Local economy loses millions to rice dumping
California farmers estimate loss could be as high as $1 billion.

Posted March 2, 2005: California's rice farmers are losing hundreds of millions of dollars to a marketing practice known as "dumping," says the farmer group Rice Producers of California. Moreover, financial losses to the state may be much higher.

Dumping occurs when US commodity traders export rice at prices below what it cost farmers to produce the crop. While this practice has greatly benefited global food companies by providing raw materials for their products at bargain prices, farmers around the world are going out of business.

RPC decided to look into the issue of dumping after a reading a report released this month by the Institute for Agriculture and Trade Policy, a Minnesota based think tank that focuses on documenting the underlying causes of America's rural crisis. According to government data analyzed in the report, U.S.-based companies have engaged in high levels of agricultural dumping in their global sales of the five most exported commodities (rice, wheat, corn, soybeans, and cotton).

"What we found with our own crop was pretty disturbing," said Greg Massa, communications director for Rice Producers of California (RPC). "Over the last five years, we estimate that marketers exported our rice at prices up to 35% below the farmers' cost to produce it. And it's getting worse-rice was sold to Japan this month at an estimated price 38% below cost. That one sale, which comprises less than one-tenth of California's annual rice exports, will cost us over $5 million. And worse yet, it didn't have to happen, as we are currently experiencing record demand for our rice."

While that number seems high, the effect on the regional economy is staggering. RPC estimates that dumping during the four years from 2000 to 2003 cost Sacramento Valley rice farmers almost $200 million in lost revenue.

"Farmer income has a multiplying effect throughout the state. California is quite possibly losing several times that amount through job losses and tax revenues," said Chip Struckmeyer, a rice farmer from Arbuckle. "We could be talking about one billion dollars in unattained income for the people of California over the last decade.

With the local and national budget crisis, this is also a loss of a much needed income source for government. This must not be tolerated any longer by the industry, or the state."

Rice Producers of California, the only group that speaks solely in the interest of California rice farmers, believes that a major factor in dumping is California's bizarre marketing system. In what is called the pool system, the marketer sells the crop after harvest, and trickles money back to the farmer over a period of 15 months or more. "We wait over a year to be paid, and our production costs are not factored into our return," noted Kelly Ornbaun, RPC's interim leader. "The farmer is assuming not only his own risk in producing the crop, but also the economic risk of the marketer."

Getting income out of the market is becoming increasingly important for farmers as Federal budget pressures squeeze farm program benefits. Currently, rice farmers are being required to reimburse the government for farm subsidies received for the 2003 crop year.

RPC believes farmers need to band together and withhold their rice from pool marketers until they guarantee a price above production costs. According to Mr. Ornbaun, "They must be made to realize that paying farmers a fair price for their product is what keeps local economies afloat. The current system is hurting this entire region of the state and it will only get worse as farm program benefits are reduced."

The IATP report is available online at iatp.org. Rice farmers wishing more information may contact Kelly Ornbaun at 530-908-3146, or send an email to RPCnews@yahoo.com.


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