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USA Rice Outlook Conference
Highlights of the December meeting

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EDITOR’S NOTE: The annual USA Rice Outlook Conference was held in New Orleans, La., Dec. 9-11. This meeting provides a forum for all segments of the rice industry to examine timely and important issues. The goal of this conference is to advance industry education, communication, understanding and cooperation. Following are some of the key points made by several of the featured speakers.

Ag Commissioner Urges Political Involvement
Mike Strain, commissioner of the Louisiana Department of Agriculture and Forestry, welcomed attendees to the 2009 USA Rice Outlook Conference held in his home state.

He urged rice producers and industry members to get involved in the poli-tical process to block rules and regulations that will ultimately affect the profitability of rice farmers.

“Most Americans are three or four generations removed from the farm,” Strain says.

“This lack of understanding of the importance of production agriculture is leading Washington bureaucrats to advance legislative and regulatory policies that will have a negative impact on agricultural producers, including cap and trade legislation.

“Bureaucracy adds layers of costs,” he adds. “The only way we can stay in business is by increasing efficiency through research and scientific and technological advancements.”

Strain called on rice industry members to get engaged in the political process.

“We must speak so that all may hear,” he says. “Our side has to be heard.”

USDA Under Secretary Miller Outlines Farm Policy, Trade Issues
In a broad and far-reaching speech before attendees of the morning general session of the USA Rice Outlook Conference, U.S. Department of Agriculture (USDA) Under Secretary for Farm and Foreign Agricultural Service James W. Miller provided an overview of the Obama administration’s domestic and international priorities and USDA’s farm policy efforts.

Detailing Obama administration domestic priorities – including education, health care, infrastructure and energy independence – Miller said the administration is working on a domestic agenda that can provide “significant benefits” to agriculture and rural America, including efforts to boost energy independence through the use of alternative fuels, such as ethanol, and the expansion of sustainable production practices.

The current administration’s international priorities are centered on a successful agreement for the Doha Round of multilateral trade talks and other bilateral trade agreements.

“Our No. 1 priority is the creation of wealth on farms and in rural communities through the tools and technology provided by public, private and non-profit sectors,” Miller says.

He cited USDA’s efforts to modernize its antiquated computer system to handle farm support payments more efficiently as an example of its work in this area.

On payment limitations, Miller told attendees that he works closely with strong advocates for farm support payments, meeting recently with Senate Agriculture Committee Chairman Blanche Lincoln (D-AR) of whom he says, “There is no stronger advocate in Congress for American agriculture.”
Miller said USDA will publish rules for 2010 farm payments by the end of the month, and producers would be given an opportunity to comment. He also said that USDA will be working to reach a final agreement for the 2011 crop insurance program.

President Obama & Democratic Congress
Jim Wiesemeyer, vice president of Informa Economics’ Washington bureau, spoke at the 2009 USA Rice Outlook conference in a session titled “President Obama and the Democratic Congress: What Happened and What’s Ahead?”

Calling her “one of the best moderate Senators that either party should need,” Wiesemeyer said that Senate Agriculture Committee Chair Blanche Lincoln (D-AR) is the “right person at the right time for agriculture.” He added that agriculture is “one of the few growth sectors [in the economy] if you’re allowed to be.”

However, Wiesemeyer said, there could be trouble ahead if a report on climate-change legislation issued by USDA proves to be correct. A USDA report projects rice production decreases of 13.1 percent by 2013, 19.2 percent by 2030 and 25.1 percent by 2050. The report also stated that rice prices could increase by 5.5 percent by 2030 and eight percent by 2050.

Any climate-change legislation will happen “later rather than sooner” and will not be addressed until after next November’s elections at the earliest.

As far as the elections in 2010, Wiesemeyer said in perspective, a sitting president’s party usually loses seats in its first mid-term election. With the exception of President George W. Bush in 2002 (when GOP picked up two Senate seats and held steady in the House), since 1978, the incumbent has lost seats in at least one if not both chambers. He noted that the White House may try to nationalize the contests to help get out the vote.

The Cook Political Report recently gave Republicans a 35 to 40 percent chance of recapturing both the House and Senate. Median forecast has Democrats retaining only a 10- to 15-seat majority in the House and a five-seat margin in the Senate.

The impact of this type of situation, if realized, Wiesemeyer told attendees, would force President Obama to the right because he could not govern without Republican support.

‘Economy Is In Expansion Mode’
Economist Michael Swanson told the audience at the conference that he has “no doubt the economy is in expansion mode.” Swanson, of Wells Fargo & Co, said despite that good news, everybody is not happy. “The continued reluctance to spend by the business sector – the primary driver of the American economy – will probably mean slower job growth,” he said.

Swanson predicted that increased productivity would eventually boost the economy, and that the Fed’s monetary policy also will bring changes.

“I see an enormously fast catch-up period for the U.S. economy,” he says, noting that he expects the Federal Reserve to keep interest rates low for the next eight months, followed by steady increases.     

“When the Fed starts raising interest rates, it will not be just two percent,” Swanson says.

He predicted increasing inflation and higher interest rates over the next five to 10 years.

Swanson also said global economic expansion and productivity increases – particularly in China and India – will drive demand for agricultural products and other consumer goods and fuel economic growth. In addition, he said, demand will continue to shrink the trade deficit, further fueling American economic growth.

The economic impact for American agriculture will depend on debt and margin management, Swanson said, calling on producers to manage debt and input costs.

Rice Industry Outlook
Nathan W. Childs, senior rice market analyst for the U.S. Department of Agriculture’s Economic Research Service, addressed the domestic and international rice situation and outlook.

According to Childs, production costs will increase in 2010-11, while there will be little change in production and a record total of domestic and residual use. He added that Thailand, China and Pakistan will “boost exports” in 2010. Childs told attendees that U.S. rice imports are projected to increase in 2009-10, while for the long-term, imports are “increasing at a faster pace than the domestic market.”

Childs also said that there will be a long-term increase in imports of jasmine rice from Thailand along with imports of basmati rice from India and Pakistan.

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