There were both encouraging, strong economic news and predictions of future changes due to an unsteady, shifting global market during Riceland Foods annual meeting held last month in Stuttgart, Ark.
New company president and chief executive officer Danny Kennedy called it “a banner year” for Riceland, noting a new sales record of $950 million — up 24 percent over the prior year — and a $110 million increase for Riceland members from the previous year.
The increased income follows on the heels of four consecutive years of low grain prices for U.S. farmers.
In regards to the 2003 rice harvest, Kennedy, who became Riceland's president Aug. 1, 2004, said the harvest will “go down in history as one of the most dynamic marketing crops in recent times. The upswing in price and harvest of the crop ran parallel. Seldom does that happen in agriculture.
“From an economic standpoint it was a very, very good year.”
Officials reported that Riceland's operations proved to be economically successful in all major facets. For 2003 the company's total assets reached a record $434 million, permanent assets reached a record $245 million and members' equity reached a record $196 million.
Also, long-term debt was reduced $2 million to $57 million while working capital increased 17 percent.
Kennedy said that just as the rice industry fluctuates from “the moment seeds are planted until the moment they are cultivated,” the industry's dynamics are in a state of “constant change.”
“What is going to change in rice?” is a question he has been constantly asked since taking the company's top leadership position.
“In time, everything will change,” he replied. “Not just because of company leadership change, but because of the industry in which we compete — global ag — is continuing to change.
“Changes are happening more rapidly than ever, and for us to be successful in the future, we will change and adapt.”
Scott Gower, vice president for commodity operations, said he anticipates Riceland will receive and market 132 million bushels of rice, soybeans, wheat and corn from the 2003-2004 crop.
During the past six years, he observed, Riceland handled five of the largest rice crops in its 83-year history. Company plans, he said, are to increase grain storage capacity total to 115 million to 120 million bushels in the future, compared to 109 million bushels stored today.
From the 2004 harvest, compared to the previous year's harvest, Gower said, Riceland had a 9 percent increase in rice receipts in the Mid-South, a 12 percent increase in Texas and a 7 percent increase in Louisiana.
“I remember just a few years ago that we thought anything over 100 million bushels was a very good year,” Gower reflected.
He said that the milling quality of the 2003 rice crop was considered below many people's expectations, with an overall average milling yield of 57/69. This year, however, Gower reported that the milling yield improved to an average of 60/71.
Soybean harvest in 2003, he said, resulted in a bean yield rivaling or exceeding many levels from the previous year.
“The biggest story this year has been the extended wet period, delaying harvest by over a month,” he said. But currently at about 88 percent harvested, he added, “the good news out of all of this wet weather is that the deterioration of the quality of the processing has been minimum.”
Jerry Delatte, senior vice president for Riceland's domestic food sales, said the 2003-2004 marketing year was a productive but challenging one for “those trying to manage his or her soybean futures market.”
He said that the lowest carryout in years led to rising future prices in the soybean sector while heavy demand for U.S. soybeans was prevalent throughout the year.
“Fortunately for our Mid-South farmers, we had an excellent 2003 crop,” he said.
He reported that Riceland's marketing products accounted for 25 million bushels of soybeans, nearly 7 million bushels of wheat and 500,000 bushels of corn, totaling nearly 33 million bushels.
Delattte noted that investments in technology helped improved wheat quality. He also singled out the ability to allow the buyer to purchase products that promote zero trans fat on labels as a key sales development.
Carl Brothers, company senior vice president for international rice, said while more global markets have emerged for U.S. rice exports in recent years, the future climate is uncertain at best, based on developments in recent months.
He said various geopolitical factors continue to swirl in Europe, Haiti, Cuba and Saudi Arabia, where anti-American sentiment has played a role in declining U.S. exports.
“The European market for rice growers has been strong, but in recent months our share of the European market has been threatened by preferential tariffs,” Brothers said.
While the Haitian market has been a real “boost” for U.S. rice export rice accounts, accounting for 50 percent of all domestic trade to that country, recent civil unrest in that nation and lower prices have contributed to an overall slow movement of rice exports.
He also noted that “although there is a record export pace of 10 million metric tons of rice per year, China, Vietnam and India have reduced or curtailed exports of rice entirely.”
But there is also hope for exports, he countered, noting increased negotiations by U.S. trade representatives with the EU as well as trade discussions with the Cuban government.
Finally, Brothers conveyed optimism about a new international market. “As U.S. prices become more competitive, we will eventually get the opportunity to compete for the 85,000 metric tons of rice needed each month by the Iraqi people,” he said.
“That would be a wonderful market for U.S. rice.”