Agricultural Economic Report No. (AER-713) 62 pp

April 1995

Rice: Background for 1995 Farm Legislation

This report address considerations in the 1995 farm bill debate for rice, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. U.S. rice sector income has shown steady growth in recent years, reaching $2.1 billion in 1993/94. However, Government program payments have also grown in importance. Since 1985/86, rice program outlays have averaged $733 million per year, 42 percent of all returns from rice farming. Farm and industry economic health are linked to costs of production which vary significantly across the six rice-producing regions. Because of inflation in the cost of production since the early 1980s, frozen payment yields, reduced target prices, and continued reductions in farm program benefits due to budgetary pressures, some rice farmers have been operating at a loss. Any reductions in current rice program support levels would probably accelerate the trends of a declining number of U.S. rice farms, increasing farm size, and a shift of rice growing from the high-cost production regions along the gulf coast to the upper Delta States, while reducing both the participation rate and dependency on government program revenue.

Keywords: rice, farm programs, farm returns, farm cost-of-production, program effects, domestic use, prices, world trade

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