PINE BLUFF -- Arkansas' rice acreage could increase by 20 percent this year as farmers search for the best possible return during a period of low commodity prices, a University of Arkansas economist said Monday.
"It's not so much because the market price for rice is so fantastic," said Scott Stiles, an economist with the UA System Agriculture Division's Cooperative Extension Service. "But when you look at all the competing crops, rice is offering the better return versus corn versus soybeans versus cotton."
Arkansas growers planted an estimated 1.1 million acres of long-grain rice last year. Final production numbers for 2015 are due today from the U.S. Department of Agriculture.
Stiles was one of several presenters at a winter production meeting for farmers at the Donald W. Reynolds Center in Pine Bluff. About 30 such meetings are scheduled around the state during January and February to give farmers and consultants a look at research conducted by the UA Agriculture Division.
Last year's roughly 50 percent drop in commodity prices has put farmers under pressure as they cope with shrinking profit margins.
Stephan Walker, who farms near Altheimer, said many growers are still trying to figure out what mix of crops to plant this year.
"I'm going to go with rice and a few vegetables," Walker said. "Economically, you can't beat rice."
Charles Wesson, who also farms near Altheimer, planted soybeans last year but agreed with Walker.
"My whole farm will be in rice" this year, Wesson said.
Stiles presented generic budgets showing hybrid rice can produce a return of $289 per acre, not counting land costs and other overhead such as machinery and other equipment. He noted those expenses can be substantial, especially for farmers who rent most of their land.
By contrast, milo, also known as grain sorghum, can produce a return of $74 per acre, Stiles said.
Conventional soybeans can produce returns of $132 per acre, he said, while genetically modified beans can return $121 per acre. Stiles did not present budgets for cotton, but the the price for that crop has been falling for years.
The long-grain, season-average farm price range for rice is projected to be between $11.50 and $12.50 per hundredweight, Stiles said.
Global stockpiles of rice are declining, Stiles said, with stocks held by Vietnam, Thailand, India and Pakistan down by a third from last year. As a result, the USDA expects U.S. rice exports to rise from about 71.7 million tons last year to about 83.8 million tons in 2016, he said.
Nationally, Stiles said, the USDA expects rice production to grow by about 12 percent. If that happens, the increased supply could drive prices down again, he said.
That in turn could mean Arkansas farmers will have to rely more heavily on federal safety-net programs designed to kick in when markets or yields are down, Stiles said. State farmers received more than $217.8 million in safety-net payments in 2015 for the 2014 market year.
For U.S. soybean growers, Stiles said, the outlook for the next four to five months is "bearish." Farmers in Argentina have built up stockpiles of between 550 million and 590 million bushels while they wait for an export tax to be lowered, he said. Half that stockpile could be added to the world market in the first quarter of 2016, Stiles said, which would depress prices and take market share from U.S. producers.
Nonetheless, Stiles said he expected that more soybeans would be planted in Arkansas in 2016. That's because farmers who planted milo last year will be looking for an alternative after the price for that crop fell from more than $5 per bushel to about $3.50 per bushel, he said.
Stiles said commodity prices could remain low for two or three years unless weather causes a major disruption in global supplies.
James Ruggeri, who said he'd been farming in Jefferson County since 1971, was planning to ride out the downturn with minimal changes to his operation, perhaps planting some cotton in addition to soybeans in 2016.
"It will cycle the way it always does," Ruggeri said.
Business on 01/12/2016