Rice producers and industry leaders came together recently to participate in a round table format in Washington, D.C., to discuss important issues that affect all of the U.S. rice-growing states. Topics that are critical to keeping the door open for a viable U.S. rice industry covered the gamut from cap and trade, disaster payments, crop insurance, trade opportunities and the estate tax.
The biggest concern among the panel about cap and trade legislation (where you collect, monitor, analyze and manage your greenhouse gas emissions) is that it would increase production costs and lower the net income for rice farmers. As one panelist notes, “We have virtually no benefits under that bill as it exists.”
Texas rice producer Linda Raun says, “With the legislation that is being proposed right now, we will have much higher input costs – between $70 and $150 an acre, and there will be very little opportunity to realize any economic gain by trading or sequestering. The Agriculture and Food Policy Center at Texas A&M did an analysis of the House bill using the representative farms that they have, and every farmer in the study realized a loss in income and net worth with no potential benefits.
“However, Congress has many issues to consider right now, so I don’t think they are expecting this bill to move, but it’s still something that eventually we will have to deal with – perhaps after the election,” she adds.
Disaster program and payments
As for disaster payments, according to USDA, “The 2008 Farm Bill created a permanent disaster program (Supplemental Revenue Assistance Payments – SURE) to replace the ‘ad hoc’ disaster program of past years.” However, to be eligible for a payment under SURE, farmers are required to buy insurance on all crops produced each year in their farming operations.
Arkansas producer Joe Mencer points out, “Our farm didn’t qualify for the SURE program because we are too diversified in the South. For example, we made a corn crop because it was early, and we beat the weather. But soybeans and cotton took a lick.
“Most people are counting on disaster assistance to get financed this year,” he adds. “Without that coming in a quick and timely manner, or some assurance that something is coming, a lot of producers in the Mid-South may not farm this year.”
Louisiana rice producer Jackie Loewer says, “As a Louisiana organization – the Louisiana Rice Producer Group – we are solidly behind the disaster assistance proposal. The rice area in north Louisiana took a pretty big hit, and they, along with other commodities, would benefit from these disaster payments. Even though we were not directly affected in south Louisiana, we like to help each other.
“The proposed disaster program that’s in the Senate designates 90 percent of your direct payments of your commodities if you are in a county that was declared a disaster, and you had at least a five percent loss, including quality and quantity.”
Next, the question arose, “What is not working with crop insurance that a rice farmer can’t be protected with coverage?”
Mencer says, “It’s a cost issue with the ratings, particularly our Actual Production History (APH) has not kept up with production. In the last 10 years, we have increased our rice production in Arkansas by 1,300 pounds on average. And when you take a 10-year average to figure your yield guarantee, we’ve far exceeded our guarantee and need a way to bring those APHs up to current production. You have to buy up to the 85 percent level to have any kind of safety net, and the cost is just too high for most growers.”
Frank Rehermann, USA Rice Producer Group chairman from California notes, “In our state, crop insurance is not consistent with current yields. The level of payment is not consistent with current prices, and most people I know who buy crop insurance in California buy CAT (Catastrophic).”
When asked about the possibility of changes actually being made to the crop insurance program to make it more beneficial to producers, Mencer was optimistic.
“I attended a meeting in late February in San Diego with the crop insurance companies,” he says. “They are all very interested in coming up with new programs or policies that would encourage more growers to participate, and we are looking at several new products that we are trying to develop within the rice industry itself, so we will have input on the programs. That’s the only true way to have a benefit is to build our own safety net into the programs.
“I think possibly there may be something out there for the 2011 crop,” Mencer adds. “We have a lot of interest in the lodged rice issue. Also, we are still developing our crop margin program because the Risk Management Agency (RMA) did not accept it as we submitted it the first time. We are re-addressing some of their concerns. Hopefully, we will have that in effect by the 2012 crop.”
Rice producer participants
Trade opportunities, the estate tax
Jamie Warshaw, USA Rice Federation chairman, noted the irony of the group discussing topics “to develop a stable industry that can compete, while, unfortunately, we are tied to programs that we rely on as an industry.
“I believe the more we do on the trade front – the more opportunities that are put in front of us to compete in the world – then the less reliant on the issues we are discussing here. For example, Cuba presents a great opportunity for us now.” (See page 14 – The time is right to open trade with Cuba).
Another hot issue for the rice industry, as well as other farmers in the United States, is estate taxes. The concern is that the relief that is in place now expires soon, and then the rates go up dramatically.
One of the California panelists pointed out that his state actually had a piece of legislation covering estate taxes and extending the current limitations.
“Unfortunately, that bill is not going anywhere,” he says. “It is dying. I think what we are looking for is some kind of threshold whereby family farms are protected from having to sell the farm to pay estate taxes. However, I think the political environment right now is tax or no tax. There is not a lot of middle ground discussion. The ultimate irony is if we had some reasonable limits on it, it might work. It’s a shame when a family has owned land for 100 years, and a death triggers an event in which the farm gets sold. That’s what we are trying to avoid.”
As illustrated by this round table dialogue that took place last month, it’s critical to keep avenues of conversation open among Congress, policy makers and agriculture. However, you don’t have to sit on a panel in Washington, D.C., to express your opinion and explain what it will take to keep the industry viable.
Be proactive in your state producer organizations, know what the issues are and contact your representatives and senators regularly to tell your side of the story. Don’t allow the door of communication to swing shut on the U.S. rice industry.
Contact Carroll Smith at (901) 767-4020 or firstname.lastname@example.org.