Volume 18, Issue 05

February 4, 2021

Over the past few weeks, the cash market in the delta has remained steady in some regions, and fairly slow in others. Louisiana has had the most action, with prices holding firm at $21 bbl FOB farm most recently. To the best of our knowledge there is no more rice in farmers’ bins in South Louisiana as old crop supplies have sold and farmers are gearing up for new crop planting—a good sign for the coming year. In Texas and Missouri, trading has been thin on account that rice in first hands is hard to quantify, but buyers know it’s there. Old crop will likely not be entirely liquidated when the new crop year gets underway. Texas had only one public sale this week with reports of $6.75-$6.80 premiums per cwt over loan. Private sales were much more active however, with reports of up to 1 million cwt of conventional varieties being purchased—largely on tiered pricing based on milling yields. Estimates predict less than one million cwt remain in first hands in the state and that is likely a stretch. With thin paddy supplies in Texas and South Louisiana, foreign buyers will now depend on New Orleans as usual until new harvest in late July.

A tender from the Iraqi Grain Board has everyone on pins and needles, as there were offers from every origin in what was only a Global Tender—nothing that was US specific. The industry desperately needs to win this business to help draw down stocks leading into planting. Given the 18-month gap from Iraq’s last tender, there’s still hope that a US specific tender could be in the works. The US bid was $690 PMT CIF Free Out which matches the offer sourced from Brazil where stocks are incredibly tight. Pakistan fronted the lowest quote at only $553 PMT CIF Free Out, which means it’ll be an uphill battle for the US to win the business. Reports out of Mercosur are commenting that a vessel or two from among Brazil and Uruguay is likely due to the respected quality. We shall see.

FAO rice price index shows a 10.6% gain this January compared to the same time last year, driven largely by increased Indica prices. The glutinous and aromatic prices have actually declined, down 30% and 8% respectively on the year, sending signals that the pandemic has resulted in more food purchases based on food security and animal feed than income-driven preference products like aromatic rice.

The general direction is firm to up on account of tight supply, though this will be changing in the coming weeks with the Vietnamese main harvest around the corner. An emerging trend, or explanation for that matter, of India’s surge in exports is the use of their rice as feed stocks.

While this has been a known strategy utilized by China, it is becoming more widely used by other countries as well—specifically Vietnam. Prices have continued to rise over the last three months, with an average increase among the benchmark varieties up approximately 10.9%.

Year over Year increases indicate an average price increase of 20%. Although the US Dollar is down 8% against the Thai Baht since last March, US rice exporters are still struggling to compete against Thailand and the other Asian origins in the Middle Eastern markets. However, the grim situation in South America continues to support strong or steady pricing in the USA.

 

The nearby contract closed down just over 7 cents from last week but still looks strong which may be the result of the market attempting to buy rice acres in 2021. As corn and bean prices continue to be high, growers able to rotate into those crops will probably be inclined to do so, especially if long grain demand remains depressed.

Congress this week is focused on passing a budget resolution in order to set up a procedural scenario where reconciliation procedures may be utilized to pass President Biden’s $1.9 billion COVID-19 relief proposal. To the extent that reconciliation procedures can be used (and there are limitations), it will make Senate passage much easier by lowering the vote threshold to a simple majority which the Democrats now have in the case of a 50-50 split when Vice-President Harris votes. The Budget Resolutions will establish a budget for the United States Government for fiscal year 2021 and set forth the appropriate budgetary levels for fiscal years 2022 through 2030.  

Senator McConnell and Senator Schumer also reached an agreement and the Senate approved an organization resolution which allows the Committees to organize. Michigan Sen. Debbie Stabenow was approved as chairwoman of the Senate Agriculture, Nutrition, and Forestry Committee. This is Stabenow’s second appearance as chairwoman having last chaired the committee from 2011 to 2015. Democratic assignments to the Committee are as follows:

Republican members of the Senate Agriculture Committee were assigned. The assignments are subject to ratification by the Republican Conference as well as the full Senate, which is expected soon. Ranking Member John Boozman will be selected by a vote of the members of each committee and then ratified by the Republican Conference. The member list is as follows:

 

Agriculture, Nutrition and Forestry

Major news for Agriculture this week was the hearing on the nomination of Tom Vilsack to be Secretary of Agriculture. This will be Vilsack’s 2nd appearance as Secretary of Agriculture.

On Tuesday, February 2, the Senate Committee on Agriculture, Nutrition, and Forestry held a hearing to consider the nomination of The Honorable Thomas J. Vilsack to be the Secretary of Agriculture. The hearing was meant to assess the nominee’s position on certain subjects, particularly on biofuels, climate change, awareness of federal programs, and market concentration in meat processing. Another important subject was the expectation of the Secretary to help American farmers expand into new domestic and foreign markets to increase sales of their agricultural products. Having already served as Secretary of Agriculture from 2009 to 2016, Vilsack came into the meeting highly regarded by members of the committee on both sides of the political aisle and his credentials were never questioned, allowing a productive Q&A regarding policy stances and priorities to take place throughout the hearing. In a unanimous vote, the committee advanced Tom Vilsack’s nomination as Secretary of Agriculture.

Incoming Chairwoman Debbie Stabenow (D-MI), Sen. Amy Klobuchar (D-MN), Sen. Michael Bennet (D-CO), Sen. Sherrod Brown (D-OH), Sen. Patrick Leahy (D-VT), Sen. Robert P. Casey, Jr. (D-PA), Sen. Tina Smith (D-MN), Sen. Kirsten Gillibrand (D-NY), Incoming Ranking Member John Boozman (R-AR), Sen. Charles Grassley (R-IA), Sen. Cindy Hyde-Smith (R-MS), Sen. John Hoeven (R-ND), Sen. Joni Ernst (R-IA), Sen. Deb Fischer (R-NE), Sen. Mike Braun (R-IN), Sen. John Thune (R-SD)

The stability and growth of the biofuel industry are of top priority for many Senators, but many feel that Biden’s policies are not aligned with this goal. Sen. Grassley, however, said he was pleased with the nomination of Vilsack to be Secretary of Agriculture, with one of the reasons being that Vilsack had a strong history of promoting biofuels domestically.

A particular concern to many Senators was the increasing presence of the electric vehicle industry in the fuel market, which some believed to be of greater priority to the Biden administration than biofuels. Sen. Ernst first asked about this shift from biofuel to electricity run vehicles and inquired about what Vilsack would do to support the biofuel industry. Vilsack answered that both industries were important and necessary. He stated that there are new opportunities to expand the role biofuels play in the fueling of planes, trucks, and ships. He also added that it needed to be acknowledged that electric vehicles will continue to be more widely used and that this presents an opportunity to use biofuels to supply that higher demand for electricity. In a follow-up question, Vilsack affirmed that millions of Americans will continue to use their older vehicles and that this older fleet of cars and the fuel they rely on will therefore not be disappearing soon.

Some Senators were worried about proper assistance not being granted to the biofuel industry throughout the Trump administration and the pandemic. After saying the Trump administration had made the wrong decisions when it came to waivers to oil companies, Sen. Klobuchar stated that 150 ethanol plants had closed around the country. She asked what Vilsack planned to do with biofuels, and Vilsack told her that he agreed that the waivers granted by the Trump administration were wrong. He said that waivers were meant to be rare and only granted to small companies, not Chevron or Exxon. When Grassley asked Vilsack on whether he would support moving some money allocated to the USDA in the CARES Act towards aiding struggling biofuel businesses, Vilsack said he’d see if money from other sources could be used to address that.

A key mission of the Department of Agriculture according to Vilsack and many Senators is to find new markets domestically and abroad. Following a question from Sen. Boozman on how he would work with the recently created Undersecretary for Trade and Agricultural Affairs and expand trade opportunities, Vilsack said that the USDA had a responsibility to maintain strong communication with the Undersecretary for two reasons. First, it is vital to have a presence, through the Undersecretary, in those export markets to make sure U.S. agriculture is front of mind for those purchasing in those markets. Second, new partnerships must be forged in foreign countries.

Sen. Stabenow wanted to know how a sense of normalcy could return to the farm economy and Vilsack’s answer involved the development of new markets and the stabilization of existing ones as well. There were three areas of expansion he mentioned. The first was completely new geographical markets such as Southeast Asia and Africa, which are due to have exploding populations in the coming years. The second focus was to grow the domestic markets by further developing a robust local and regional food system that creates market opportunities for small and midsized producers so that they can negotiate their own price. The last one, Vilsack explained, was expanding into entirely new industries such as methane capture and carbon sequestration.

The timber market was of particular concern to Sen. Hyde-Smith, who both worried about the lack of insurance programs that protected the wood industry from natural disasters and was interested in learning how the USDA could help innovation within the timber industry. Vilsack was quick to point out his previous efforts as Secretary of Agriculture to promote the construction of high-rise buildings using cross-laminated timber, saying the technology could be applied to government, specifically, Department of Defense, construction projects.

Sen. Fischer asked Vilsack about how innovation could keep the United States as a global leader in fueling and feeding the world. Vilsack responded that it would provide a significant market advantage if the U.S. became recognized for producing food sustainably. In a response to Sen. Braun, Vilsack said the U.S. was “on the cusp” of finding new markets.

Another solution proposed by Vilsack on growing markets was maximizing the ones that already exist. Sen. Brown asked Vilsack how the food supply chain could be diversified while continuing to help local medium-sized farms. Vilsack said that the flow of food products to schools, or universities, or prisons must be maximized, as well as expanding commitments to farmer's markets. Expanding assistance programs to help farmers transition into organic products and creating new meat processing facilities are also important steps to take.

Sen. Hyde-Smith followed up with concerns about a petition filed with the Department of Commerce and International Trade Commission seeking countervailing duties on phosphate fertilizers. Sen. Hyde-Smith asked Vilsack what he would do to ensure farmers have access to critical inputs. Vilsack responded saying he plans to reach out to the Department of Commerce to see what can be done to increase our competitiveness and ensure ample supply of fertilizer in the U.S.  Vilsack also assured Sen. Hyde-Smith that he would see if there was anything USDA could do to directly address the issue and help farmers use inputs in the most efficient ways possible.

With the pandemic having nearly halted the livestock processing industry, many Senators were eager to know how Vilsack would approach the high market ownership concentration of processing plants. When Sen. Hoeven voiced his concern over that market concentration, Vilsack agreed, saying that there was a need to open more because there were too few. Sen. Grassley put the situation in more concrete terms, noting that “just 4 companies control over 80% of beef processing”. In response, Vilsack said that he would speak about the issue with the Justice Department to fully understand whether anti-trust concerns should be raised. Vilsack also raised the prospect of reforming incentives at USDA to increase the number of processing facilities.

Sen. Braun also took a close look at the problem of market concentration, voicing concerns about the decline in local purchases of food supply. Vilsack again suggested consulting with the Justice Department but also mentioned involving the Federal Trade Commission or the Small Business Administration. Vilsack also mentioned how patent laws may be reformed to benefit farmers and how more money should be allocated to public research because all too often farmers have to license their innovative technology from private sources.

The Biden Administration’s pledge to address climate change issues seemed to concern many Republican members of the committee. Sen. Boozman was among those to question Vilsack on his commitment “to be a voice for the farmers and agricultural businesses”. Vilsack directly responded that he planned to commit to being both a voice for the agricultural workers and to upholding Biden’s climate pledges. There are ways to increase job opportunities in ways that combat climate change, Vilsack argued, such as through bio-based manufacturing, expanding biofuel capabilities, and carbon capture and sequestration.

In a similar vein, Sen. Hoeven asked Vilsack to respond to the demand that any efforts to expand carbon capture be “farmer-friendly.” Vilsack responded that he was aware of the concern that carbon capture programs will primarily benefit third parties. Vilsack then said those programs must primarily benefit farmers because USDA wants to encourage the adoption of such operations. He added that he believed the farm economy was ready for carbon capture.

Vilsack then answered a request from Sen. Stabenow to address the lack of technical assistance farmers are able to receive to become more climate-friendly. Vilsack described that a system, developed with the help of a farmers advisory group, must be created that makes sure conservation programs are (1) designed to incentivize the actions most environmentally valuable and (2) produce results that can be adequately measured.  

Some Senators pointed out the lack of awareness and the inconvenience of enrolling in many of USDA’s programs. Sen. Bennet, for example, was frustrated with how often rural staff must navigate the federal bureaucracy by themselves to access USDA infrastructure funding. The Senator also asked Vilsack how he would make it easier, and Vilsack responded that through partnerships with local community-building organizations, USDA had to provide the technical assistance necessary to successfully enroll in those programs. A similar answer was offered to Sen. Brown who asked a question about the awareness of the Women, Infants, and Children (WIC) program. Vilsack said that USDA was in charge of educating people of the programs it offers and that there should be a way to apply only once and enroll in multiple programs, rather than apply individually for each program, often in different offices.

The authors are Drs. X. G. (Shane) Zhou, M. Way, A. McClung, and F. Dou. This bulletin is the culmination of research funded by a USDA NIFA OREI multi-state, multi-year, multi-discipline project. This bulletin contains the latest information on organic rice production in Texas. It covers varietal selection, cover crops, fertility, irrigation, and pest management. We think adding photos to this bulletin enhances the value of the information presented. Of course, this bulletin does not provide all the answers you might have, but it is a step in the right direction! Please let us know if other organic rice research needs attention.