Rice prices for 2008 look strong, but production cost keeps increasing

Steven Linscombe, Eskew, Charles E., Smith, Jr., Carlos A., Saichuk, John K., Guidry, Kurt M., Cormier, Howard J., Fontenot, Keith A., Harrell, Dustin L.  |  1/15/2008 9:17:51 PM

Acadia Parish farmers Al Cramer, at left, and Charles Reiners listen to speakers at the rice growers meeting held Jan. 10 by the LSU AgCenter. (Photo by Bruce Schultz)

The 2007 rice harvest was good, and Louisiana farmers look to another good year for yields in 2008. (Photo by Bruce Schultz) (Click on photos to download larger image.)

Dr. Steve Linscombe, LSU AgCenter rice breeder, gives an overview of the development of new rice varieties during the Jan. 10 meeting held for Acadia Parish rice growers. (Photo by Bruce Schultz)

News Release Distributed 01/15/08

Southwest Louisiana farmers are hopeful that rice prices will remain strong, but their optimism is tempered by increased production costs.

In a series of rice forums across South Louisiana, LSU AgCenter experts advised farmers on techniques of managing their 2008 crop.

Rapides Parish farmer Phillip LaMartiniere Jr. at Monday’s meeting (Jan. 14) in Bunkie, said prices are higher, but so is the cost of diesel and nitrogen, so he doesn’t anticipate changing the acreage he grows.

“Everybody is concerned about two things, fuel and fertilizer,” LaMartiniere said. “And the farm bill – we don’t have one right now.”

Efficiency is critical, he said, but farmers can’t afford to reduce necessary expenses.

“You can hardly cut without sacrificing yield, and that’s what it’s about, increasing the yield to cover the costs,” LaMartiniere said.

Dr. Dustin Harrell, LSU AgCenter agronomist, said the latest price for urea fertilizer is $525 a ton, $69 more than last year, and phosphorus and potash have also increased dramatically this year.

Dr. Kurt Guidry, LSU AgCenter economist, said projections have been made that diesel, already at the $3-a-gallon level, will climb another 15 to 20 cents this year, he said.

Prices have exceeded $14 a hundredweight, or $22 per barrel, recently on the Chicago Board of Trade. Guidry told the gathering in Crowley that prices are likely to weaken, although some projections have been made that prices could reach $25 a barrel.

Worldwide, rice stocks are much lower than they have been over the past several years, Guidry said, and that should increase U.S. export demand.

“As long as we don’t get a major increase in production in 2008, the supply and demand conditions look to exist that would provide enough support for prices in 2008 to remain above the $11 per hundredweight,” he said.

Guidry also said that the total rice acreage is unlikely to increase in 2008. Last year, Louisiana farmers grew 378,000 acres of rice, compared to 350,000 in 2006. Nationwide, rice acreage in 2007 totaled 2.6 million acres.

Dr. Gene Johnson, LSU AgCenter economist, said at the Ville Platte forum that the rice market is bullish. He said some countries, such as India and Vietnam, have export bans, further tightening the world market.

Johnson said the Louisiana yield in 2007 set a record at 38.5 barrels, or 6,200 pounds per acre.

Last year, farmers were having trouble getting enough rice seed after several varieties were unavailable because they had a trace amount of the transgenic Liberty Link trait.

But farmers aren’t expected to have the seed availability problem this year, according to Dr. Steve Linscombe, LSU AgCenter rice breeder and director of the Rice Research Station.

Linscombe advised farmers at the meetings that the Cheniere variety will be available again, with enough seed for 70,000-80,000 acres for seed and commercial production. All seed rice at the station has tested free of the Liberty Link trait.

“All seed rice will have to be tested before being planted for the Liberty Link traits,” he said.

If turnout for the Acadia Parish forum is an indicator of farmers’ confidence, the upcoming year should be good. More than 150 attended the Jan. 10 event.

Among those at the Acadia Parish meeting was farmer Charles Reiners of Mowata who said the uptick in prices has farmers in a different frame of mind from previous years.

“It’s positive, no question about it,” Reiners said.

But he said he doesn’t plan to increase his rice acreage this year, unless he can’t get enough seed for his soybean crop.

“If we can’t get our bean seed, we’ll plant more rice,” he said.

Farmer Al Cramer of Crowley said he’s planning to cut back on his rice acreage and shift to soybeans “just because of the input costs.”

Kaplan farmer Ted Girouard said he’s going to continue with his rice acreage.

“I’m trying to be as efficient as I can with the acres I have,” Girouard said. “Even with these prices, that doesn’t mean we’re going to make money.”

David LaCour of Abbeville said he has already bought fertilizer to prevent increased expenses.

Farmers worldwide appear to be affected by higher costs, he said, possibly reducing the global rice crop.

LaCour said farmers have potential to make money, “if we can stay with our good yields and good prices.”

Lake Arthur farmer Kevin Berken said he hopes the low world stocks will mean continued higher prices. “So we’re poised for a perfect storm of sorts.”

If overseas buyers purchase U.S. rice, he said, that could raise prices more.

But Berken said he’s going to continue with the same acreage of rice that he’s grown for the past two years, and double up on soybean acreage.

Jackie Loewer, president of the Acadia Parish Rice Growers Association, said a few rice sales in Texas were made recently for $20 a barrel.

“I think the demand is out there that we can expect that to be the norm,” Loewer said.

Loewer also suggested that producers consider a uniform measure of rice in hundredweight. Currently, South Louisiana farmers measure rice in barrels while their counterparts in the northern part of the state use bushels.

Loewer said use of a hundredweight would make computations easier. “It’s to get more in line with the Chicago Board of Trade so computations would be easier to make.”

County agents said farmers remain concerned about increased expenses, but they are more optimistic than they have been in previous years.

“Farmers are optimistic for the first time in several years,” said Eddie Eskew, LSU AgCenter county agent. “However, they continue to worry about increased input costs, especially fuel and fertilizer, because these increases will continue to put pressure on break-even costs.”

Keith Fontenot, LSU AgCenter county agent in Evangeline Parish, echoed Eskew’s comments.

“Our producers are optimistic but also apprehensive. The gloom and doom of last year is not there, but they are still cautious. Overall I would say the look is guardedly positive,” Fontenot said.

Howard Cormier, LSU AgCenter county agent in Vermilion Parish, said he has noticed farmers are more optimistic, but cautious. “The situation is vastly improved over last year at this time,” he said. “With current prices and prospects for increased demand for rice, many hope to regain financial footing in rice farming.”

Carlos Smith, LSU AgCenter county agent in Avoyelles Parish, said the amount of rice acreage in Central Louisiana is less certain because farmers in the area have more flexibility than in Southwest Louisiana. He said some will be tempted to shift from rice to soybeans because of high prices for that commodity and low input costs.

Dr. Ron Levy, LSU AgCenter county agent in Acadia Parish, said farmers are looking forward to the 2008 growing season.

"They see rice prices begin to inch higher and are optimistic that higher production costs can be offset by these higher prices. Good prices for other crops give them hope that rice's future will be as profitable.

Dr. Johnny Saichuk, LSU AgCenter rice specialist, told farmers that the verification program has shown rice farming can be profitable, even with the steep cost increases during the past two years.

“There’s still room in there to make money,” he said. “You just have to work harder.”

Saichuk urged farmers to have their soil tested to make sure the proper fertilizer is being used. In addition, timing of spraying, flooding and draining all affect yields, he said.

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Contacts: Dustin Harrell at (337) 788-7531, or dharrell@agcenter.lsu.edu

Kurt Guidry at (225) 578-4567, or kmguidry@agcenter.lsu.edu

Steve Linscombe at (337) 788-7531, or slinscombe@agcenter.lsu.edu

Eddie Eskew at (337) 824-1773, or eeskew@agcenter.lsu.edu

Keith Fontenot at (337) 363-5646, or kfontenot@agcenter.lsu.edu

Howard Cormier at (337) 898-4335, or hcormier@agcenter.lsu.edu

Carlos Smith at (318) 253-7526 or 473-6513, or csmith@agcenter.lsu.edu

Johnny Saichuk at (337) 788-7547, or jsaichuk@agcenter.lsu.edu

Writer: Bruce Schultz at (337) 788-8821, bschultz@agcenter.lsu.edu

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