Rice prices have risen this year as American rice acreage has dropped, but growers are also facing higher production costs, said LSU AgCenter economist Michael Deliberto.
Supply chain disruptions that have plagued the overall economy also have affected farm products, and the war in Ukraine has caused natural gas prices to rise, which has led to higher fertilizer costs, he said.
“That's been a challenge this year to make margins tighter than what they've been in the past,” Deliberto said. “So even though we've had higher commodity prices, that's only partially offset some of the increases that we've seen in the cost of production.”
However, economic conditions over the next year will likely benefit rice producers.
“With all that bad news, rice prices are projected to be substantially higher in the 2023 marketing year than what they were last year,” Deliberto said.
While recent events have contributed to the unpredictability of the farm economy, every year agricultural producers must carefully consider several factors when deciding what to plant and in what quantities to apply fertilizer, chemicals, irrigation and other inputs.
To help with these decisions, Deliberto has developed farm management decision tools that help Louisiana producers plan. One tool is a rice farm cash flow model that Deliberto updates and releases every January. It includes a set of customizable budgets in a detailed spreadsheet created specifically for Louisiana rice producers.
“These tools allow growers to analyze how changes in prices, yield and input cost impact profitability of that rice enterprise,” Deliberto said.
Users can change the costs of their expenses, including fuel costs, fertilizer, irrigation and other inputs, in a spreadsheet and balance them with the projected profits from growing a crop.
“Do they want to look at strictly the risks that are associated with market prices?” Deliberto said. “Or do they want to look at, for 2022, the impact that higher fertilizer and fuel prices have? How much do they have to produce, or how much more do they have to produce to cover their cost of production?”
In recent years, Deliberto has added tools that help farmers decide how the profitability of furrow-irrigated rice production competes with corn and soybean production.
The farm management tools also include tools that analyze land rental arrangements and crop insurance and helps producers estimate payments from farm programs, such as the U.S. Department of Agriculture Farm Service Agency Agriculture Risk Coverage and Price Loss Coverage programs.
“It's really a way for growers to tailor these decision tools to represent their fields or their farming operations, whether they're in south Louisiana or north Louisiana,” Deliberto said.
Deliberto has also begun studying the effect that the milling of different rice cultivars has on profitability.
“We're looking at different cultivar mixes on farms, relative to the cost structure associated with each of those cultivars too,” Deliberto said. “For example, hybrid rice is more expensive to grow, but doesn't necessarily mill as high as, say, a conventional variety would.”