The recent Wall Street Journal Article A Rice Gets a Price Premium portrays the proposed House farm program for rice completely inaccurately. In fact, the regional differences in the rice reference price are neither unusual nor excessive.
Not unusual
The first claim that is offered is that somehow differences within an individual crop or region are unusual. Not true. Past farm programs have consistently provided different programs for long staple cotton compared to upland cotton. Different classes of wheat have also historically been treated separately as have sunflower seeds used for confectionary uses compared to those grown for oil. Barley is also considered differently. The basis for these differences is straightforward – the value received is higher. Japonica rice is the same. It is premium rice that commands a price higher than long grain indica rice grown in other regions of the U.S.
Not excessive
The second theme is that the fifteen percent premium in the House bill for japonica rice is excessive. This claim is also not based on easily verifiable data. Over the past 30 years japonica rice has held an average of a fifteen percent premium to long grain indica rice. More recently however that premium has been far greater – closer to forty percent above other U.S. rice. The story also implies that the target price is higher that production costs – also not factual. UC Cooperative Extension calculated the cost of production for rice in California in 2012. Their estimates were $19.36 per hundred pounds. This cost is far higher than in other regions and far above the regional $16.00 target price.
An effective safety net
Completely lost in the story is any discussion of a safety net for California rice that is adequate and equivalent. The reality is that California japonica rice costs far more to grow and has commanded a long–term market premium. When market prices are above the target price, our family farmers (brothers farming together, husbands and wives farming together, son and fathers farming together) earn enough to keep the farm going. Only when prices drop significantly below the cost of production will support for the farmer be triggered and only up to the target price. So if rice in California were to drop to say $15, farmers would be eligible for a $1 payment to bring them up to the target price. If instead all rice in the U.S. had one target price at the proposed $14, a California farmer would not eligible for support until they had loss of over $300,000 for an average farm.
Also missing is the acknowledgement of the huge change in farm programs that eliminate the current program of paying growers every year regardless of any loss.
The ultimate reality is that in both the House and Senate Farm Bills, rice farmers are moving to a safety net designed to keep growers on the farm based not on payments every year but based on significant losses below production costs. This change seems fair, as long as all regions receive a proportional level of protection against loss.
Why having rice farms matters
There are several reasons why rice farming matters. Certainly jobs are important. There are 25,000 generated by rice farms in California. In small communities in the Sacramento Valley like Gridley, Colusa and Biggs, the impact is even more significant, with over half of the region’s economic activity generated by rice farming and milling. But probably the most important reason to keep farmers on the land when prices go south is the tremendous benefit to wildlife and keeping our open spaces open. Each fall over 300,000 shorebirds migrate through the valley and stop to feed on the insects that are plentiful in rice paddies. Later in the winter millions of ducks, geese and swans pour into the rice fields to eat the leftover grain. Right now thousands of wading birds are nesting right in the fields, their chicks running along the edge of the growing rice chasing their next meal.
None of this is possible without farmers staying in business. In the final analysis, this is what the farm bill endeavors to do – keep farmers farming when things get tough.
Tim Johnson, CRC President & CEO
No comments:
Post a Comment