INTERVIEW: US rice industry faces challenges amid global competition

The US is the fifth-largest exporter of rice globally. S&P Global Commodity Insights interviewed Peter Bachmann, president of USA Rice to get his insights into the outlook for US rice and how global factors can have an impact on the industry.

Following is a Q&A that has been edited for clarity.

How did you get your start in the US Industry?

I started with USA Rice in 2015 as just a junior lobbyist, working on behalf of farm and conservation programs. Advocating on behalf of farm and conservation programs for US farmers. I then went into [the US Department of Agriculture] for two-and-a-half years and returned to USA Rice in a trade policy role. This turned into leading our government affairs team, as well as trade policy which led me to get promoted to CEO once my predecessor retired.

What role does USA Rice have in the rice industry?

Our primary role is to make sure that we provide, and keep the industry profitable and going, and that is through advocacy to our administration and to our Congress. We work with state governments sometimes if issues arise, but really our goal is to keep our members from consolidating further and the industry from going away.

What are the biggest challenges the US rice market is facing?

The competitiveness of our rice prices is a challenge. In terms of rice competitiveness, that's something that we can't control. USA Rice cannot weigh in and tell our members that they have to sell their rice cheaper. That's not our role; that is the market's role. And so, I think that's going to be our biggest challenge, and there’s a lot of factors outside of our control such as changes of policies and how that will have an impact on the market.

You mention outside factors having an impact on rice. One big story this week was India’s removal of the minimum export price on non-Basmati white rice. What effect, if any, did this have on the US rice market?

I think that India has such huge supply that they're desperate to move it wherever they can. The US is going to be a target, but so is everywhere else, including the Western Hemisphere, and so I see them interrupting our market shares in places like Mexico or throughout Latin America, potentially.

India has always been a big seller to Canada, especially on basmati, but I think maybe we would see more traditional long grain ending up in Canada, which is a country that the US normally exports to.

India is also disrupting trade flows from Vietnam and Thailand right now, but they're also going disrupt the US, which is how I am seeing the MEP removal affecting the markets in the short term.

I understand that the US competes with South America. How does the US remain competitive?

The biggest market where we battle out is Mexico. The US has the logistical advantages with Mexico.

Especially the reliability of our crop and ability to get it there quickly compared to how long it takes South American nations. For example, if rice is coming from Brazil or Argentina or Uruguay, it's a much longer journey for them.

Whereas we can be a lot more reactive if Mexico needs rice and ship it on rail, truck or vessel to Veracruz.

Right now, they have got zero duties for white rice imports and from all origins and it's supposed to run through the end of December.

Therefore, we're hopeful that Mexican President Claudia Sheinbaum Pardo will go back to giving the [United States-Mexico-Canada Agreement[ preference for US rice into Mexico. So that would force the South Americans to have to pay a duty if they want to ship their rice to Mexico. I think that'll help put us on a more equal footing.

What impact do you think the US elections will have on the US rice market?

USA Rice works with whoever is elected. We have established relationships with people who work for both administrations.

We have relationships with people who work for both administrations, therefore I feel as though we will be well positioned.

Agriculture will look largely the same and that's a place where we're well positioned to be able to compete in terms of sustainability and all the programs and projects we work on with the Harris administration.

Under a Trump administration, we have a lot of allies as well, and so I think they would be more friendly towards production agriculture and large-scale production agriculture.

Our biggest challenge is what happens with trade. With a Harris administration, it will look largely the same.

With a Trump administration there's a chance that we are going to see more opportunity for trade deals, including with the UK, just because he likes to make deals. He wants to use these tariffs as leverage for deals and so that they could present some opportunities for US rice.

I understand the Farm Bill was meant to be discussed in Congress last month but this has now been postponed. How important would you say the Farm Bill is and what are your hopes regarding this bill?

It’s extremely important for us as it is something we have lobbied for the last two to three years, and we always spend a lot of time on this because of a lack of exposure to the agricultural industry.

It's a safety net for us when we look at rice globally; you look at how manipulated it is as a commodity by all the foreign governments, and so if we have to compete with that, we need to make sure that we’ve got a safety net that gives us enough of a backstop that our farmers are not going under every time the markets dip.

It helps keep us from going out of business and protect the rice infrastructure out there to keep all the mills running, to keep all the merchants running, and job security for a lot of those industries throughout rural America.

If there is a new change of leadership, which goes into effect on Jan. 1, there is a period where they can get deals done. That is when we see a lot of action happening among our government officials.

We also have got 45 people coming to DC the week before Thanksgiving to visit with our Congress people and a target list of Congress people to try to push to get something done. So, I think there's definitely still opportunity for something by the end of the year as Congress works well under tight deadlines. However, if Congress has to extend the farmer bill rather than pass a new one, then I think we are pushing for an additional safety net to be included in the package, which would be some sort of federal assistance or backstop just so we don’t go without assistance for another year or so.

Commodities are in trouble right now due to prices dropping significantly for cotton and soybeans, and everybody is looking for some assistance right now and it’s a good opportunity for us to be a part of that, as we will have support of the other commodities.

In terms of the current US harvest, in the US South, a lot of sources have mentioned that the quality is similar if not a bit lower compared to the previous year's crop. What impact do you think this will have on the rice market for the new marketing year.

I can’t speak about prices, but based on my conversations, I can agree with you that the milling quality is similar if not a bit lower compared to the previous year. This is challenging for the US, in terms of millers requiring more paddy rice to make the same amount of milled rice. This will cost the mills more, just to do the same amount of business.

What would you say are the biggest opportunities for growth in the US rice market?

Our domestic market is still our biggest opportunity for growth. I don’t think we will go above 3.1 million acres by any means, any time soon in my opinion. But I think that we have a lot of opportunities to take back some of the market share in our domestic market, especially when it comes to the jasmine market.

Thailand exports a lot of jasmine rice to the US. However, we grow some competitive generic jasmine rice, and I see a lot more opportunities for growth there.

US rice consumers are not necessarily rice connoisseurs, but they see jasmine rice and they want to buy it because they know it smells good and its consistent. So, I think that’s our biggest opportunity.

Also, I think maybe to also secure some of our Western Hemisphere markets. So, Columbia is moving towards duty-free trade with us right now, and we don’t sell any milled rice there, but I see opportunities for us to get more milled rice there as our duties go down in the next five to six years.