It may seem like a small thing – including the cost of hauling grain from a farmer’s bins to an elevator in the price received – but even a small amount can make a difference when every penny counts.
U.S. producers have not always agreed with the accounting USDA’s National Agricultural Statistics Service has given them for the numbers that can have a major impact on rice industry fortunes.
In some years, rice prices have risen to promising levels ahead of spring planting only to fall when NASS released a stocks report indicating farmers and elevators had more crop on hand than expected. Rice is a thinly-traded commodity and any indication of a market surprise can become bearish.
NASS has worked with industry groups such as the USA Rice Federation to try to smooth out some of those bumps. The USA Rice World Market Price Subcommittee, which holds frequent meetings with NASS, has developed a new recommendation for completing NASS’ monthly rough rice price questionnaire.
“If dried rough rice is purchased f.o.b. (free on board) from the farmer’s grain bin, only the price of the rice should be reported, " says Keith Glover, chairman of the World Market Price Subcommittee and president and CEO of Producers Rice Mill.
“The real challenge is when a buyer buys dried rough rice on a delivered mill, elevator or barge loading facility basis. Unless the buyer specifically identifies within the contract the amount of the total price being paid to the farmer for other services like hauling, the buyer has to report the total delivered price.”
Under such a scenario, the average cash price reported to NASS would be overstated by the cost of hauling, thus resulting in a higher than otherwise national average cash price, which can reduce PLC payments to all farmers.
“It is extremely important the most accurate average cash price possible for dried rough rice be reported each month to NASS,” adds Glover. "Any first hand buyer of rough rice from U.S. farmers not currently reporting average purchase prices on a monthly basis to USDA really needs to contact their state's NASS office to be added to the reporting list.”
It's also a reminder of how important farm programs are at a time when some think the role of government should be diminished. In a perfect world where every nation practices unsubsidized free trade and the climate provides abundant rain right on schedule, that might be possible. Until that happens, U.S. agriculture is too important to be allowed to be subject to the whims of foreign governments and to ideologues who have no idea of how the world really works.