Rice Profile

Background

Rice was first cultivated commercially in the United States in South Carolina during the 17th century. Today, U.S. production accounts for less than 2 percent of the world total; however, the country is an important exporter due to the relatively small percentage of rice traded globally. In recent years, about half of U.S. production has been exported.

Production

Rice Production in 2017 totaled 178 million cwt, down 20 percent from the 2016 total, and was valued just over $2.2 billion. (NASS)

Planted area for 2017 was estimated at 2.46 million acres, down 22 percent from 2016. Area harvested, at 2.37 million acres, was down 23 percent from the previous crop year. The average yield for all United States rice was estimated at 7,507 pounds per acre, up 270 pounds from the 2016 average yield of 7,237 pounds per acre. (NASS)

In the United States, rice production is predominant in three areas of the country—the Mississippi Delta region, the Gulf Coast and the Sacramento Valley region of California. Of these regions, the Mississippi Delta is the largest in terms of total acreage; however, the Sacramento Valley historically has produced the highest yields. In terms of states, six produce nearly all rice grown in the United States: Arkansas, California, Louisiana, Mississippi, Missouri and Texas.

Multiple varieties of rice exist including short-grain, medium-grain and long-grain varieties. The majority of U.S. production is long grain with 1.8 million acres planted in 2017. Medium-grain varieties account for 629 thousand acres of U.S. production, while short-grain varieties account for 41,000 acres of U.S. production. (NASS)

Value-Added Products

In the United States, long-grain rice accounts for the bulk of U.S. consumption. Long-grain varieties are predominantly used in processed foods such as packaged mixes and as a side or main dish. Medium-grain varieties have found an outlet in breakfast cereals and other processed foods and are also used for desserts, casseroles and stir-fry recipes, while short-grain rice is ideal for pudding and other desserts. Short- and medium-grain japonica rice is used for Japanese and Korea foods, including sushi. In addition, rice is often processed into products including rice flour and vegetable oil and many rice products are branded.

Prices

In 2017 U.S. rice prices increased to an average of $12.50 per cwt, an increase of $2.10 per cwt over 2016 marketing year prices (NASS).

Several factors contribute to producer responses. First, in years when world prices are low, U.S. marketing loan benefits and counter-cyclical payments compensate farmers for lower prices, so anticipated losses from a decrease in world prices are minimized. Second, the large capital investments, high operating costs of rice production and specialized machinery specific to rice production make exit or decreased production costly for many producers. Third, because much of the acreage dedicated to rice production in the United States is unsuitable for other viable planting options, it is less common that rice cropland is converted to alternative crops. Lastly, increased yields lead to increased production, regardless of market prices (ERS).

U.S. Rice Policy and Government Programs

Beginning with the Farm Security and Rural Investment Act of 2002 and continued with the 2008 Food, Conservation and Energy Act, rice producers have access to federal government programs designed to increase producer revenue beyond that from market sales. The three major programs providing payments to rice farmers are direct payments, counter-cyclical payments and marketing loan payments. direct payments are paid to producers based on historical production and are linked to current prices or output only indirectly. Counter-cyclical payments use a basis of previous production depend on national prices and marketing loan benefits rely on federal compensation in response to low market prices. Marketing loan benefits are available when the price of rice in specified international markets is below the legislated U.S. loan rates. In years where rice prices are low, counter cyclical payments and marketing loan payments can be substantial (ERS). Eligibility for both the direct payments and the counter-cyclical payments restrict crops eligible for rice base acres and the 2002 Act allowed farmers to update the base to reflect more recent planting and yields.

In addition, U.S. rice producers are able to take advantage of government revenue insurance, trade assistance and conservation programs. Because rice land provides a wetland-friendly habitat for wildlife, several conservation programs have been made available to producers in order to enhance, protect and preserve the habitat they use. Some of these programs include the Conservation Security Program, Conservation Planning Assistance Pilot Program, U.S. Fish and Wildlife Service Conservation Easement Program, Wetland Reserve Program, Conservation Reserve Enhancement Program Partners for Fish and Wildlife Program and the Wildlife Habitat Incentive Program (California Rice Commission). These programs typically offer monetary compensation for restoration projects by producers or compensation for land retirement. Rice producers can also benefit from wildlife resources by flooding their rice fields in late fall and leasing the ground to waterfowl hunters.

Related Issues

As the United States continues to use its market power in terms of price support to rice producers and as the price difference between global and U.S. prices widens, U.S. competitiveness in world markets is expected to decrease. U.S. competitiveness in the global market will continue to be an issue of importance to producers.

Recently the popularity of organic rice has increased in many regions around the world. The organic rice market remains relatively immature, though decreased cost of production per acre (but not per unit of production) and environmentally friendly production methods have become appealing to some producers. Organic price premiums are not well established. Decreased yields compared to conventional production also partially offset, or more than offset potential premiums for most producers.

Sources

California Rice Commission

Crop Production Annual Summary, National Agricultural Statistics Service (NASS), USDA.

Crop Values Annual Summary, NASS, USDA.

Global Agricultural Trade System (GATS), Foreign Agricultural Service (FAS), USDA.

Rice, Economic Research Service (ERS), USDA.

Riceland Foods, Inc.

 Links checked August 2018.