Key Rice Industry Issues Examined During 107th RMA Convention

ASHEVILLE, NC, June 30, 2006 — Speakers at the 107th USA Rice Millers’ Association (RMA) Convention here June 18-21 discussed rice economics, World Trade Organization (WTO) negotiations, prospects for the new farm bill, intermodal transportation, domestic rice promotion and food aid.

Economics and Trade: Without a WTO agreement there is no strong incentive for Congress to write a farm bill, Informa Economics President and CEO Dr. Bruce Scherr told his RMA general assembly audience.

Multilateral trade rules are essential to the growth of the U.S. economy, Scherr said. “If you’re the best player, you can’t fear a level playing field,” he said, adding that failure to set multilateral trade rules would result in bilateral trade agreements, which are whimsical and subject to change.

Scherr’s detailed and wide-ranging analysis of the U.S. economy targeted inflation concerns and the U.S. response to energy demands and shortfalls. Among Scherr’s points:

· Rising federal deficits will keep government costs high.

· A weak dollar on international markets will make it difficult to purchase inexpensive goods, despite being offset by a measurable rise in productivity.

· High fuel prices are not going to go away.

· The emphasis in agriculture reflects the administration’s focus to reduce dependence on foreign energy sources. The restructuring of the U.S. approach to renewable fuels “is the single most colossal event in American agriculture.”

World Trade Negotiations: Negotiators in Geneva for the current Doha Round of World Trade Organization talks are not making as much progress as they need to reach an agreement, Mark Manis, a trade negotiator with the U.S. Department of Agriculture’s Foreign Agricultural Service, told RMA attendees.

“We’re looking for a deal that makes sense for us. We’re not going to make any deal just to have a deal,” Manis said. He outlined in detail how the United States is being asked “to do more than the European Union (EU)” in cutting domestic supports for agriculture, and said any cuts must be coupled with market expansion. “We’ve made that clear in Geneva,” he said.

U.S. negotiators have maintained that position in the negotiations this week in Geneva.

Food Aid: There is a “greater [food aid] need for emergencies today than is being met,” Manis said. U.S. negotiators are insisting that the form of food aid and its definition not be restricted. The EU, he said, wants food aid emergencies defined by time limits, but “it doesn’t make sense to cap it.” There is a role in food aid for a wider range of organizations than a United Nations panel, Manis said, declaring, “We don’t accept UN control.”

“We need all the tools in the toolbox on food aid,” Manis said. He explained that negotiators need to reach an agreement by the end of July. All parties know the president’s trade promotion authority expires and that an agreement must be reached by the end of the year, he said.

FERM President Outlines European Opportunities for U.S. Rice: U.S. rice in Europe is hanging on to its foothold, despite steeply rising imports of Basmati rice, Ernesto Morgado, president of the Federation of European Rice Millers (FERM), told attendees. Consumption in Europe of U.S. brown rice has not dipped significantly with the influx of the aromatic Asian rice.

Morgado highlighted the increase in rice consumption as the European Union (EU) expands. When the EU had 15 members, rice consumption was 1.9 million metric tons (MT), he said, but with 25 members, a total of 2.15 million MT is consumed, a 13-percent growth for Europe.

However, the growth opportunity in the EU is not limited to the increase in the number of member countries. Opportunities for the U.S. rice industry result from the limited ability of Europe to expand its rice production capacity. For example, Morgado noted that Bulgaria and Romania consume about 10 times as much rice as they can produce.

He asked attendees to reflect carefully on the European market when in comes to considering the U.S. trade position. “Without special status for rice [in the WTO Doha Round trade negotiations], the future of brown rice in Europe is bleak,” Morgado said.

Lasseter Highlights FSA Focus: Questions about how the Doha Round of World Trade Organization talks might affect the next farm bill, what it will looked like and when it will come are on many people’s minds, including that of U.S. Department of Agriculture (USDA) Farm Service Agency Administrator Teresa Lasseter.

“We’re just like you; we’re not sure where the farm bill is going,” Lasseter said in her address to RMA convention attendees.

Lasseter reiterated the secretary’s emphasis on the need to reduce spending, and said Johanns is especially concerned about energy prices. USDA is looking for a strategy to help agricultural producers face energy challenges, she said, pointing to the administration’s support for ethanol and biodiesel production.

On the subject of farm payments, Lasseter said payment files are scheduled for release in August, but added, “We want to make sure we’re accurate with that.” None of the 2005 data will be released before the end of the marketing year, she said. Also scheduled for August release is the national rice beta project for electronic warehouse receipts.

Trends Tip Scales toward Rice, Levy Says: Demographic and cultural trends are driving growth in rice consumption, Jody Levy, a domestic promotions consultant with The Advantage Partnership, LLC, said during her general assembly address.

In describing differences between the aging Baby Boom Generation, ages 42-60, and Generation Y, the 9- to 29-year-old population, Levy noted a similar interest in healthful eating that motivates them toward increased rice consumption. She explained that Boomers are eating away from home more for convenience, adventure and experience, while Gen Y-ers seek more ethnically diverse foods, leading to an increase in rice usage and consumption in foodservice channels.

Hispanic and Asian ethnic groups will increase in number by 25 percent by 2025, Levy said, and by 2007, Hispanic, African-American and Asian buying power will surpass $2 billion, trends that further benefit rice consumption.

The USA Rice Federation was perfectly positioned in the initial research demonstrating the healthfulness of rice consumption, which resulted in the grain’s inclusion in the U.S. Department of Agriculture dietary guidelines released last year, Levy declared.

Segment Growth Drives USA Rice Expansion into Foodservice: The USA Rice Federation is aligning elements of its domestic promotion program to take full advantage of the projected growth in foodservice, Anne Banville, USA Rice VP for domestic promotion, told attendees.

Rice has been underutilized in foodservice, Banville said, and “we can achieve a greater share of menuing and consumption in this growing segment.” Spending on food away from home is expected to increase from 53 percent today to 56 percent of the food dollar by 2010, according to the U.S. Census Bureau — an increase of nearly $50 billion, Banville said.

A recent survey shows that 75 percent of foodservice operators serve rice as a side dish, and 51 percent serve rice as an entrée, she said. Most operators do not perceive a difference between U.S.-grown and imported rice. The survey also shows that 92 percent of operator-respondents use the Internet for work-related purposes.

Foodservice growth is driving the establishment of a new USA Rice Web-based communications and promotions program, Banville said, with a new Web site devoted to the promotion of rice in foodservice to come online in September.

Banville also outlined an array of rice-foodservice partnerships, including with SYSCO, the largest U.S. foodservice distributor.

Transportation Capacity Crunch Stifling: U.S. transportation is the best in the world, but faces a “capacity crunch” that poses wide-ranging and costly challenges to agriculture, Ken A. Eriksen, senior transportation analyst for Informa Economics told his RMA general assembly audience.

While one prediction says the U.S. freight transportation infrastructure will reach capacity in three years, a perception exists that it is already there. “There are many choke points in the system,” Eriksen said.

Eriksen made the following points:

· It is difficult or impossible to add rail capacity beyond running longer trains, he said.

· The shortage of truck drivers continues.

· For shipping, aging water resources (half of all locks are more than 50 years old) and a decline in infrastructure investment result in more frequent closures for repairs, decreased performance and costly delays. Nearly half of all closures are now unscheduled.

Wall Street looks for short-term profits rather than reinvestment, and government is equally reluctant to spend, making it less likely that the nation’s aging transportation infrastructure will be updated soon.

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High-resolution photos are available at the

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Contact: David Coia, (703) 236-1444, dcoia@usarice.com

USA Rice Federation is the national advocate for all segments of the rice industry, conducting activities to influence government programs, developing and initiating programs to increase worldwide demand for U.S. rice, and providing other services to increase profitability for all industry segments.