Rice Profitable for Louisiana Rice Farmers

BATON ROUGE, La.-(AP)--Global rice markets are in turmoil, but for the first time in several years, Louisiana rice farmers are looking forward to something they haven't had in a while _ a good chance of turning a profit.

And while the forces behind the rising price of rice are unique, it's not the only Louisiana crop for which prices are up.

The price of rice has almost doubled since the end of last year, but far from making farmers rich, it's right about where it should be considering the high cost of fuel, fertilizer and other expenses farmers have been enduring for the last few years, said Steve Linscombe, director of the LSU Agricultural Center's rice research station in Crowley.

"It's a very positive thing," Linscombe said of the price, which is at about $30 for a 162-pound barrel as planting season draws to a close. "Things look better than they did a year ago, but it's not going to be 100 percent profit in the producers' pockets."

Rice acreage has been falling in Louisiana over the last three decades _ down from 650,000 in the 1980s to 375,000 today, primarily in Evangeline, Acadia and Vermilion parishes. Saltwater intrusion from Hurricane Rita's surge dealt a particularly harmful blow.

But the main problem over the last couple of years has been the high price of oil pushing up the cost of diesel fuel and rising demand lifting prices on fertilizer and herbicides. All that is putting a strain on a way of life already known for being difficult.

"We were losing (rice) farmers at a pretty rapid pace over the years," said Michael Hensgens, vice president and business manager of G and H Seed Co. in Crowley, which supplies seed and fertilizer to as many as 200,000 acres of rice farmland. The family business also farms or has an interest in about 6,000 acres of rice.

"Had the price not rallied ... there would be very little production," he said.

Hensgens said that as high costs wore down rice farming, G and H Seed has had to cut back on its fleet of trucks and begin using contract labor. He also said high prices put a strain on the relationships between the lenders and farms they help fund. This year, they can be assured the crop will bring in a sufficient return.

"The bankers have the confidence that their operations will cash flow this year," he said.

Linscombe said the price spike will bring some additional acreage online, but there won't be much of an increase this year. Rice farming, with its complex irrigation system, isn't as easy to jump into as, for example, switching between corn and soybeans, Hensgens said.

But Linscombe said the long-term nature of the spike's causes _ a six-year drought in Australia and depleted inventories in heavy-producing countries such as Vietnam and Thailand _ ensures the price shouldn't drop back down overnight. This, he said, could coax more farmers back into rice for the long haul.

But even with the promise of a better price come harvest time, he said, "they still don't know what the price of diesel's going to be two months from now."

Louisiana is the third-largest rice-producing state in the nation, trailing Arkansas' 1.5 million acres and California's 600,000 acres, Hensgens said. The planting season, which started in mid-March, is about 80 percent finished. The harvest begins in July and wraps up by the beginning of September.

Meanwhile, ethanol production has driven up the price of corn, and indirectly affected the price of soybeans by shifting acreage away from them, Kurt Guidry, a professor of agriculture economics who tracks corn and soybeans for the LSU AgCenter.

But Guidry pointed out corn and soybean farmers have been dealing with the same high expenses as rice farmers.

"It's also costing them considerably higher to grow a crop this year as it has been in the last 10 or 15 years," he said. "A lot of this increase we're seeing on the commodities side is just offsetting what it costs producers to grow."

Kyle McCann, associate commodities director with the Louisiana Farm Bureau Federation specializing in rice, corn and soybeans, said higher prices are "serving as a signal for producers to plant more and most are trying to and _ Mother Nature cooperating _ they'll do just that."

The AgCenter recently reported that crops that have remained stagnant in price, such as sugar cane, or risen only modestly, such as cotton, are being squeezed by high expenses.

McCann said that while high food prices have been in the news, there are a lot of other downstream factors in the price of a box of processed food on the shelf than the base price of a commodity. He said that between 5 and 10 cents of the total cost of the finished product traces back to the farmer.

"The raw ingredient to any box of Special K, Corn Flakes ... whatever is probably less than the package," he said.