Rice Producers Call for Two Years of Aid

March 22, 2001

Rice producers have asked Congress to appropriate enough emergency aid to cover farmers' needs for this year and 2002. The only caveat they offered the House Agriculture Committee was that the assistance to rice farmers should total no more than was provided for the 2000 crop. That also provides Congress enough time to debate and approve a new farm law, they added.

Nolen Canon of Tunica, MS, and chairman of the U.S. Rice Producers Association, and John Denison of Iowa, LA, chairman of the Rice Foundation, and the immediate past chairman of the USA Rice Federation said low commodity prices and high production costs made the additional assistance necessary.

"Negative cash flow projections are currently causing bankers to reduce or even refuse credit for spring rice planting," they said. "This hesitancy on the part of lenders is not unfounded. Our economic analyses indicate that rice is the only major commodity for which net market returns after variable costs for the 2001 crop will be negative, if government payments are excluded."

They also recommended that the budget baseline for agriculture be increased permanently to a level that will allow farm programs to respond "by design to the type of economic stress currently facing agriculture. Crop producers should not have to stake their livelihood in such difficult times on uncertain, ad hoc assistance."

Congress should maintain the planting flexibility provisions in the 1996 FAIR Act, they added. The marketing loan and deficiency payment programs should be continued. "Rice producers strongly support maintaining the option for producers to redeem their loans with generic commodity certificates," the producers said. "This option has enhanced the marketing flexibility available to producers, empowering them to more effectively market their rice both here and abroad. This current marketing loan system works well, and should be continued."

The rice loan rates should be established at no less than $6.50 per hundredweight. The Secretary of Agriculture should be given the discretionary authority to raise the loan rate above this base level. If Congress realigns the loan rates for the other program crops with the current soybean loan rate or otherwise increases loan rates, "then we would support alignment of the rice loan rate with these higher rates. This will discourage distortions in cropping patterns and loan-rate driven over- and under-production of individual commodities."

They also asked for a payment scheme similar to the Freedom to Farm payments in the 1996 act that were designed to wean farmers from all government payments. "Rice producers recommend that a similar fixed payment, decoupled from current production, be provided over the fiscal years 2003-2007 at the fiscal 2002 budgeted level of approximately $4.01 billion for the eight major program crops."

And there was more. In addition to continued payments, the producers asked that a counter cyclical income support payment program be implemented. "While the program structure of PFC payments coupled with LDPs has served the rice industry well, it also contained some weaknesses. Specifically, this structure has provided inadequate income support in periods of low prices such as those experienced since 1998. This has necessitated the enactment of emergency farm assistance in each of the last three years."

In an effort to address "this inadequacy on a long-term basis, U.S. rice producers support maintaining a PFC-type fixed payment coupled with LDPs, while supplementing them with a counter cyclical payment paid to producers."