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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