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USRPA Participates in USAEDC Annual Workshop

Left to right: USRPA Chief Operations Officer, Mollie Buckler; USRPA Office and Technology Manager, Iris Figueroa; and USRPA Chief Financial Officer, Grace Wang.
This week, USRPA participated in the U.S. Agricultural Export Development Council (USAEDC) Annual Workshop in Baltimore, MD, celebrating 40 years of partnership with the USDA Foreign Agricultural Service (FAS). The three-day workshop focused on the national political outlook, Farm Bill update, export program funding, member campaigns in foreign markets, sustainability, and climate-smart issues, among other topics. It was also a great opportunity to meet with USRPA’s Marketing Specialist, Curtis McCoy, as well as network with a variety of agriculture industry members.
Breakout sessions gave the attendees a more intimate setting to discuss specific topics. The sessions offered focused on tackling trade barriers, enhancing outreach to buyers, program application updates, marketing strategies, contracting and travel tips for export programs, and the "secret sauce" for international success.
During the workshop, the USAEDC Board of Directors met to vote and elect Greg Tyler, President and CEO of the USA Poultry & Egg Export Council as USAEDC's new Chairman. He previously served as the organization’s Secretary/Treasurer and will serve as the organization’s Chair for the next two years. Other newly elected officers include Karen Horan of the National Confectioners Association, Vice Chair, and Jeff Correa of Pear Bureau Northwest, Secretary/Treasurer. Previous Chair Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC), will rotate to the Immediate Past Chair position on the Executive Committee.
Left to right: Newly elected Chair Greg Tyler and past Chair Jim Sutter.

Washington, D.C. Update

House and Senate Avoid Shutdown and Extend Farm Bill Through the 2024 Crop Year
This week, both the House and Senate passed a continuing resolution to fund the government beyond November 17. The “laddered” resolution extends funding deadlines for different parts of the Federal government in two steps: January 19 and February 2, 2024. The Department of Agriculture would be funded through January 19, 2024, when the following four appropriations bills will expire: the Department of Agriculture, Food and Drug Administration; Energy and Water; Military Construction-Veteran’s Administration; and Transportation Housing and Urban Development. The eight appropriations bills expiring on February 2, 2024, include Commerce-Justice-Science; Defense; Financial Services; Homeland Security; Interior-Environment; Labor-HHS-Education; Legislative Branch; and State and Foreign Operations. In addition, the bill would extend the 2018 Farm Bill until September 30, 2024, one year from when it expired. The commodity programs for rice and other program crops are extended through the 2024 crop. The bill also accounted for the farm bill programs without a baseline, often referred to as “orphan programs,” by providing them with one additional year of funding (equal to one-fifth of the funding provided for each program in the 2018 five-year farm bill). To offset the cost of this additional spending for these “orphan” programs, the bill rescinds $177 million in unobligated funds from the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program. After the proposal was released, House Agriculture Committee Chairman Glenn “GT” Thompson (R-PA) Ranking Member David Scott (D-GA), and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) and Ranking Member John Boozman (R-AR) released a joint press release noting how they were able to reach an agreement but that they remain committed to completing a five-year farm bill next year. The bill passed on a bipartisan vote in both chambers. In the House, it passed on a 336-95 vote on Tuesday, November 14. In the Senate, it passed on an 87-11 vote on Wednesday, November 15. It will now go to President Biden to be signed into law. The full text of the bill can be found here.
Meeting with Chairman Thompson
In the picture below, Fred Clark and Vernie Hubert after a meeting with Chairman Glenn “GT” Thompson (R-PA) of the US House of Representatives Committee on Agriculture on Wednesday of this week. USRPA representatives thanked Chairman Thompson for the recent extension of the farm bill and discussed other important issues. Chairman Thompson shared his desire to have a farm bill completed early in 2024 before the political campaign season kicks in. They also discussed ag labor issues being investigated by the bipartisan Agricultural Labor Working Group created by Chairman Thompson and Ranking member David Scott (GA) co-chaired by Congressman Crawford (AR) and Don Davis (NC).
Left to right: Fred Clark, Chairman Glenn “GT” Thompson (R-PA) of the US House of Representatives Committeeand Vernie Hubert.

Market Update: The Good, the Bad and the Ugly

The Good: We are the only suppliers of long-grain rice in the Western Hemisphere through the balance of the year to a large degree. The Bad: We can’t ship comfortably because of the low draft on the Mississippi River. The Ugly: Crop quality and milling yields have certainly been a challenge in most areas.
Right now, it’s all about crop quality. Last week we discussed the macro-factors impacting rice trade both globally and right here at home through the lens of climate risk and El Niño. This week, the chatter is that the deeper the mills get into this crop, it’s becoming clear that the initial reports of milling yields in the low 50's weren’t a fluke. In fact, some places in Louisiana and Arkansas would be happy to see milling yields in the 50’s, as the high 40’s is unfortunately becoming the norm. It is difficult to quantify exactly what this means to total supply at this point, but the market is beginning to indicate, via an increase in futures price, that the large acreage won’t necessarily result in a commiserate supply of milled product.
The market has also spiked on marketing year highs from the export sales report. Net sales were reported at 207,900 metric tons, largely from huge purchases from Mexico, the WTO purchase from South Korea (medium grain), and a large sale to Senegal. Exports were down this week by 70% from last week, but those will rebound as we begin to ship against the aforementioned sales. We have been saying for weeks now that the U.S. is the only place to buy rice in the Western Hemisphere until spring, and we are finally beginning to see those procurements tally up. The problem remains, however, low draft levels at the Mississippi River and the ensuing logistical cost increase to deliver.
Nothing is easy north or south. Demand for long grain, both rough and milled, continues to be strong, and new players have entered the U.S. market as a result of conditions in the normally exporting South American countries that are virtually sold out of rice. New crop planting is not going smoothly in Brazil or Paraguay due to heavy rains and flooding in key areas blamed on the El Niño weather pattern. Rumors of Asian milled rice imports into Brazil are rampant and Paraguayan rice farmers and mills that have the 2024 crop in the ground are booking sales to Brazil, a clear indication of the market circumstances.
The low milling yields are prompting the industry to look to the scientific community to find answers to help overcome the poor milling quality this year. Many are at a loss as to what happened, and questions have been asked if it was climatological factors, cultural practices, planting dates, strange weather patterns, a mixture of varieties, or a myriad of other things or all of the above. As more data comes to light here, we will be reporting on it.
In Asia, the action continues to settle down a bit, with Viet prices holding steady for two weeks in a row in the $660 pmt range, while Thai prices are registering nearly $100 pmt below that price at $565 pmt. Again, a spread this significant between these two exporters almost never happens, but would appear to be par for the course for the way things are going this year. Things could change quite radically, however, as India is reporting that their stocks are nearly double their normal levels. With statistics like these entering the marketplace, it is a clear telegraph that the export ban will be lifted, and likely sooner than later now that domestic food security is shored up and election pressure is likely alleviated.
As we head into Thanksgiving week, there is much to be thankful for, as we have faced these challenges in prior years. So have rice with your turkey!

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Texas Rice Roundup: Capital Farm Credit Platinum Sponsor

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USDA to Provide More Than $3 Billion to Commodity and Specialty Crop Producers Impacted by 2022 Natural Disasters

Last week, USDA announced more than $3 billion to provide assistance to commodity and specialty crop producers impacted by natural disaster events in 2022. Eligible impacted producers can apply for financial assistance through the Emergency Relief Program (ERP) 2022. Administered by FSA, the program will help offset the financial impacts of crop yield and value losses from qualifying disasters occurring in 2022. Producers can apply for ERP 2022 starting Oct. 31, 2023. The application deadline has not yet been determined and will be announced at a later date. 

USRPA Visits Guatemala City

Last week, USRPA staff traveled to Guatemala City to visit promotional activities in retail stores and schools, continuing to engage with the Guatemalan rice association ARROZGUA to promote interest in U.S. rice in the market. USRPA CFO, Grace Wang successfully monitored promotional programs implemented at various retail locations.
USRPA’s Guatemala campaign USA Arroz targets consumers, mainly households and mothers, educating and promoting their consumption of U.S. rice. USRPA also successfully conducted audits of the programs in Guatemala through an in-person contractor interview and the examination of reports and documents.  

Washington, D.C. Update

House Agricultural Labor Working Group Releases Interim Report

On Tuesday, the House Committee on Agriculture's Agricultural Labor Working Group released an interim report on the labor challenges facing the agricultural sector. The report outlines initial findings based on a series of stakeholder roundtables the Working Group has held over the past four months. These roundtables covered topics such as challenges in accessing and navigating the H-2A temporary agricultural program and labor and producer perspectives on the H-2A program. The Working Group is co-chaired by Reps. Rick Crawford (R-AR) and Don Davis (D-NC) will work toward developing legislative solutions to the challenges identified in the interim report.

Farm Bill and Appropriations Update

As of this week, all four Agriculture Committee leaders have publicly stated support for extending the 2018 farm bill as they continue to work on the next farm bill. There is interest from both parties in including an extension on the next continuing resolution; however, specifics of an extension have yet to be determined. The current continuing resolution (CR) expires on November 17. Currently, most are optimistic that an agreement can be reached on another CR to temporarily fund the government and avoid a shutdown while the House and Senate continue work on the funding bills for fiscal year 2024. The House has passed seven of twelve of its appropriation bills but failed to pass the bill to fund USDA in September. The Senate passed three of its appropriation bills last week, including the USDA funding bill.

Market Update: It's All About the Weather

The El Niño weather pattern means different things to different regions, and the impacts are far-reaching across the rice chain. For example, El Niño was the reason cited by the Indian government to restrict exports. In California, it means a return to wetter weather and a full-size crop. In South America, its absence has meant drought and a reduced crop last year, and its return has gone so far as to cause flooding in places like Ecuador to reduce their crop. Some have blamed El Niño for the problems with the Mississippi River, and a newly emerging problem is the freshwater drought in the Panama Canal and its ensuing reduction of throughput. Let's not leave out that southern Louisiana is suffering salt intrusion from lack of rain. "If we don’t get 20 inches of rain by planting season, we will cut back 30% on acres,” according to a leading rice farmer. Weather patterns and climate risk continue to play a significant role in the rice market, and being able to respond in a timely manner is of utmost importance.
Source: https://twitter.com/majorflood42
All this chaos shines a light on the United States as the clear winner in the Western Hemisphere in the next several months — we need only to take advantage of the opportunity. The large crop makes us the only supplier to Central and South America until their harvest in the Spring of 2024, but we are having trouble loading barges due to the low levels of the Mississippi. The poor milling quality and low head yields can be turned into a positive by helping the U.S. industry claw back some of its market share in the parboiled space. Conversations are starting around the possibility of U.S. long grain finding its way to Cuba since Vietnam shipments are getting tied up in the Panama Canal. Even the spread between U.S. long-grain and Asian rice is the smallest it’s been in years because of strong demand from Indonesia and no shipments from India. Every opportunity has its challenges, but things are setting up to be an exciting year.
The monthly FAO Rice Price Update dropped for its second consecutive month for October, but it’s still 24% more than this time last year. The drop was led by Japonica varieties, falling 9% from last month with California in full swing, while Indica varieties dropped 5.3% as the panic works its way out of the market from the Indian export ban. If Indonesia didn’t double its imports in the last quarter of the year, we could have seen more softening in Thai and Viet prices, but Indonesia’s insistence on procuring supplies for food security in the event of severe weather events has kept the pressure on prices.
The monthly World Agriculture Supply and Demand report was just issued and offers a relatively sideways outlook for rice. Carryout dropped 600,000 cwt to 22.2 million cwt this month, with few updates for other supply/demand elements. Of note, however, is an increase of 10% in the estimate for the size of the Brazil crop from this month to last month. The new estimate now puts Brazil at 7.5 million metric tons. The increase comes with the return of El Niño and solid rains as high as 200% of normal in some regions. This means more competition for Mexico after May 2024 when the Brazil harvest is ready for export.
The weekly export sales report shows net sales of 36,000 MT this week, down 62% from the previous week and 43% from the prior 4-week average. Increases were primarily for Venezuela and Mexico. Exports of 96,100 MT — a marketing-year high — were up noticeably from the previous week and from the prior four-week average. The destinations were primarily to Iraq (43,300 MT), Mexico (38,300 MT), Haiti (7,000 MT), Canada (2,900 MT), and Jordan (2,200 MT).