryers and storage containers. Millers would have to process each variety separately and ship them separately. Recently, the U.S. rice industry has created a task force to address these concerns. The group's recommendations are not yet available, but among the suggestions may likely be a move toward an identity preservation program similar to California's. Ultimately, the same market forces that encouraged California to preserve the quality of its rice will shape how the long grain industry responds to the challenge. Tweet |
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