Agriculture Secretary Testifies Before House Agriculture Committee

On Wednesday, Secretary of Agriculture Tom Vilsack testified before the House Agriculture Committee. Republicans and Democrats agreed on the importance of a passing bipartisan farm bill. Republicans focused on the struggles faced by farmers due to fractured supply chains, high input costs, inflation, natural disasters, volatile markets, and labor shortages. They also discussed the ramifications of California’s Proposition 12, the rollout of the Emergency Relief Program for 2022, and funding for the Supplemental Nutritional Assistance Program and other nutrition assistance programs. Democrats focused on continuing support for nutrition programs and preserving investments in conservation programs through the Inflation Reduction Act. Secretary Vilsack advocated for preserving the flexibility of the Secretary of Agriculture to use the Commodity Credit Corporation.

Other topics discussed include labor challenges, wildfire and forest management, direct and guaranteed loan programs, foreign farmland purchases, and the impacts of tariffs on agricultural products. Secretary Vilsack is scheduled to testify in front of the Senate Agriculture Committee on February 28.

A summary of the hearing can be found here and a recording of the hearing can be found here.

Following the vein from last week where we discussed the increasing pace of exports of US long grain rice, the USDA Economic Research Service Rice Outlook report just released this week is headlined “U.S. 2023/24 Export Forecast Raised 2.0 million cwt to 87 million.” Top-line news like this is especially positive when it trickles down to on-farm pricing, which has been the case thus far into the year. With futures prices pushing new highs, the market is also testing the topside tolerance of domestic buyers. What we are finding is that prices aren’t likely to go up forever, but sustained firm pricing is not only possible but probable.    Right now on the ground, we are seeing prices in Texas firm at $19.00/cwt, Louisiana $18.40/cwt, and Arkansas, Mississippi, and Missouri all strong at $18.50/cwt. If we look at prices from last September/October, we see an increase of 17% in the last four months. This increase typifies the reality that the United States has been the only reliable supplier of long grain for months.   In Asia, it has been a long-held expectation that prices would remain over $600 pmt on account of the Indian export ban. Prices skyrocketed to over $625 pmt, then $650 pmt, then even above $660 pmt. Thailand and Vietnam have been neck-and-neck vying for exports with strong demand, but the recent and very sizable procurement from Indonesia that didn’t include any Thai rice has poked a hole in the upward narrative. Prices for Thai rice have now dropped down to $625 pmt, and Viet prices at $645 pmt, down significantly from recent weeks. The expectation is that India will lift their ban sometime between April and June of this year.   Further investigation into the February ERS Rice Outlook reveals that the rice import forecast was raised by 1 million cwt, to a record 43 million cwt. This 8% increase from last year comes all in the long grain category. More specifically, the lion’s share is Thai jasmine or aromatic varieties. Also increased, as mentioned above, was the export forecast, by 2 million cwt, all of which is not only long grain rice but long grain rough rice. This is 35% above last year and the highest since 2020/21. This fact alone speaks to the value of our partners in Central and South America and the strategic partnerships and relationships that USRPA fostered over the years.   The weekly USDA Export Sales report shows net sales of 154,900 MT this week, up 40% from the previous week and up noticeably from the prior 4-week average. Increases primarily for Colombia (88,000 MT), Mexico (22,300 MT), Haiti (22,200 MT), Japan (14,000 MT), and El Salvador (6,000 MT). Exports of 95,600 MT were up 23% from the previous week and 27% from the prior 4-week average. The destinations were primarily Senegal (34,600 MT), Venezuela (27,700 MT), Haiti (22,200 MT), Mexico (4,100 MT), and Canada (2,400 MT).

Congressman Jason Smith calls for investigation into competition in the global rice market

On Monday, Chairman of the House Ways and Means Committee Jason Smith (R-MO) sent a letter to the U.S. International Trade Commission (USITC) Chairman David Johanson calling for an investigation into the competitiveness of global rice markets.

The USITC analyzed the market and produced a report in 2015, but Congressman Smith requested the Commission update this report to include information from 2018-2023. This includes information on developments in the rice industry in the U.S. as well as in major export markets, policy changes in the U.S. and other rice-producing countries, and relative strengths and weaknesses of U.S. rice production and exports compared to other rice-producing countries.

A copy of the letter can be found here.

House Ways and Means Committee holds a hearing on trade issues

On Wednesday, the House Ways and Means Committee Trade Subcommittee held a hearing on American trade interests ahead of the World Trade Organization’s Ministerial Conference later this month. During the hearing, a rice miller testified on how policies in other countries like India are impacting the domestic rice industry. He called for strengthening enforcement mechanisms to better protect rice farmers and other agricultural producers. A recording of the hearing can be found here.

USDA releases 2024 farm income forecast

On Wednesday, USDA released its projections for farm income for 2024. Overall, USDA is forecasting that income will continue to decrease in 2024; however, cash receipts for rice are expected to increase by $400 million, or 13.1%. In addition, USDA expects that direct payments to producers through ARC and PLC will decrease while the cost of production—including labor and fertilizer—will increase. More information on the farm income forecast can be found here.

USRPA board members with FAS Administrator Daniel Whitley

This week, USRPA board members and representatives from Texas, Missouri, Louisiana, and California flew to Washington, D.C., to discuss issues impacting rice farmers. USRPA met with officials at the Environmental Protection Agency, the Department of Agriculture, and the Office of the US Trade Representative, as well as House and Senate offices for Louisiana, Missouri, California, Texas, and Arkansas. USRPA discussed a variety of issues with these offices, including its farm bill priorities, trade policy, and conservation policy. FECARROZ joined USRPA in D.C., holding their board meeting on Tuesday and Wednesday. Both boards met for a celebratory dinner to close out the week.

Louisiana board members Dustin Watkins and Mark Pousson and Cornerstone Government Affairs' Fred Clark with Louisiana Congresswoman Julia Letlow.

Chairman Neal Stoesser and his wife, Meredith, Gayla Rose (2023 USRPA scholarship recipient), and Texas Rice Council President Tommy Turner met with Texas Senator Ted Cruz.

Missouri board members Alex Clark, Justin Wheeler, Mitchell Thomas, and USRPA COO Mollie Buckler met with Missouri Senator Eric Schmitt.

Meeting with California Congressman Doug LaMalfa, who is a rice farmer and was part of the creation of USRPA.

FAS Marketing Specialist Curtis McCoy joined FECARROZ to educate the group on how FAS supports USRPA's international promotion efforts.

A toast from USRPA Chairman Neal Stoesser, thanking FECARROZ for their partnership with USRPA over the last two decades.

It was a newsworthy week for the global rice markets, headlined and perhaps punctuated in the U.S. by the realization that the current pace of exports would indicate we’ll actually run out of long grain rice before harvest! Now history has taught us that “running out of rice” is highly unlikely, but if the current pace of exports holds steady for the balance of the year, projections would put us at 97.4 million cwt, where USDA projected exports sit at 61 million cwt. We expect to find ourselves somewhere in the middle, as we can’t sell what we don’t have. The U.S. industry will likely find itself with scarce supplies come harvest, much like our counterparts in South America are right now. Our outpaced exports are largely on account of short supply in the Mercosur countries and a large U.S. crop compared to previous years. Strong domestic market demand, milled rice exports to Haiti and Iraq, and an overall lower milling yield situation for long grain have contributed to an anticipated scarce supply. While it was expected that the USDA would lower carryover stocks by raising exports (by 2 million cwt), the increase of imports by 1 million cwt to an already record 42 million cwt was unexpected. Apparently the USDA is taking the approach that the U.S. will continue to import rice to replace exports, keeping the carryover somewhat under control. Last week we mentioned this report would hold a deeper discussion surrounding planting intentions this year. While it’s too soon to set any concrete expectations, news from China on a large soybean crop is sending signals to U.S. producers that rice will be the crop of choice in 2024. If that happens, it is likely that we will see an acreage increase above this year in all states (except maybe Texas given water availability). Last year, the USDA showed total U.S. rice planted at 2.894 million acres. This year, it is likely that production will meet or exceed 3 million acres of rice sewn, pending any other large announcements from China. The largest gains are likely to come from Mississippi and Arkansas. This bodes well for healthy production and a more consistent supply for U.S. exporters. The most recent USDA Grain: World Markets and Trade report has an excellent piece on Western Hemisphere rice trade, and more specifically, paddy exports in the region. The Western Hemisphere accounts for just under 13% of global imports, and about one-third of those imports are paddy. Up through 2021, the U.S. has consistently held well over 50% of total paddy exports, but last year’s short crop and inflationary protection policies to our primary export partners dropped our share down to about 40%. We are already seeing a resurgence in the 2023 numbers up to the 50% range and looking to move higher once again. Rice production for 2023/24 is projected at 36% higher than the previous year, while paddy exports are forecast at 82% higher. This lends credibility to the opening statement that unless export pace slows, the U.S. will run out of rice. In Asia, the significant news is the fulfillment of a large Indonesian tender that was filled largely by Vietnamese suppliers. Thailand was left out in the cold with an ensuing price drop in an attempt to be competitive. Thailand has been leading the charge with high prices, last week recording as high as $660 pmt, but after this week and not being awarded any business to Indonesia, prices have fallen to as low as $625 pmt. Vietnam has held steady in the $640 pmt range, as India remains absent from the open market. The weekly USDA Export Sales report shows net sales of 110,600 MT this week, up noticeably from the previous week and up 89% from the prior 4-week average. Increases primarily for Nicaragua (25,000 MT), Canada (20,300 MT), Japan (17,200 MT), Honduras (15,000 MT), and El Salvador (14,800 MT), were offset by reductions for Venezuela (1,100 MT). Exports of 77,700 MT were up 24% from the previous week and 15% from the prior 4-week average.

The Embassy Suites at Jonesboro, AR was the setting for the 27th Annual Cotton & Rice Conference, hosted by the National Conservation Systems. Cotton, Inc. and the US Rice Producers Association are primary sponsors of the conference each year. Over 400 attendees were treated to a wealth of information, including cutting-edge research, firsthand farmer experiences, and successful case studies. USRPA, a leading sponsor for 25 years, was well-represented at the conference, with over 100 speakers present. Alex Clark, USRPA Board Member, kicked off the Opening General Session with an overview of the organization's current programs and priorities and was awarded the Rice Farmer of the Year award. Dennis DeLaughter, USRPA Board Member from Texas, led a Rice Market Outlook Session. Mollie Buckler, USRPA COO, introduced Dr. Justin Benavidez, Chief Economist, U.S. House Committee on Agriculture as the luncheon keynote speaker on a very well-attended overview of the Farm Bill. Fred Clark, Senior Consultant at Cornerstone Government Affairs in Washington, D.C., presented “Farm Policy still matters, even if the farm bill is late, budgets aren’t great, and trade deals wait”. Attendees had the opportunity to meet with USRPA staff at the Missouri Rice Council and USRPA booths, and the social reception sponsored by the US Rice Producers Association on Tuesday evening. Thanks to the Mid-America Farmer Grower team for another successful conference.

Trey Barker and Iris Figueroa at the USRPA booth.Dr. Justin Benavidez, Chief Economist, U.S. House Committee on Agriculture.

Mollie Buckler representing Missouri Rice Council and USRPA.Mollie Buckler, USRPA COO, introducing Dr. Justin Benavidez.

Alex Clark was named the 2024 Rice Farmer of the Year at this week’s 27th Annual National Conservation Systems Cotton & Rice Conference. Clark is a proud third-generation rice, corn, and soybean farmer from Butler County, Missouri. While he has been farming since he graduated from the University of Missouri in 2007, he has been involved with farming his entire life, learning alongside his father, uncle, and brother, with whom he still farms today. He has been an advocate for the U.S. rice industry for his entire farming career. Serving on both the US Rice Producers Association Board of Directors and the Missouri Rice Research and Merchandising Council, he has traveled to Washington, D.C. and Jefferson City to speak with elected officials and other government leaders on behalf of both Missouri and U.S. rice farmers. He has also traveled on several international trade missions to promote U.S.-grown rice and help establish new markets. Alex most recently served as chairman of US Rice Producers Association from 2021-2023. In addition to being an advocate for the U.S. rice industry, Clark is an innovator. He recognizes that the industry’s long-term success lies in the ability to be good stewards of our land today. Clark Farms has partnered with companies like Riceland and AgriCapture to implement climate-friendly practices in their operation, including the expansion of their row rice production, tracking water usage and utilizing moisture sensors for both rice and soybeans. His wife, Kathryn Clark, is an Agriculture Instructor at Three Rivers College in Poplar Bluff, and they have three children, Luke, Max, and Lucy. Clark’s brother, Zane Clark, his farming partner, said it best: “Alex has been a champion for the U.S. rice industry for nearly two decades. From the fields of the Missouri Rice Research Farm to the halls of the Capitol in Washington, D.C., he has tirelessly fought for America’s rice farmers. On the farm, he is always looking for new ideas to innovate. Whether poring over new research or looking into new technology, he is always searching for the next way to improve our operation. Not only is Alex a heavyweight in productivity but he is a selfless father, son, husband, and brother.” USRPA congratulates Alex on this well-deserved honor.

House of Representatives Passes Tax PackageOn Wednesday evening, the House of Representatives passed a tax package addressing business tax policies as well as expanding the child tax credit. The bill also includes provisions to raise limits on the Section 179 expensing provision as well as restore bonus depreciation. These provisions are often used by those in the agriculture sector to write off expenses related to farm equipment and machinery. The bill passed on a bipartisan 357-70 vote, with 169 Republicans and 188 Democrats voting in support. The bill will now move to the Senate. To date, the Senate has not announced plans to consider the bill. USRPA Calls for Consistent Pesticide RegulationThis week, USRPA joined other agriculture organizations in calling for consistent labeling of pesticides. In a letter to House and Senate Appropriations Committee leadership, they noted that some states and localities have begun implementing regulations for pesticides that contradict the scientific guidance provided by the Environmental Protection Agency (EPA). They ask Congress to consider the impacts of a patchwork of policies and urge the Committees to include language reaffirming federal pesticide labeling uniformity in the final fiscal year 2024 appropriations bill for the EPA. A copy of the letter can be found here.

Steady business is the name of the game, though it’s been slightly dampened by the freezing temps. Demand has remained strong throughout the marketing year thus far both domestically and internationally, helping to keep prices firm across the chain. Even though the rice complex in India and Asia doesn’t often have a direct impact on pricing in the Western hemisphere, the ban on Indian exports seems to be the tide that raises all ships. Just like Thailand and Vietnam are benefiting from India being out of the market, the U.S. is benefiting from Brazil, Paraguay, Uruguay, Argentina, and other S. American suppliers being short of rice for the past several months. India continues to be a wild card in the minds of U.S. rice farmers about the effect the lifting of the export ban would have on prices…..eventually. Harvest is underway in Paraguay and getting started in other origins, so the competition in the Western Hemisphere will be heating up in the near term. Easier said than done as early reports indicate inconsistent field yields and quality but it's early of course. Uruguay will not begin until the end of this month. The good news is that demand has remained strong both to Iraq and Haiti, while Mexico continues to procure rice at a faster pace than last year, where significant quantities of paddy rice are benefiting. Just as the rice from South America hits the market, the US will be determining its planting intentions, which we will cover more fully next week. Those intentions were a constant conversation at this week’s National Conservation Systems Cotton & Rice Conference held in Jonesboro, Arkansas. The US Rice Producers Association has been a sponsor of this popular farmer conference since 1999. A recent GAIN report on Mexico outlines what could be read as good news for the U.S. long-grain industry. Post forecasts that despite slight increases in rice plantings, imports are expected to increase even more based on rising consumption patterns. Plantings are expected to increase only 5% up to 150,000 metric tons, milled basis. The good news is that rice imports are expected to increase by 10% up to 830,000 metric tons. Right now, exports to Mexico are up over 10% from this time last year, so the increased crop size is paying off in the form of increased exports. When supply returns to Brazil and other South American origins, the competition will be fierce for this market; we will see the playing out of any anti-inflationary policies in this new cycle. In Asia, prices are staying high and not showing signs of stopping. This week Thai prices remained above $650 pmt, and Viet prices hovered just below $645 pmt. Even Pakistan has joined the party and is quoting rice as high as $640 pmt. Now when we compare these prices from the Far East with our Western rice, the spread seems to shrink every week! Right now, the average price of Asian rice is $645 pmt. US quotes are sitting right around $770 pmt…a mere $125 pmt difference. Spreads this small are uncommon, especially when prices are this high. The weekly USDA Export Sales report shows a nice rebound in net sales of 42,100 MT this week, up 46% from the previous week, but down 24% from the prior 4-week average. Increases were primarily for Mexico (15,700 MT), Japan (13,600 MT), Canada (5,000 MT), Honduras (4,400 MT), and Guatemala (1,200 MT). Exports of 62,700 MT were down 12% from the previous week and 4% from the prior 4-week average. The destinations were primarily to Mexico (33,000 MT), Guatemala (12,600 MT), El Salvador (11,800 MT), Canada (2,400 MT), and Jordan (1,500 MT).

Market Update: Farmers Pondering 2024 Planting Decisions

Steady business is the name of the game, though it’s been slightly dampened by the freezing temps. Demand has remained strong throughout the marketing year thus far both domestically and internationally, helping to keep prices firm across the chain. Even though the rice complex in India and Asia doesn’t often have a direct impact on pricing in the Western hemisphere, the ban on Indian exports seems to be the tide that raises all ships. Just like Thailand and Vietnam are benefiting from India being out of the market, the U.S. is benefiting from Brazil, Paraguay, Uruguay, Argentina, and other S. American suppliers being short of rice for the past several months. India continues to be a wild card in the minds of U.S. rice farmers about the effect the lifting of the export ban would have on prices…..eventually. Harvest is underway in Paraguay and getting started in other origins, so the competition in the Western Hemisphere will be heating up in the near term. Easier said than done as early reports indicate inconsistent field yields and quality but it's early of course. Uruguay will not begin until the end of this month. The good news is that demand has remained strong both to Iraq and Haiti, while Mexico continues to procure rice at a faster pace than last year, where significant quantities of paddy rice are benefiting. Just as the rice from South America hits the market, the US will be determining its planting intentions, which we will cover more fully next week. Those intentions were a constant conversation at this week’s National Conservation Systems Cotton & Rice Conference held in Jonesboro, Arkansas. The US Rice Producers Association has been a sponsor of this popular farmer conference since 1999. A recent GAIN report on Mexico outlines what could be read as good news for the U.S. long-grain industry. Post forecasts that despite slight increases in rice plantings, imports are expected to increase even more based on rising consumption patterns. Plantings are expected to increase only 5% up to 150,000 metric tons, milled basis. The good news is that rice imports are expected to increase by 10% up to 830,000 metric tons. Right now, exports to Mexico are up over 10% from this time last year, so the increased crop size is paying off in the form of increased exports. When supply returns to Brazil and other South American origins, the competition will be fierce for this market; we will see the playing out of any anti-inflationary policies in this new cycle. In Asia, prices are staying high and not showing signs of stopping. This week Thai prices remained above $650 pmt, and Viet prices hovered just below $645 pmt. Even Pakistan has joined the party and is quoting rice as high as $640 pmt. Now when we compare these prices from the Far East with our Western rice, the spread seems to shrink every week! Right now, the average price of Asian rice is $645 pmt. US quotes are sitting right around $770 pmt…a mere $125 pmt difference. Spreads this small are uncommon, especially when prices are this high. The weekly USDA Export Sales report shows a nice rebound in net sales of 42,100 MT this week, up 46% from the previous week, but down 24% from the prior 4-week average. Increases were primarily for Mexico (15,700 MT), Japan (13,600 MT), Canada (5,000 MT), Honduras (4,400 MT), and Guatemala (1,200 MT). Exports of 62,700 MT were down 12% from the previous week and 4% from the prior 4-week average. The destinations were primarily to Mexico (33,000 MT), Guatemala (12,600 MT), El Salvador (11,800 MT), Canada (2,400 MT), and Jordan (1,500 MT).