Ag economist looking at effects of lodged rice on profits

Frances Gould  |  10/9/2013 9:38:01 PM

LSU AgCenter agricultural economist Dr. Mike Salassi, far right, speaks at the Vermilion Parish Rice Field Day concerning congressional deliberations about the next farm bill. Salassi said it’s likely direct payments will be eliminated.

Photo By: LSU AgCenter

Lodged rice during harvest time not only reduces rice yield and increases harvest cost but also affects the market price received for rough rice sold.

Dr. Mike Salassi, LSU AgCenter agricultural economist, continued his work in 2011 on the effects of lodged rice on milling yields and how it affects rice farmers’ profits.

The project began in 2010 at the urging of rice farmer Richard Fontenot, who also is a Rice Research Board member.

"There was no research data available to specifically answer this question, so we started some work last year, expanded that research this year and hope to do it again in 2012," Salassi said.

The LSU AgCenter economist said he expanded his studies in 2011 to include data from Arkansas, Mississippi and Texas, in addition to the data from Louisiana. He said the effects of downed rice this year were less than last year because of drier conditions in 2011 than in 2010.

"From our tests in 2010, price decreases due to lower milling yield from downed rice were estimated to be as high at $3.30 per hundredweight," Salassi said. "This year, price discounts were lower, ranging as high as $1.25 per hundredweight. In any event, it’s still a significant loss of revenue to the grower."

Salassi also has worked on the possible ramifications of the new farm bill. He said a proposed targeted cut of $23 billion for the farm bill probably means the end of direct payments and the replacement of those by some version of average crop revenue election, or ACRE, as it’s come to be known.

"All of these proposals are something less than what is received now," he said, adding, "The question is ‘how much?’"

Salassi said he has run analyses on the various proposals to see how they would affect rice farmers, and he said he hoped some type of program would be implemented that would consider the high cost of production for growing rice.

Until 2005, rice prices and the costs of production were increasing at the same pace, so the target price of $10.50 a hundredweight was reasonable, he said. But rice farmers were hurt more severely than other commodity producers by higher fuel and fertilizer prices after 2005, making the $10.50 target price an irrelevant figure, according to Salassi.

"We can’t just look at market prices. We have to be aware of the current level of production costs in any farm income support program," Salassi said. "Just because commodity prices are high doesn’t mean growers are that much better off. Production costs for rice have increased tremendously over the past five years."

Salassi said rice farmers, as well as producers of any row crop, need a sufficient fixed reference price, acting as a price floor, that doesn’t change and is high enough to keep growers in business if market prices drop to low levels over extended periods of time. "So in whatever type of farm program is eventually passed by Congress, it has to have a fixed references support price to minimize downside price risk," he said.

Checkoff funds for this
project in 2011: $45,000 

(This article was published in the 2012 Louisiana Rice Research Board Annual Report.)



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