News & Events
California rice farmers see record demand, so why are prices lagging?
Press Release, Rice Producers of California
March 2, 2005
California rice farmers are realizing record demand for their 2004 crop. Export numbers released this week from the US Department of Agriculture show that export demand for medium grain milled rice is 45% ahead of one year ago. Total demand for all classes of the 2004 medium grain rice crop (milled, brown and paddy) is 37% ahead of 2003. A total of 26.4 million cwt. (hundredweight, or 100 pounds) of paddy rice have been sold to export markets thus far, as compared with 19.3 million cwt. one year ago.
“These numbers are good news for California rice farmers,” said Steven Jones of Rice Producers of California. “We grew a big crop in 2004, but these export numbers show that we should easily move the entire crop.”
California’s rice production for 2004 is estimated at 52 million cwt., and when added to medium grain produced in the Southern US, total US production comes to 60.8 million cwt. Carryover from the 2003 crop is 12.4 million cwt, giving a total supply of 73.2 million cwt.
US domestic use is projected to consume 35 million cwt, leaving 38.2 million cwt for the export market and carryover supplies. “We’ve already hit 26 million cwt. in export sales, so now we’re eating into that 12 million cwt. carryover supply,” noted Mr. Jones. “We’ve already exceeded anticipated export sales for the entire year, and we’re only four months into the marketing year.”
These new numbers are causing some growers to ask tough questions of rice marketers. “If traders have already marketed basically the entire crop, with almost 8 months to go before new supply becomes available, why are prices so low?” asked Scott West, a rice farmer from Colusa. “If demand is exceeding supply, prices should rise.”
Indeed prices on the export market are at record low levels. Recent sales of rice to Japan, formerly a lucrative market for California rice farmers, were made at prices estimated to be 38% below the farmer’s cost of production. Unfortunately, rice farmers aren’t the ones doing the actual selling of the crop.
“It’s ridiculous,” said Greg Massa, communications director for Rice Producers of California, a farmer organization that has been examining the low prices. “Farmers can’t make a living at these prices, which are so low that even full subsidy payments don’t make up the shortfall. The rural counties of the Sacramento Valley could lose more than $100 million in taxable income this year due to overly-aggressive marketing.”
RPC interim leader Kelly Ornbaun expanded on the issue of lost tax revenue. “Rural areas in California are hurting. When farmers don’t get paid fairly for their crop, it ripples through the community. Ultimately, country and state governments become affected, we’re already seeing that here.”
Mr. Ornbaun continued, “The only way out is for farmers and community leaders to stand up and make themselves heard. Anyone can sell a crop at these prices. What we’d like to see is someone actually sell our crop at a profit.”
The Rice Producers of California is the only organization solely representing the views of the California rice farmer.