Washington DC Updates

House Passes Ukraine Supplemental Assistance

On Tuesday, the House introduced and passed a bill for supplemental assistance for the Ukraine conflict. While the House’s version included $7 billion more in total spending than the President’s plan, it drastically reduced the agricultural provisions to only include $100 million for in-kind food aid. The House version did not include crop insurance and loan marketing assistance. The bill passed on a bipartisan 358-57 vote.

White House Introduces Plan to Support Domestic Agriculture

Responding to supply chain disruptions and price increases, on Wednesday the White House introduced a plan to lower costs for farmers. Most notably, the plan includes increasing the investment in domestic fertilizer production to $500 million.

House Agriculture Committee Welcomes New Member

The House Agriculture Committee announced Rep. Marcy Kaptur would be joining the House Agriculture Committee. Rep. Kaptur is a Democrat representing northern Ohio who also serves on the Appropriations Committee.

House Agriculture Appropriations Subcommittee Holds a Hearing on the USDA Budget Request

This week the House Agriculture Appropriations Subcommittee held a hearing on the President’s FY23 budget request for USDA. During the hearing, members and Secretary Vilsack emphasized investments in rural America, supply chain and cost concerns, and climate and conservation.

USTR Announces New Chief of Staff

On Monday, the U.S. Trade Representative’s office announced Heather Hurlburt as the agency’s new chief of staff. Hurlburt replaces Ginna Lance, who has held the role since February 2021.

Delta Farmers Planting Last Acres for 2022

We are finally caught up with planting in Arkansas—a welcome sign to all farmers, processors, and industry members. Despite the return to normal after poor weather that severely delayed planting, it will still be a victory to exceed 1 million acres of long and medium grain combined in the state. There is concern that the later planted rice will follow historical trends and yield slightly less than normal, but this is a tradeoff all are willing to accept given the other option of no rice at all. The core domestic business continues to be the primary driver looking forward for milled rice, as Iraq has found ample supplies in Asia and Haiti’s political disruptions prevent bookings and subsequent distribution to the Haitian people.

Although export demand for U.S. long grain rice is down only 2.6% year to date, it would be down roughly 10% if the Iraqi business didn’t materialize. In other words, exports to most other origins are off this year. As Brazil concludes harvest and looks to merchandise its rice, the U.S. can expect ongoing stiff competition in Mexico and Central America. Just this month, Mexico has declared an emergency because of the increasing food costs. As a result, the Mexican government announced the removal of most import duties on food supplies. This includes paddy rice of any origin for several CAFTA countries where tariffs are going to zero in order to suppress food inflation. This will further erode the U.S. market share because of our higher prices. In the case of Mexico, the duty free import measure for rice is only on rough rice and milled rice was not included in the new policy. These set of conditions will make for interesting discussions at the Rice Market & Technology Convention scheduled for May 31 - June 2 in Cancun, Mexico where more than 175 rice businesses have registered to attend.

The rice world is wrought with complications. Front and center are the disproportionate impacts of the fuel and fertilizer costs to rice vs. other crops like corn and beans. This problem is only exacerbated by the hamstrung wheat trade, courtesy of the Russia invasion. Most analysts expect the volatility to worsen as we move into the Fall. Water shortages in Pakistan are having a large impact on rice growing provinces, such as Punjab and Sindh, which will likely hinder output from this region. However, there is no sign that India will reduce their production or exports, further depressing export prices for rice worldwide.

In Myanmar, the government surprisingly decided to modify the rate of the kyat to the detriment of exporters. This forex restriction has ultimately made the country less competitive in the global market restricting them to border trade only. To make matters worse, Myanmar farmers cultivated fewer acres due to poorer economics; higher fuel costs, fertilizer, and chemical costs, not to mention credit issues, are all factors that have driven rice prices higher. 

In Thailand, prices have remained similar to last week around $445pmt, and they are home to Iraq’s purchases for the time being. Vietnam is cheaper, in the $415-$420pmt range, keeping busy fulfilling Filipino demand. With these prices from Thailand and Vietnam, one would think that India would be interested in raising prices; however, they remain at a discount of at least $65pmt in comparison. The subsidies given to farmers to produce the record quantities and the subsequent exports make it extremely difficult for other origins to be competitive.

The weekly USDA Export Sales report shows net sales of 13,100 MT this week, down 55% from the previous week and 57% from the prior 4-week average. Increases primarily for Canada (4,000 MT), Honduras (3,700 MT), Guatemala (3,000 MT), and Mexico (2,000 MT), were offset by reductions for Haiti (300 MT). Exports of 24,200 MT were down 47% from the previous week and 53% from the prior 4-week average. The destinations were primarily to Haiti (13,200 MT), Mexico (3,300 MT), Canada (3,300 MT), South Korea (2,200 MT), and Honduras (1,000 MT).

A&M AgriLife Research & Extension, Texas Department of Ag meet with Texas Rice Industry Representatives

On May 13, the new Directors of Texas A&M AgriLife, Cliff Lamb, Director of Research and Rick Avery, Director of Extension, along with Dan Hale, Assistant Director of Ag and Natural Resources, spent the day with the Texas rice industry.

Stops included The Wintermann Rice Research Station in Eagle Lake, the LG Raun Farm near Round Mott, lunch with the Western Rice Belt Conference Planning Committee at Rice Belt Warehouse in El Campo, tour of the Rice Belt Facilities and ANF Air Service near Garwood to visit with crop consultants, Raymond Rabius Farm and drying and storage facility, near East Bernard, and supper with the Texas Rice Research Foundation and Texas Rice Council at Hlavinka's Equipment in East Bernard.

The directors learned about the Texas rice industry. At supper they gave a summary of what they had seen and heard throughout the day and discussed next steps moving forward for the Texas rice industry to be better served by AgriLife Research and Extension.

The Texas rice industry would like to express its appreciation to the directors spending the day in rice country, and look forward to an effective partnership to better the Texas rice industry.

At Raymond Rabius's Farm:
Left to Right: Dan Hale, Corrie Bowen, Tommy Turner, Cliff Lamb, Raymond Rabius, Rick Avery, Greg Baker, Tyler Fitzgerald, and Laramie Kettler
At the Wintermann Rice Research Station in Eagle Lake, Texas
Left to right: Cliff Lamb, Tommy Turner, Jason Samford: Farm Research Services Manager, Rick Avery, Tyler Fitzgerald, Corrie Bowen, Laramie Kettler

USDA announces $6 billion in natural disaster payments

The U.S. Department of Agriculture (USDA) today announced that commodity and specialty crop producers impacted by natural disaster events in 2020 and 2021 will soon begin receiving emergency relief payments totaling approximately $6 billion through the Farm Service Agency’s (FSA) new Emergency Relief Program (ERP) to offset crop yield and value losses.

“For over two years, farmers and ranchers across the country have been hard hit by an ongoing pandemic coupled with more frequent and catastrophic natural disasters,” U.S. Secretary of Agriculture Tom Vilsack said. “As the agriculture industry deals with new challenges and stressors, we at USDA look for opportunities to inject financial support back into the rural economy through direct payments to producers who bear the brunt of circumstances beyond their control. These emergency relief payments will help offset the significant crop losses due to major weather events in 2020 and 2021 and help ensure farming operations are viable this crop year, into the next growing season and beyond.”

Background
On Sept. 30, 2021, President Biden signed into law the Extending Government Funding and Delivering Emergency Assistance Act (P.L. 117-43), which includes $10 billion in assistance to farmers and ranchers impacted by wildfires, droughts, hurricanes, winter storms, and other eligible disasters experienced during calendar years 2020 and 2021. FSA recently made payments to ranchers impacted by drought and wildfire through the first phase of the Emergency Livestock Relief Program (ELRP). ERP is another relief component of the Act.

For impacted farmers, existing Federal Crop Insurance or Noninsured Crop Disaster Assistance Program (NAP) data is the basis for calculating initial payments. USDA estimates that phase one ERP benefits will reach more than 220,000 farmers who received indemnities for losses covered by federal crop insurance and more than 4,000 farmers who obtained NAP coverage for 2020 and 2021 crop losses.

ERP Eligibility – Phase One
ERP covers losses to crops, trees, bushes and vines due to a qualifying natural disaster event in calendar years 2020 and 2021. Eligible crops include all crops for which crop insurance or NAP coverage was available, except for crops intended for grazing. Qualifying natural disaster events include wildfires, hurricanes, floods, derechos, excessive heat, winter storms, freeze (including a polar vortex), smoke exposure, excessive moisture, qualifying drought and related conditions.

For drought, ERP assistance is available if any area within the county in which the loss occurred was rated by the U.S. Drought Monitor as having a:

Lists of 2020 and 2021 drought counties eligible for ERP is available on the emergency relief website.

To streamline and simplify the delivery of ERP phase one benefits, FSA will send pre-filled application forms to producers where crop insurance and NAP data are already on file. This form includes eligibility requirements, outlines the application process and provides ERP payment calculations. Producers will receive a separate application form for each program year in which an eligible loss occurred. Receipt of a pre-filled application is not confirmation that a producer is eligible to receive an ERP phase one payment.

Farmers must have the following forms on file with FSA within 60 days of the ERP phase one deadline, which will later be announced by FSA’s Deputy Administrator for Farm Programs:

Most producers, especially those who have previously participated in FSA programs, will likely have these required forms on file. However, those who are uncertain or want to confirm the status of their forms can contact their local FSA county office.

ERP payment calculations – phase one
For crops covered by crop insurance, the ERP phase one payment calculation for a crop and unit will depend on the type and level of coverage obtained by the producer. Each calculation will use an ERP factor based on the producer’s level of crop insurance or NAP coverage.

Full ERP payment calculation factor tables are available on the emergency relief website and in the program fact sheet.

Applying ERP factors ensures that payments to producers do not exceed available funding and that cumulative payments do not exceed 90% of losses for all producers as required by the Act.

Also, there will be certain payment calculation considerations for area plans under crop insurance policies.

The ERP payment percentage for historically underserved producers, including beginning, limited resource, socially disadvantaged, and veteran farmers and ranchers will be increased by 15% of the calculated payment for crops having insurance coverage or NAP.

To qualify for the higher payment percentage, eligible producers must have a CCC-860, Socially Disadvantaged, Limited Resource, Beginning and Veteran Farmer or Rancher Certification, form on file with FSA for the 2021 program year.

Because the amount of loss due to a qualifying disaster event in calendar years 202 and 2021 cannot be separated from the amount of loss caused by other eligible causes of loss as defined by the applicable crop insurance or NAP policy, the ERP phase one payment will be calculated based on the producer’s loss due to all eligible causes of loss.

Future Insurance Coverage Requirements
All producers who receive ERP phase one payments, including those receiving a payment based on crop, tree, bush, or vine insurance policies, are statutorily required to purchase crop insurance, or NAP coverage where crop insurance is not available, for the next two available crop years, as determined by the Secretary. Participants must obtain crop insurance or NAP, as may be applicable:

Coverage requirements will be determined from the date a producer receives an ERP payment and may vary depending on the timing and availability of crop insurance or NAP for a producer’s particular crops. The final crop year to purchase crop insurance or NAP coverage to meet the second year of coverage for this requirement is the 2026 crop year.

Emergency relief – phase two (crop and livestock producers)
Today’s announcement is only phase one of relief for commodity and specialty crop producers. Making the initial payments using existing safety net and risk management data will both speed implementation and further encourage participation in these permanent programs, such as Federal crop insurance, as Congress intended.

The second phase of both ERP and ELRP programs will fill gaps and cover producers who did not participate in or receive payments through the existing programs that are being leveraged for phase one implementation. When phase one payment processing is complete, the remaining funds will be used to cover gaps identified under phase two.

Through proactive communication and outreach, USDA will keep producers and stakeholders informed as program details are made available. More information on ERP can be found in the Notice of Funding Availability.

Additional Commodity Loss Assistance
The Milk Loss Program and On-Farm Stored Commodity Loss Program are also funded through the Extending Government Funding and Delivering Emergency Assistance Act and will be announced in a future rule in the Federal Register.

More information
Additional USDA disaster assistance information can be found on farmers.gov, including the Disaster Assistance Discovery ToolDisaster-at-a-Glance fact sheet and Farm Loan Discovery Tool. For FSA and Natural Resources Conservation Service programs, producers should contact their local USDA Service Center. For assistance with a crop insurance claim, producers and landowners should contact their crop insurance agent.

Biden Administration Appoints Kelly Adkins to Serve as State Executive Director for USDA’s Farm Service Agency in Texas

The Biden Administration recently appointed Kelly Adkins as the new State Executive Director (SED) for the USDA Texas Farm Service Agency (FSA). Adkins joined the Texas FSA team on May 9, 2022.

“Individuals selected to serve as FSA State Executive Directors are incredible public servants who have a proven track record when it comes to their commitment to advance their states and communities,” said Agriculture Secretary Tom Vilsack. “Each will serve on the frontlines, carrying out USDA’s mission at the state level and ensuring the voice of each and every USDA customer is heard. We are fortunate to have each of these talented individuals at this critical time for farmers and producers and rural communities across America.”

A native of Haskell, Texas, Adkins was raised on small family farm in Haskell County where he attended Haskell High School and later Texas Tech University where he earned his Bachelor of Business Degree with a minor in Agriculture.

Adkins enjoyed a career serving the farmers and ranchers of Texas and the FSA in many capacities. including County Executive Director in Grimes and Randall counties, and District Director for the agency overseeing FSA county offices and program delivery for a multi county area of the Panhandle.  He is currently a resident of Canyon where he is involved in a small farming/cattle operation. Adkins has been involved in community activities and several state agricultural commodity associations.

As SED, Adkins will be responsible for overseeing the delivery of FSA programs to agricultural producers in Texas.  These commodity, conservation, credit, and disaster assistance programs ensure a safe, affordable, abundant, and nutritious food, fiber, and fuel supply for consumers.

“The State Executive Director is a pivotal leadership position for the Agency and for the agricultural producers we serve,” said Marcus Graham, FSA Deputy Administrator for Field Operations.  “These leaders, appointed by the Biden-Harris Administration, bring a wealth of knowledge and expertise to their respective states. We are happy to have them on board and wish them much success.”

Farm Service Agency serves farmers, ranchers, foresters, and agricultural partners through the effective, efficient, and equitable delivery of federal agricultural programs. The Agency offers producers a strong safety net through the administration of farm commodity and disaster programs. Additionally, through conservation programs, FSA continues to preserve and protect natural resources and provides credit to agricultural producers who are unable to receive private, commercial credit, including targeted loan funds for beginning, underserved, women and military veterans involved in production agriculture.

USDA touches the lives of all Americans each day in so many positive ways. In the Biden-Harris Administration, USDA is transforming America’s food system with a greater focus on more resilient local and regional food production, fairer markets for all producers, ensuring access to safe, healthy and nutritious food in all communities, building new markets and streams of income for farmers and producers using climate smart food and forestry practices, making historic investments in infrastructure and clean energy capabilities in rural America, and committing to equity across the Department by removing systemic barriers and building a workforce more representative of America. To learn more, visit usda.gov.   

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Market Update: USDA Planting Report is Purely Prospective, Far from Actual

Prices remain firm as planting gets underway.  The initial USDA Prospective Plantings report just published this week has a much rosier picture than the industry is currently projecting.  The table below shows that the total long grain production is expected to be 99% of last year’s total.  The industry is predicting a 10-15% decline, or acres looking much closer to 1.65 million acres. This lower acreage number would appear to be baked into paddy prices right now, which are holding firm across all regions despite scant offshore demand.  Louisiana is the only region that is expected to gain acres with any significance, and the rest are expected to taper. 

Looking at Medium Grain, the big drop will be coming from drought-plagued California.  The USDA is projecting a 315,000 acre medium grain crop from the west coast, but recent water allocations coming out of GCID, the State’s largest water district, are dismal. Initial signals are showing that acreage could fall well below even a 270,000 acre level.  Medium grain across the rest of the states will hold relatively constant.  It will be interesting to watch planting progress as the weeks tick by and the actual numbers come to light.

As far as planting goes, Louisiana has crested the 60% planted now, approaching as high as 70%. Texas is now approximately nearly 50% planted as well, though rain has slowed progress there a bit last week.  They are itching to get started in Arkansas, and we expect to have first plantings by this time next week.

The March rice stocks report was released this week, showing rough rice stocks in all positions down by 8% from this time last year. To break things out, long grain rough is down by 11%, and long grain milled almost 6% down, medium rough about equal, and medium grain milled rice stocks down nearly 40%.

In Asia, Thai prices firmed slightly up to $415pmt, and Viet prices softened just a bit to come down to $415pmt.  This is largely based on currency fluctuations and strong demand coming out of China and the usual suspects like the Philippines.  India is still holding at steady at $365pmt, and Pakistan is coming in just below at $360pmt. 

The weekly USDA Export Sales report shows net sales of 17,000 MT for this week, down 80% from the previous week and 71% from the prior 4-week average. Increases were primarily for Guatemala (5,500 MT), Honduras (3,500 MT, including decreases of 400 MT), Mexico (3,300 MT), Canada (2,600 MT), and Saudi Arabia (800 MT). Exports of 27,500 MT were down 49% from the previous week and from the prior 4-week average. The destinations were primarily to Guatemala (11,000 MT), Honduras (6,000 MT), Canada (3,300 MT), Mexico (2,700 MT), and Jordan (1,600 MT).

North Africa Digital Campaign Update

The month of November showed significant growth for USRPA's Facebook page in our North African Market, RizAmerican. The page gained a total of 1,300 new followers (a growth of 39.3%), with total followers now reaching 4,800. Facebook likes, comments and interaction rates also show positive growth. More than 650,000 impressions were made in just one month, the majority of the audience being females from Tunisia.

Our Moroccan-based influencer @MouniaSenhaji posted a series of stories talking about U.S. rice and prepared a healthy rice salad for her fans in North Africa. She tagged USRPA on Facebook, which also helps to increase awareness and achieve a higher reach, connecting both channels. The stories reached an average of 17,000 accounts per story.

Washington, D.C. Update: Debt Ceiling

The House and Senate passed legislation to suspend additional cuts to mandatory programs and initiate the process of raising the debt ceiling. The bill delays any additional sequestration cuts to Medicare, farm programs, and other mandatory spending programs and limits Senate debate on a separate debt ceiling increase bill, bypassing the legislative filibuster rules.

Congress will need another bill that would increase the debt limit to ensure the federal government doesn’t exceed its statutory borrowing limit and default. Congress is expected to swiftly draft and pass this legislation ahead of the December 15 deadline set by the Treasury Department.

USDA Supply/Demand Report Brings No Surprises

This week, the USDA released the December WASDE report which contained only minor revisions for both U.S. long-grain and medium & short-grain. The USDA didn’t make any notable changes to the 2020/21 balance sheet in this report but rather focused on the 2021/22 crop. Long-grain imports were revised downward, while export and domestic demand was left steady from the November report. Ultimately, the 2021/22 long-grain carryout was lowered by 1 million cwts, entirely the result of lower imports. Season average farm prices improved, but only slightly, up $0.10 per cwt to $13.10.

Medium & short-grain imports were also lowered this month, but that was more than offset by lower export use which is attributed to higher prices and less supply. The domestic use, as per the norm, appears more resilient against the current market conditions and is even expected to exceed last year’s demand. Ending stocks were assessed up 500,000 cwts, and while California’s price projections are unchanged from last month, southern medium-grain was lowered $0.30 per cwt to $13.70 per cwt.

On the ground, there is little to report in the way of cash trade activity. With tax implications prohibiting some from selling, and the normal holiday slow-down inhibiting others, a more mellow pace is normal for this time of year. However, the market is abuzz with what next year’s acreage numbers will look like as a result of the soaring fertilizer costs and the potential for growers to plant more corn and beans. The expectation is that the largest reduction will come for Arkansas and that Louisiana will remain close to the same as this year. Mississippi and Texas are still up in the air, and California acreage on the West coast is completely contingent on precipitation and the ensuing water policy.

In Asia, prices remain relatively constant. Thai rice remains around $385pmt, Viet at $405pmt, and Indian down at $355. It is notable that Viet prices have dropped in recent weeks to come more in line with Thai prices, while Indian rice has held steady along with their record-breaking export pace.

The weekly Export Sales Report shows net sales of 48,800 MT, which is up 51% from last week, but down 22% from the prior 4-week average. Increases were primarily for Honduras (18,500 MT), Guatemala (13,100 MT), Jordan (4,100 MT), Taiwan (3,000 MT), and Canada (2,400 MT).

Exports of 60,100 MT were down 42% from the previous week and 21% from the prior 4-week average. The destinations were primarily to Guatemala (14,400 MT), Japan (13,000 MT), El Salvador (12,400 MT), Haiti (12,400 MT), and Canada (2,600 MT).

Futures have been taking a hit since Thanksgiving, with the low registering this week at $13.79. This could be on account of the cash market being slow, the typical slow-down this time of year, or simply the difficulty in the logistics sector. Average Daily Volume is 815, down 5%, and Open Interest is at 8,444, holding even with last week.

Volume 18, Issue 48

December 10, 2021

In This Issue: