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
"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
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
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
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.