1. RICE ECONOMICS Farm Program and Economic Outlook
Valent Rice Seminar, Destin, FL
March 3-6, 2003
Dr. Michael E. Salassi, Professor
Department of Agricultural Economics & Agribusiness
LSU Agricultural Center, Baton Rouge, LA

2. Discussion Topics 2002 Farm Program Provisions
Current U.S. Rice Market Situation
Future Domestic and International Outlook

3. 2002 Farm Program Provisions

4. 2002 Farm Program General Commodity Provisions
Loan Rate
Dir. Pmt
Target Price (max CC pmt)
Rice (cwt)
Corn (bu)
Sorghum (bu)
Barley (bu)
Oats (bu)
Wheat (bu)
Soybeans (bu)
Cotton (lbs)
$6.50
$1.98
$1.88
$1.35
$2.80
$5.00
$0.52
$1.95
$1.85
$1.33
$2.75
$2.35
$0.28
$0.35
$0.24
$0.024
$0.44
$0.0667
$10.50
$2.60
$2.54
$2.21
$1.40
$3.86
$5.80
$0.724
(1.65)
(0.34)
(0.21)
(0.09)
(0.03)
(0.54)
(0.36)
(0.14)
$2.63
$2.57
$2.24
$1.44
$3.92
(0.40)
(0.27)
(0.15)
(0.65)

5. 2002 Farm Program General Commodity Provisions
Base Acres
Allows producers to
- retain current AMTA (contract) base acres and add oilseed acres, or
- update base acres using the acres planted and prevented
planted to all covered commodities.
Payment Yields
Allows producers who update base acreage to the average of the plantings to also elect to update program yields for counter-cyclical payments.

6. 2002 Farm Program General Commodity Provisions
Timing of Payments
50% of the direct (fixed) payment beginning December 1 of the year prior to the year the crop is harvested and the balance of the direct payments in October of the year the crop is harvested.
For counter-cyclical payments, producers can received up to 35% of the projected payment in October of the year the crop is harvested, an additional 35% beginning in February of the following year, and the balance after the end of the 12-month marketing year for the specific crop.
Marketing Assistance Loans and Loan Deficiency Payments
Nonrecourse marketing assistance loans and loan deficiency payments will be made available to producers of covered commodities (wheat, corn, sorghum, barley, oats, cotton, rice and soybeans).

7. 2002 Farm Program General Commodity Provisions
Payment Limitations
Per person limitations on program payments include:
(1) $40,000 limitation on direct (fixed payments)
(2) $65,000 limitation on counter-cyclical payments
(3) $75,000 limitation on marketing loan gains and LDP payments
Total dollar limitation per person equal $360,000
Other Provisions
Bill retains current rules on spouses, 3-entities, and actively engaged requirement.
Adopts a $2.5 million adjusted gross income cap on eligibility for participation in farm programs.
Retains the use of generic certificates in the loan program.

8. 2002 Farm Program Base Acreage and Program Yield
Alternative Base Acreage Calculation Methods
For the purpose of making direct and counter-cyclical payments, farm base acreage can be updated using specified methods. Two relevant to rice are:
(1) The sum of the following:
(a) current contract base acreage for covered commodities
(b) average of eligible oilseed (soybean) acreage on the farm
(This option adds soybean base to current base acreage on the farm)
(2) average planted acreage of covered commodities on the
farm. Includes prevented planted acreage.
Acreage of all covered commodities on the farm must be updated.
(This option updates base acreage for every crop on the farm)

9. 2002 Farm Program Base Acreage and Program Yield
Eligible Oilseed (Soybean) Acreage
Eligible oilseed acreage may not exceed the difference between:
(1) the total planted acreage for all covered commodities
(2) the total contract (base) acreage existing on the farm.
Calculation of 4-year average for years
Inclusion of All 4 Years In Average
In determining a 4-year acreage average for a farm, no crop year in which a covered commodity was not planted may be excluded.
Treatment of Multiple Planting or Prevented Planting
If acreage that was planted or prevented from being planted was devoted to another covered commodity, the commodity to be used for that crop in determining the 4-year average may be selected.

10. 2002 Farm Program Base Acreage and Program Yield
Single One-Time Election
Deadline for update election April 1, 2003.
The election will apply to all covered commodities. Failure to make update election will be equivalent to not update (but adding soybean base)
Payment Acres
Payment acreage for covered commodities will be 85% of base acreage.
Prevention of Excess Base
Base acreage plus oilseed base cannot exceed total farm acreage.

11. 2002 Farm Program Base Acreage and Program Yield
Use of Farm Program Payment Yield
Direct and counter cyclical payments will be based on existing payment yields established for the 1995 crop.
Update of counter cyclical payment yields
Farms updating base acreage may also update counter cyclical payment yields. One of two methods can be selected:
(1) 70% of the increase above existing payment yields
(2) 93.5% of actual yields
Payment Yield for Oilseeds
Payment yields for oilseeds will be average yields adjusted to levels (approximately 78% of avg.).

12. 2002 Farm Program Louisiana Rice Base Example
Example for 100 Acres of Rice Base
Rice Base Acreage on the Farm = 100 acres
Payment Acres = 85%
Rice Payment Yield = 40.8 cwt (state avg.)
Production History
Planted Rice Acreage Yield per Acre
(acres) (cwt./acre)
Average

13. 2002 Farm Program Louisiana Rice Base Example
Impact of Percent of Rice Base Planted on Total Program Payments
Avg Percent of Rice Base Planted in
Total Payments % % %
(1) No update $13, $13, $13,872
(2) Update base $10, $11, $13,187
(3) Update (70%) $11, $12, $14,080
(4) Update (93.5%) $11, $12, $14,013

14. 2002 Farm Program Rice Base and Planted Acreage by State
Avg. Planted
Rice Acreage
Total Rice
Base Acreage
Percent of
Rice Base Planted
Arkansas
California
Louisiana
Mississippi
Missouri
Texas
U.S. avg.
1,545,250
498,250
569,500
267,500
178,000
244,250
3,302,750
1,664,642
590,054
760,000
375,976
142,102
592,907
4,150,342
92.8%
84.4%
74.9%
71.1%
125.3%
41.2%
79.6%

15. Current U.S. Rice Market Situation

16. 2002/03 U.S. Rice Market Supply Side Factors
The 2002/03 U.S. rice crop is estimated at 211 million cwt., 2 percent below a year earlier and the second largest production on record.
U.S. rice imports are projected at 12.5 million cwt., second only to the 2001/02 record of 13.2 million.
Beginning stocks are estimated at 39.0 million cwt., 37 percent higher than a year earlier.
Total U.S. rice supplies for 2002/03 are projected at a record million cwt., 2 percent higher than a year earlier.

17. 2002/03 U.S. Rice Market Demand Side Factors
Total domestic use is projected at a record million cwt., slightly higher than last year. Food, industrial, and residual use projected at a record 121 million cwt.
Exports projected at a record 105 million cwt., 12 percent higher than a year earlier. Rough rice accounts for most of the increase (37% of total U.S. rice exports).
Total use for 2002/03 is projected at a record million cwt., nearly 6 percent above last year’s level.
Ending stocks are projected at 32.5 million cwt., 17 percent below the previous year.

18. 2002/03 U.S. Rice Market U.S. Rice Supply and Use
Rice Outlook, Feb. 12, 2003
2000/01
2001/02
2002/03
Million cwt.
Beginning stocks
Production
Imports
Total supply
Domestic use
Exports
Total use
Ending stocks
Avg. farm price ($/cwt)
27.5
190.9
10.9
229.2
117.5
83.2
200.7
28.5
$5.61
215.3
13.2
256.9
123.9
94.1
218.0
39.0
$4.25
211.0
12.5
262.4
124.9
105.0
229.9
32.5
$3.85

19. 2002/03 U.S. Rice Market U.S. Monthly Average Rough Rice Price
$ per cwt.
Month of marketing year

20. 2002/03 U.S. Rice Market U.S. Rice Exports – Top 10 Export Markets
Rice Yearbook, November, 2002
2001/02
2000/01
1999/00
Rank
1,000 metric tons, milled basis 1 2 3 4 5 6 7 8 9 10
Mexico
Japan
Haiti
Canada
Nicaragua
Saudi Arabia
Turkey
Honduras
El Salvador
United Kingdom
465.6
359.2
258.1
171.4
129.3
144.5
112.7
111.9
108.0
94.3
Philippines
Ghana
397.5
289.3
177.7
174.6
146.3
107.0
104.7
103.8
80.8
68.7
South Africa
368.3
280.5
210.2
200.9
175.3
154.3
125.6
81.3
75.0
72.2

21. 2002/03 U.S. Rice Market U.S. Rice Export Market
2001/02
2000/01
1999/00
Total exports (1,000 metric tons) 1/
Top 10 markets 1/
Western Hemisphere 2/
Milled
Rough
2,959.0
65.1%
59.2%
66.3%
33.7%
2,514.9
65.6%
49.2%
72.6%
27.4%
2,801.5
62.2%
46.3%
71.6%
28.4%
1/ Milled basis
2/ Product-weight basis

22. 2002/03 U.S. Rice Market U.S. Rice Exports Through Jan. 2003
(1,000 metric tons,
product-weight basis)
2002/03
(as of Jan. 03)
2001/02
(as of Jan. 02)
European Union
Turkey
Japan
Indonesia
Brazil
Canada
Cuba
Haiti
Mexico
Total
253.3
113.3
239.0
94.9
117.4
134.4
125.3
164.4
473.5
2,620.9
208.8
45.0
246.6
0.0
0.1
90.5
35.2
107.4
477.3
1,932.9

23. 2002/03 U.S. Rice Market Rice Export Prices (dollars per metric ton)
Marketing
Year
U.S. LG MG
Thailand
Grade B
Vietnam
5% brk
India
Pakistan
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
415
369
284
272
213
194
396
470
454
313
265
302
231
184
192
196
269
257
202
165
185
183
286
276
268
171
179
255 -
209
198
186

24. and International Outlook
Future Domestic
and International Outlook

25. Future Outlook U.S. Rice Supply, Domestic Use, Exports
Production will continue to vary from year to year as changes in market price influences planted acreage.
Steady growth in domestic food use of rice is projected. The expansion in domestic food use of rice reflects a growing share of U.S. population of Asian and Latin American descent, a continuing emphasis on healthier life styles, and the greater use of rice for processed foods, including pet foods.
Continued expansion in domestic use of rice eventually pushes U.S. prices higher relative to Asian competitors, a factor underlying weaker future projected exports.
USDA Agricultural Baseline Projections – Feb. 2003

26. Future Outlook U.S. Rice Domestic Use and Exports

27. Future Outlook International Rice Export Projections
Rice Exporting Country
2002/03
2012/13
Thailand
Vietnam
India
U.S.
China
Pakistan
Other
Total exports
U.S. Share
7.5
4.0
3.9
3.1
2.3
1.0
4.5
26.3
11.9%
9.2
5.5
6.3
2.8
2.4
2.2
4.9
33.3
8.4%
(million metric tons) World Ag. Outlook Board baseline