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State's Rice Co-ops Feud Over Share of Shrinking Exports : Growers' Fortunes Hinge on 2 Groups' Strategies

January 06, 1985|BRUCE KEPPEL | Times Staff Writer

Gene Harris grows rice on 1,200 acres of land in Richvale, about 60 miles north of California's capital, and he'll consider 1985 a good year if he just breaks even on the sale of his 1984 crop. "It's not a happy situation right now," Harris said. "I was fairly pleased not to fall farther behind than I did."

Harris' experience is fairly typical of the farmers who grow rice on 450,000 acres in California's flat, rich, river-coursed Sacramento Valley, which produces the world's highest yields--about double that of the rival and larger Southern rice belt that runs from Texas east to the Arkansas border.

But California's 1.4-million-metric-ton rice crop--about 23% of the 6.27 million tons grown in the United States last year and the second-largest after Arkansas--depends heavily on export sales, much of them to South Korea in recent years. After peaking at $350 million in 1980-81, California's export crop has fallen victim to a run of good growing seasons abroad, which decreased foreign demand for U.S. rice.

As more of its former customers became self-sufficient in rice production, thanks to the fortuitous absence of typhoons, competition also increased for the remaining rice exports--and this at a time when a persistently strong dollar and a rigid system of domestic price supports had boosted the U.S. crop's price above world prices. A greatly improved rice crop from Thailand, currently the leading rice-exporting nation, undersells U.S. rice by $7.25 per 100-pound sack, or about $150 per metric ton. The government supports U.S. rice at $11.40 per sack.

Southern growers, who specialize in the long-grain variety that cooks into the dry and fluffy rice favored by Americans, are less dependent on foreign markets than their counterparts in California, where growing conditions favor the more glutinous short- and medium-grain varieties favored in key markets abroad.

As a result, California growers are contributing a disproportionate share of the nation's costly surplus rice stocks.

The fortunes of Gene Harris and the 3,000 other California growers now are also tied to distinctly different marketing strategies devised by the state's two largest milling cooperatives, which between them handle about 75% of the crop. While the two--Rice Growers Assn. of California, the largest, and Farmers' Rice Cooperative--traditionally worked closely to market the state crop, dealing mostly through a single New Jersey broker, Connell Rice & Sugar Co., they have now gone separate ways--and not without bitterness.

Both say they are responding to the same problem:an increasing inability to compete for foreign sales.

Exports were off 30% last year, said James R. Errecarte, executive vice president of the Rice Growers Assn. of California, the 65-year-old cooperative that mills and markets rice from Harris and 2,000 other growers. "We have to be able to compete in the world market--that's all there is to it."

About a mile from RGA's headquarters on the Sacramento River, Ralph S. Newman Jr., president of Farmers' Rice Cooperative, the state's No. 2 grower-owned association with 893 members, said the California rice grower is, in a way, the economic victim of his own agricultural success.

"We can't sustain our capacity to produce," Newman said.

Affecting both the marketplace and its ability to weed out uneconomic growers is the federal program to support rice prices, he said. The state's growers receive far fewer benefits per unit produced than do their less-productive counterparts in Arkansas and Louisiana.

Authorization for the farm program expires this year, and farm legislation will be a major item on the new Congress' agenda. As the U.S. Department of Agriculture noted in a recent study:"The 1981 farm bill expires at a critical time for the U.S. rice industry. The industry faces rising production capacity, weak foreign demand, hefty supplies and stocks, farm prices below target (support)prices and increasing government costs."

"It's a very complex situation," Newman acknowledged, "and I don't have any simple answers for it." Somehow, he said, U.S. prices must be allowed to move more in line with prevailing world prices. Today, many farmers find it more profitable to sell to the government under its price-support program.

Split in Strategies

Faced with an uncertain future, the once closely allied Rice Growers Assn. and Farmers' Rice Cooperative have embarked upon sharply different marketing strategies.

"We need to position our company to be a survivor," Newman explained. In an attempt to do so, Farmers' Rice chose a "different mix" from RGA, he said, "not because we see the future differently, but because we see different ways to get there."

The different level of exports at each cooperative has a lot to do with the two cooperatives' separate strategies. While RGA sells about 60%of its rice abroad, Farmers' Rice only sells 35%overseas.

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