When Fred Zaunbrecher isn’t tending to his rice crop in Rayne, La., he’s talking about rice to congressional leaders, trade representatives and domestic users of the commodity.
As chairman of the USA Rice Council and chair of the USA Rice Domestic Promotion Committee, he’s had time for little else than running back and forth between the farm and the airport. “I’m up to here in rice, which is a good thing,” Zaunbrecher said, waving a hand in front of a sun-drenched neck.
He’ll be the first one to admit, he picked a heck of a time to get involved in rice industry affairs. The new farm bill will be without direct payments for the first time in many years, replaced by revenue and price loss coverage options. Trade policies and perceptions of rice quality are threatening U.S. rice exports and the price of rice, well, it could use a little boost.
But Zaunbrecher understands that every chairman has a unique set of challenges.
Zaunbrecher, who also serves on USA Rice Federation’s International Promotion and Trade Policy Committees, says his committees are making progress on rice industry issues, but if his experience beyond the farm gate has taught him anything, it’s that change happens much faster on the farm than within agencies of the federal government.
Zaunbrecher farms 2,050 acres of rice, about 1,600 acres of soybeans and 1,000 acres of crawfish, on GF&P Zaunbrecher Farms with his brothers Phillip, Paul and Bill. In 2014, they planted 1,200 acres of Clearfield (111 & 151), 250 acres of conventional long-grain, 300 acres of conventional medium-grain and 300 acres of a specialty purple rice, Blanca Isabel.
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Last year, the Zaunbrechers had one of their best seasons ever, with high yields for soybeans and rice, plus excellent quality in rice and high soybean prices. They used the surplus revenue to prepay some of their production costs for 2014 to get a head start on what was sure to be an uncertain year and to reduce what they had to borrow for the crop. It’s looking more and more like a wise decision.
Signing up for the new farm bill
Because of the timing of farm bill implementation, “We’re not going to even sign up for the 2014 rice crop until it’s in the bins,” Zaunbrecher said. “And any indemnity that we might get paid if the market really drops won’t be paid until 2015. That’s not going to help your cash flow for the 2014 crop.”
The loss of direct payments, plus a lower market price for rice this year, means farmers will have to make up the revenue difference in crop yield, and lenders are understandably skittish, Zaunbrecher said. “With direct payments, you always had a number that the banks could count on every year. In our case, it went directly to the bank to use against our operating loans.
“If you’re not a tiptop producer, things could get tight with financial institutions. Right now we’re producing about as good a crop as we can produce. But Mother Nature usually has the final a say on what is going to happen.”
The Zaunbrechers will choose the Price Loss Coverage option for their rice crop under the 2014 farm bill. “In rice, it’s the fluctuating markets that affect us more than yield,” Zaunbrecher said. “The rice industry was able to get our target price of $14. With the PLC, we will be able to update our yields to 90 percent of a 4-year average from 2008 to 2012.”
With the Supplemental Coverage Option, which is only available if producers choose PLC, Zaunbrecher has an opportunity to purchase more crop insurance, “but we won’t have that option until the 2015 crop. So in 2014, you’re basically in limbo, but at the mercy of the market.”
Prepared for uncertainty
Fortunately, the Zaunbrechers have made several decisions over the last 10 years that are proving helpful during a scaled-back farm program, including diversifying into crawfish and making land purchases.
“Since most of the land we farm is leased, we didn’t want to get caught in a situation where we would lose property as generations and families turned over,” Zaunbrecher said of the land acquisitions. “The younger generation may want to sell property that you been farming for 30 years, and we didn’t want to get caught without owning our own property.
“We have been blessed over the years to work with some great landowners, but we needed that comfort factor of owning our own land.”
Zaunbrecher says the farm’s bottom line has been improving with crawfish and excellent first and ratoon crops that push average annual rice yields to over 10,000 pounds per acre. They have the capability to do their own laser leveling, should cash flow ever start getting thin. They also have a grain-drying system and have been identity preserving their harvests.
Identity preservation has become more important in rice markets as rice mills and end users often request varieties of rice, according to Zaunbrecher. While the reasons – such as quality concerns –are often subjective on the part of buyers or millers, IP gives the Zaunbrechers a competitive edge in the market.
Unfair trade practices
And every little bit helps these days, especially with U.S. rice having to compete against unfair trading practices from foreign competitors and governments. Zaunbrecher says with U.S. rice producers now facing subsidy cuts, the U.S. government needs to step in with some help.
“But we’re just not getting it right now,” said Zaunbrecher, who has seen the results of delayed action first hand.
“We had a big market here in Louisiana with the new Jazzman rice which had opened some markets up in Ghana. They were crazy about it there. Vietnam came in and cut that market down to nothing. So we went from planting 500 acres of Jazzman on this farm last year to not planting an acre this year, because there’s no demand for it.
“Vietnam, Thailand, and Brazil, are all putting rice on the market at cheap prices and getting subsidized on the back end either through export subsidies, producer subsidies or in Thailand’s case, government intervention. We just can’t compete with that.”
For the same reasons, exports of milled rice to Mexico have fallen by 50 percent over the last five years, Zaunbrecher said. “The declining market may have started off with quality problems with the 2010 crop, but it’s really all about money. It’s all about buying cheaper rice.
“We’ve got a good product, it’s just tough competing in markets where there are unfair trade practices. The problem is you can’t get a judgment on it right away. By the time you do, the market will be lost. It’s a shame because logistically, it takes no time to get rice to Mexico, the largest importer of U.S. rice.”
One trade agreement that is paying off for the U.S. rice industry is the Colombia Free Trade Agreement, Zaunbrecher noted. The CFTA contains an agreement for a tariff rate quota that will be split between the United States and Colombia, with the U.S. share going into domestic rice research. The agreement has already put over $2 million into Louisiana rice research coffers alone, according to Zaunbrecher, who is also a member of the Louisiana Rice Research Board. “We are entrusted to use those funds in the best interest of rice research.”
A position of strength
While trade and WTO issues threaten profitability of U.S. rice producers, Zaunbrecher believes that inevitably, rice markets favor efficiency, quality, food safety and consumer health, benefits which U.S. rice producers bring to the table. It’s a message Zaunbrecher always carries with him on trips to Washington and to domestic users.
Zaunbrecher does look forward to spending more time back on the farm and with his family when his terms as chairman are over, when he can simply sit on a committee or two and have more time to wade through his rice fields again.
In the meantime, three brothers keep G, F&P Zaunbrecher Farms operating at full efficiency. “I couldn’t do this without them,” Zaunbrecher said. “They appreciate what I do professionally in the organizations, and at the same time it helps to keep them informed. Meanwhile the farm operations never skip a beat in my absence.”
The bottom line is that the brothers recognize and respect each other’s strengths. “We have our spats, but at the end of the day it all works out.” Zaunbrecher said.