HEARINGS CONTINUE IN DEBATE OVER 2012 FARM BILL

In preparation for the 2012 Farm Bill, the House Agriculture Committee has held seven field hearings across the country. Committee Chairman Collin Peterson (D-MN) said the farm bill hearings have been a positive experience and emphasized that farm programs must evolve.

The testimony of California rice producer Frank Rehermann at the hearing in Fresno, CA centered on the importance of maintaining the safety net for rice producers.

At the sixth field hearing held in Troy, AL, rice producer Joe Mencer of Lake Village, AR talked about the shortcomings with the current crop insurance, Average Crop Revenue Election (ACRE) and Supplemental Revenue Assistance programs (SURE). Mencer also mentioned the costly effects of climate-change regulations on the rice industry, other environmental regulatory concerns and the urgent need for disaster assistance for producers.

At a Texas hearing rice producer L.G. Raun said trade policies should also be addressed and that rice producers “have seen nothing in the Doha Round negotiations that would change the current situation in which the United States is outgunned by foreign subsidies and tariffs.”

Farmers are encouraged to fill out a farm bill survey at www.agriculture.house.gov and click on the feedback link.

PRODUCERS HOSTS DIRECTOR FROM TAIWAN 'S COUNCIL OF AGRICULTURE

From left; Marvin Baden, Mr. Chao-Hsing Huang, Keith Glover

Senior Vice President Marvin Baden and President & CEO Keith Glover met with Mr. Chao-Hsing Huang, Deputy Director of the Food Warehousing and Transportation Division of Taiwan's Council of Agriculture. Mr. Huang's interests include understanding U.S. business practices regarding the agricultural market and national/international agricultural policies and exploring the U.S. food safety regulatory system. After meeting with Baden and Glover, Mr. Huang enjoyed a white rice mill tour before leaving to continue his U.S. travels.

AFRICAN AGRICULTURAL LEADERS VISIT PRODUCERS

Walter Nunn, director of the Arkansas Council for International Visitors and Keith Glover, President and CEO of Producers, welcome visitors from Kenya, Nigeria, Swaziland, Uganda, Zambia and Zimbabwe. The group of agricultural specialists is in the U.S. to learn about the U.S. rice industry.

Mr. Glover spoke on rice farming and the role of Producers in promoting sustainable development. He also answered numerous questions concerning two of the group's objectives: (1) to understand how good governance stimulates growth, investment and trade and (2) to learn how partnerships between the private and public sectors can help lead to increased agricultural production at a lower cost to the environment.

MANAGER'S MESSAGE

On May 11th, USDA released its monthly supply and use report. The May report contained USDA's first projections for the new and upcoming 2010/11 marketing year. In this manager's report, I will discuss USDA's first projections for the 2010 crop as well as USDA's adjustments to the 2009/10 marketing year.

2009/10 Marketing Year

In the report of May 11, USDA increased long grain export numbers during the 2009/10 marketing year by 1.0 million cwt. resulting in a 1.0 million cwt. reduction in the projected long grain ending stocks for July 31, 2010. In order to appreciate the rarity of this type of adjustment so late in a marketing year, consider this is the first time in seven years the USDA May supply and use report has increased export numbers resulting in a corresponding decline in projected ending stocks. With the 1.0 million cwt. reduction, long grain ending stocks are now projected at only 14.8 million cwt. which would be the lowest long grain ending stocks since July 31, 2004.

To date, U.S. long grain export shipments are running about 6% higher than a year ago. With the May adjustment, USDA is now projecting 2009/10 long grain export shipments will be 4% higher than last year. Recent purchases of U.S. rough rice by Venezuela have given U.S. long grain exports a boost from a non-traditional U.S. export market. Should rough rice purchases from Venezuela continue along with an unexpected sale of U.S. milled rice, U.S. old crop long grain supplies could become extremely tight.

2010/11 Marketing Year

Overall 2010 crop – USDA's first projections of the 2010 U.S. rice crop forecasted the overall production at 244.0 million cwts., up 24.1 millions cwts. or 11% over the previous year. The acres used in the first projections were based off of USDA's Planting Intentions Report released on March 31. If the projections are accurate, the 2010 rice crop would be the largest in U.S. history breaking the previous record set in 2004.

With the forecasted record 2010 crop, USDA is projecting next year's overall ending stocks will balloon to 51.4 million cwts. compared to only 30.4 million cwts. for the 2009/10 marketing year, a whopping 69% increase. If correct, next year's overall ending stocks would be the largest carryout since the 1986/87 marketing year.

2010 long grain crop – All of the forecasted increase in the overall 2010 U.S. rice crop is due to the long grain crop. According to USDA, the 2010 U.S. long grain crop is projected at 177.0 million cwts., up 24.3 million cwts. or 16% over the 2009 long grain crop. If USDA's forecast becomes reality, the 2010 U.S. long grain crop would just miss breaking the previous U.S. long grain production record set in 2005 by only 100,000 cwts. With the potentially enormous 2010 long grain crop, the long grain ending stocks for the 2010/11 marketing year are projected to nearly double to 28.3 million cwts. from 14.8 million cwts. at the end of the current marketing year.

2010 medium/short grain crop – The 2010 U.S. medium/short grain crop will see the smallest change in production from the previous year. According to USDA, the 2010 U.S. medium/short grain crop is projected at 67.0 million cwt. which is within 100,000 cwt. of the 2009 crop. Even though the 2010 U.S. medium/short grain crop is forecasted slightly down from last year, we must remember the 2009 U.S. medium/short grain crop was a record crop historically. With another large medium/short grain crop projected, the medium grain ending stocks for the 2010/11 marketing year are forecasted to increase to 20.7 million cwt. from 13.2 million cwt., a 57% increase.

Market Implications

Old crop – With old crop long grain supplies continuing to dwindle towards the end of the 2009/10 marketing year, old crop rough rice prices could be excited at least one more time should some unexpected or non-traditional export demand for U.S. long grain rice surface. However, with an early new crop harvest expected in the south, time is quickly running out. Old crop medium grain supplies appear to be adequate until new crop.

New crop – With a record 2010 crop now forecasted, we believe 2010/11 could be a very challenging year for U.S. rice prices. Fortunately, the 2010/11 marketing year hasn't even begun and we still have well over a year for something good to happen in the market place. Realizing additional demand from our traditional domestic and export markets along with receiving any unexpected demand from some non-traditional U.S. export markets will be the key to making the most of the 2010/11 marketing year.

Sincerely,

Keith Glover
President & CEO