Rice farmers ‘thankful’ they enrolled in PLC program

Joe Outlaw says that toward the end of the 2014 farm bill process he got a “little more blunt than normal” when it came to talking to farmers about their decision-making.

For those who know Dr. Outlaw, co-director of Texas A&M University’s Agricultural and Food Policy Center in College Station, blunt might seem to be more the norm. But those farmers also know he has their best interest at heart.

“I kept telling people that I wasn’t going to argue with them about what to sign up for on rice; though I might debate with them on the pros and cons for the other crops,” said Outlaw. “On rice I wanted them to sign up for PLC (Price Loss Coverage) and go home.”

On Thanksgiving Day, not long after USDA began making payments under the Price Loss Coverage and Agricultural Risk Coverage or ARC programs, one farmer sent Outlaw an email: “You told us during the meetings to sign up for PLC and thank you later. This is my official thank you. I signed up for the program.”

Outlaw told that story while delivering the Outlook Report for Texas during the Rice Research and Outlook Reports segment of the 2015 USA Rice Federation’s Rice Outlook Conference in New Orleans Thursday, Dec. 10.

Outlaw presented slides showing the 2014 dollars-per-base-acre payment rates for each of the counties in the Texas Rice Belt east and west of Houston. The PLC payments ranged from $102 per base acre in Calhoun County to $156 an acre in Waller County west of Houston and similar amounts for the six rice-producing counties east of Houston.

$61 million in payments

The PLC payments for rice in Texas, which ranged from $117,000 in Jackson County to $12,542,000 in Wharton County west of Houston and from $867,000 in Galveston County to $6,163,000 in Liberty County east of Houston reached a total of $61,381,000.

“Did this make people whole? Not even close,” said Outlaw, a professor and Extension economist with Texas A&M. “But it does put a pretty big bandaid over the losses that otherwise would have occurred.” (Under PLC, the payment is the difference between the national marketing year average price and the effective price multiplied by the payment yield and 85 percent of a grower’s base acres.)

Similar numbers could also be presented for other rice growing states where PLC program payments were made this fall on the 2014 crop. Payments for the 2015 crop will not be made until 2016 under the new law.

Dr. Outlaw and James Richardson, the other co-director of the Agricultural and Food Policy Center, spent more than three years helping develop the farm bill decision-making tool, which they provided to producers when USDA released the first regulations implementing the new farm bill.

Texas A&M University and the University of Illinois received funding from USDA to build decision-making tools aimed at helping farmers analyze their options under the new programs provided in the Agricultural Act of 2014.

Texas’ rice acres have been on the decline since the severe drought conditions in 2011 led to curtailment of irrigation water deliveries, which come from reservoirs around Austin to the rice-growing areas along the Texas Gulf Coast west of Houston.

Significant decline in acres

USDA estimates Texas farmers planted about 133,000 acres of rice in 2014, a significant decline from the 193,000 acres at the most recent peak of Texas rice plantings that occurred in 2010. More water could be available in 2016 due to the rains that have occurred across Texas in recent months.

“The question is whether that 60,000 acres will come right back?” says Outlaw. “With these prices you wouldn’t expect everyone to just jump back in, but it has the potential to lead to more rice acres.”

Except for fuel, production costs are continuing to go up, “but the rate of increase has not been as dramatic as it has been in the past,” he said. “The most dramatic increase has been the price of seed.”

Outlaw told farmers and other industry members attending the Outlook Conference that he had spent the two or three days prior to the USA Rice event providing analyses of the cotton industry’s proposal to have cottonseed declared to be “another oilseed.” The designation would make cottonseed eligible for the programs now available to soybean producers.

“You might ask why talk about cotton at a rice meeting?” said Outlaw. “But, as Larry talked about, the more people move from cotton to rice the lower your price will be.” (Larry Falconer, Extension economist with Mississippi State University, gave the outlook report for Mississippi rice producers.)

“I know some of you do both, and that’s great. The more we can keep cotton people planting cotton and corn people planting corn, the sooner we’re going to get the rice price to move back up.

To learn more about the USA Rice Outlook Conference, visit http://usarice.com/.

TAGS: Cotton
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