Better prices and more favorable international climate help rice farmers

In spite of the year’s uphill battle, the 2020 rice crop actually proved profitable for Arkansas growers as a whole. Dr. Jarrod Hardke with the University of Arkansas says conditions are looking more favorable for rice farmers in 2021.

“Rice prices have held up to make 2020 a profitable year for growers,” Hardke said. Although some economists initially predicted that prices would continue to rise with the approach of winter, prices have actually remained static throughout December. Hardke said Arkansas rice acreage in 2021 will likely decline from 2020 numbers if market prices remain strong for other commodities.

“Soybean and corn prices have now surged into strong competition with rice acres for 2021,” he said. “Rice acres at this point can be expected to decline slightly, but if those competing commodities remain strong or strengthen in price then it will push rice further down. Right now, a 5-10 percent decline in rice acres is my expectation. Should soybean prices climb higher then rice acreage will decline further.”

Row rice, the practice of growing rice using furrow irrigation rather than submerging the plants in a controlled flood, continued to see increased interest — and acreage — from Arkansas growers in 2020, with an estimated 200,000 acres planted with the method statewide.

“Results were variable as growers continue to learn and adapt to the practice,” Hardke said. “However, once again results were positive overall. So as a percentage of production. it seems likely to continue to increase in 2021.”

Also, after nearly a year of gridlocked negotiations, the United Kingdom (UK) and the European Union (EU) secured a dramatic last minute Brexit deal to preserve their long-term relationship. While the UK Parliament voted to leave the EU in late 2019 and formally split from the trading bloc on January 31, 2020, the UK provided an 11-month runway for negotiations before they left the EU Customs Union on December 31, 2020. One of the major areas of contention was disagreements around fishing rules in UK waters, which was resolved by providing EU fishermen a quota to be phased out over time. For agriculture, including rice, the deal means that two-way trade will remain duty-free and quota-free for products originating in either bloc.

“This agreement is a big deal for all involved and has been a long time coming,” said Mark Holt, Arkansas rice miller and chair of the USA Rice Europe, Africa, Middle East Trade Policy Subcommittee. “While the treatment of U.S. rice shipped to both the UK and the EU didn’t change much, the long-term certainty and stability that this EU-UK agreement provides will benefit U.S. rice exporters. We also know that the lack of an EU-UK agreement was a hurdle for the U.S. to clinch our own trade deal with the UK. This should help clear the way for negotiations with the new administration to move forward later this year.”

The U.S. has three country specific quotas for the EU for milled and broken rice totaling 50,109 MT. The presence of an EU-UK agreement means those quotas will each be split between the EU and the UK effective in 2021, although details of the allocations have not yet been made public. Additionally, U.S. milled and broken rice shipments to both markets will continue to be subject to a 25 percent retaliatory duty.

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