Drought and gobal competition continue to challenge U.S. rice industry

U.S. rice growers will continue to face lower prices in the 2016/17 growing season as stocks of more types of rice are elevated domestically, total planted acreage will be close to record levels and quality continues to improve from other global producers. The report, "Reaching Boiling Point - U.S. Rice Producers are Feeling the Heat of Global Competition," focuses attention on these factors and how they impact the different rice types in the growing regions of California and the Midwest.

In California, the challenge is to deal with the pressure of the severe drought that has been ongoing since 2011, while also managing supply to longstanding, profitable markets.

"We know that right now expansion into new markets isn't really on the top of everyone's mind," said James Williamson, analyst at Rabobank and author of the report. "However, it is going to be critical for the long-term growth and profitability of premium California medium-grain rice to look to expansion markets even in times of tight supply."

The report goes on to examine the situations surrounding medium- and long-grain rice in the southern states:

Many southern medium-grain producers planted more acreage in 2015/16, planning to take advantage of supply gaps from California production. These gaps were limited, leaving many with an unsellable surplus. Faced with lower demand and high supply, Rabobank expects that southern medium grain growers will need to work through their 2016/17 crop as well as their surplus stocks to bring prices to a more profitable level.

Southern long-grain acreage is expected to be up 30% from the 2015/16 crops year, with significant conversion coming from soybean acreage. It is expected that with this large crop, combined with nearly half of the prior year's production still in storage, southern growers will be unable to compete on price alone. This presents the opportunity for producers to concentrate on growing and maintaining the quality of their product to gain premium prices in this space.

The report concludes by noting that for export-driven countries such as the United States, changes in production in a competing country or region can help or hurt local industries. The best way, according to the report, to stay in front of this is for producers and processors to do all they can to differentiate themselves by segregating by quality.