Rice Farming

 - Rice Producers Forum -

The power of demand:
The rice stimulus package

By Thomas Wynn
Director, Market Development
USRPA

Today’s news events revolve around “stimulus packages” that are touted by the government. These packages are purported to solve economic crises, offset liquidity issues, help preserve jobs and revitalize the economy. These carefully crafted pieces of legislation are the brainchildren of economists, legislators and politicians.

For the rice industry, however, a different sort of stimulus has been functioning for quite some time – the stimulus of increased demand. For almost 10 years, the U.S. Rice Producers Association has been working in Latin America to help increase demand for rice in the largest export markets that we currently hold.

These programs have been successful not only in increasing the demand for U.S. rice, but also have been able to generate awareness for the nutritional and economic benefits associated with this food, while developing the tastes and preferences for the next generation of consumers.

In doing so, these programs have provided “job security” for thousands of rice producers across the nation for years to come.

The power of demand
Demand is essential to any marketing plan. Only by developing current and future demand can an industry truly ensure its survival. This principle serves as the basis for the international programs conducted by the U.S. Rice Producers Association. The theory is very simple – identify the markets where rice can see the greatest growth and target those markets.

In this case, the strategy revolves around Latin America (the destination of over one-half of the total U.S. rice exports) and its lower socio-economic groups, specifically the women and children. These groups provide the greatest potential for prolonged consumption as well as retention for the message that the program carries. This message is also very simple – eat more rice.

In this market, families who must survive on only hundreds of dollars a year are taught how to consume rice economically and ensure that they will maintain food on the table at each meal. This effect is astounding from a goodwill perspective, but the true power reaches even further.

Increased funding efficiency means increased exports
Increased exports mean increased sales, and for an industry that is as heavily dependent on exports as rice, this is a necessary function of survival. The beauty of the programs currently conducted is that they simply promote rice as a generic commodity. There is no specific brand name or type, except rice. The reason behind this is that the U.S. rice industry holds over 90 percent market share in these regions.

Any increases in consumption will directly relate to exports. These benefits relate back to growers in the Uni-ted States multifold as they not only provide increased rice exports during the current time, but also assure a market for U.S. rice in the future.

Economically, the benefits are obvious. Since the beginning of the U.S. Rice Producers Association’s international marketing promotions in 1998, rice exports from the United States have grown consistently and dramatically in this region. This is especially true for the rough rice market, which is most critical for producers.

Last year, these efforts generated over $10 million in revenue for the U.S. rice industry. By state, this amount equates to over $6 million for Arkansas, $2 million for Louisiana, $1 million for Mississippi, $900,000 for Missouri and $700,000 for Texas. This is a result of less than $1 million in federal and producer funds invested in the programs over the same period.

While the ability to promote brand recognition or a specific type of rice is definitely important, the ability to ensure a long-term demand for U.S. rice is by far the best stimulus package that rice producers could hope to receive.

For more about USRPA, visit www.usriceproducers.com.