Rice farmers see a ‘regular, normal’ year

Issue Date: May 11, 2016
By Ching Lee
Butte County rice farmer Josh Sheppard readies equipment to be moved to a different field during land preparation before planting. Throughout the Sacramento Valley, farmers are busy planting a more-typical amount of rice acreage this year, after reductions the last two years due to water shortages.
Photo/Ching Lee
An agricultural airplane flies over a flooded rice field in Butte County during planting.
Photo/Ching Lee

Thanks to improved rainfall and recovering reservoirs, farmers in Northern California say they are back to planting a more-normal amount of rice this season, after water shortages forced them to reduce production the last two years.

But the additional plantings come as the global rice market is struggling, with large supplies weighing down prices and farmers in more parts of the world growing medium-grain rice, directly competing with California farmers.

Concerns about rice prices have not slowed planting activities in the Sacramento Valley, though. All across the region, growers are "going six ways from Sunday and working every single field," said Sean Doherty, who farms rice in Colusa, Sutter and Yolo counties.

"We're back to a regular, normal year," he said.

Despite periodic rain in recent weeks, Butte County grower Josh Sheppard said he's happy with the progress he's made, noting that rain is normal during planting and that the downpours have not caused significant delays. He said he expects to be finished by the end of the week.

Fields that had been taken out of production for the last year or two have had a good rest and are "working up beautifully," Doherty said, allowing him to do fewer tillage passes. He said he's expecting better weed control and good yields in those fields. Having to do less tillage is a cost saving, "which is nice because the price of rice is abysmal," he added.

The softening market is "very heavy on the minds of producers," Sheppard said. Much of the land on which he farms is best suited for rice production and will remain in rice despite the lower prices, he noted.

After fallowing 30 percent of his acreage last year due to lack of water, Sutter County rice farmer Walt Trevethan said he's planting all of his ground this year. That has allowed him to keep his employees working longer, whereas their hours were cut short last year during planting and harvest.

"The biggest concern is the market," he said. "If we're going to have wall-to-wall rice and the market is already weak, what's it going to do when all this rice is harvested?"

Doherty said warehouse space for the incoming crop could be a problem this fall, but he added that he's "hopeful there'll be some sales and the issue will be alleviated by summertime."

Higher prices for medium-grain rice in recent years and reduced plantings in California attracted competition from farmers in other rice-producing regions around the U.S. and the world to fill the gap, said Chris Crutchfield, president and CEO of American Commodity Co. in Williams. Until recently, the higher-value dollar also slowed U.S. exports, and for California rice, it was particularly problematic in lower-income markets such as the Middle East.

Now, with full planting returning to the Sacramento Valley and significant stocks from 2014 and 2015, Crutchfield said there will be "a lot of inventory" to work through and marketers will have to "use price as a mechanism to buy our way back into the markets that we've lost to competition from alternative origins."

Farmers in Southern states such as Arkansas and Louisiana who traditionally have grown long-grain rice switched to growing more medium grain, as did farmers in India, Southeast Asia and Europe, creating competition for California in the Middle East and the Oceania markets, he noted. While the South has scaled back its medium-grain plantings this year, Crutchfield said California still faces significant competition from around the world.

"For the last couple of years, the global marketplace has been consuming medium-grain Japonica rice from a whole lot of different origins that in the past had not been available," he said.

Japan, South Korea and Taiwan are considered "rock-solid" export markets for California rice, Crutchfield said, but he noted that Taiwan bought no rice from the Golden State in the last two years. It fulfilled its World Trade Organization minimum import quota for U.S. rice, but the purchases all came from Southern states. Japan and South Korea were California's largest export markets in 2015.

"I think we'll get that market back, but we have to get it back by selling at prices that the South would sell rice for," he said.

Meanwhile, other big markets in the Middle East have been turning to regions such as India and Russia for their rice, Crutchfield said. He noted that California used to market 150,000 to 200,000 tons of rice to Turkey, but last year sold fewer than 5,000 tons there. These "highly price-sensitive" markets now have "a whole grocery basket of places to buy rice from, when not that long ago it was essentially Australia, California and, to a certain extent, Egypt," he added.

Colusa County rice farmer Joe Carrancho said while having a full allocation of water this year is great and he has planted all of his acres, lower market prices for rice and higher wage costs for employees have forced to him cut about a third of the custom work he used to do for other farmers.

"I'm not running near as many men because I can't afford it. I sure can't afford to work them overtime," he said. "I can't raise my prices because there's no way these farmers can afford to pay it when rice is so cheap right now."

What has helped, he said, is that the price of fuel has come down.

Doherty said it's not just the rice market that has retreated, pointing to lower prices in other agricultural commodities such as nuts, tomatoes, wheat, corn, alfalfa and other forages.

But rice farmers agree that being able to plant more acres this year has allowed other support businesses in their communities to bounce back—from rice mills and aerial applicators to tractor dealers and seed sellers. More rice acreage also means more habitat and food for wild birds this fall.

"We're looking forward to growing the big feast for the birds—and seeing more of them in the countryside again," Doherty said.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.