Louisiana rice farmers could benefit from normalized Cuba relations _lowres

Advocate staff photo by BRYAN TUCK -- Rice farmer Allen McLain, left, watches his son, Allen McLain Jr., load rice into a truck at their drying station Wednesday in Abbeville in this December 2013 Advocate file photo.

The prospect for normalized relations with Cuba could be good news for Louisiana rice farmers, who have fought to reopen what had been a lucrative market before the 1962 embargo and again as recently as a decade ago.

“That would be a very big deal for the rice industry,” said Dustin Harrell, who is set to become the LSU AgCenter’s new state rice specialist in January.

Experts say the benefits of normalizing diplomatic and trade relations would accrue gradually, and would come at a time when the rice industry is learning to cope with cuts in subsidies and other support programs brought on by the 2014 farm bill.

Michael Salassi, a production economics specialist for the AgCenter, said any benefits in terms of increased rice exports from Louisiana wouldn’t happen overnight but rather would slowly phase in over a period of years as any potentially new trading arrangements were formalized.

“Should the U.S. be successful in normalizing diplomatic relations with Cuba, this certainly would have great potential for Louisiana rice exports to Cuba,” he wrote in an email response to questions about the impact of normalized relations.

Louisiana rice farming is concentrated in a belt that runs diagonally from the southwest into the northeast. Rice was worth about $494 million to Louisiana farmers in 2013, according to AgCenter figures. Value-added enterprises such as milling added another $164 million.

In all, 1,023 farmers grew rice on about 410,000 Louisiana acres in what was considered a good crop year.

Rice farmers got a taste of what an open Cuban market could do for prices after an easing of the Kennedy-era embargo in 2000 allowed food and medicine exports to Cuba.

U.S. rice exports grew to nearly 177,000 metric tons, worth about $68 million, by 2004, according to the U.S. Department of Agriculture. The price of rice rose from $164 per metric ton in 2000 to just more than a $1,000 per metric ton in 2007.

But the Bush administration toughened trade policy with Cuba in 2004, requiring cash in advance for food shipments. Rice exports to Cuba declined sharply and dropped to nothing in 2009.

“An agreement between the two countries to facilitate commerce and banking activities would go a long way toward facilitating agricultural trade,” Salassi said. “Should this occur, the Louisiana rice production sector would be in a prime position to supply a large portion of any rice exports to Cuba.”

Published sources estimate total Cuban rice imports from all sources at 600,000 to 770,000 metric tons each year.

In the agriculture policy portion of her website, U.S. Sen. Mary Landrieu, D-La., cites an estimate that Cuba could buy 480,000 metric tons of U.S. rice if trade relations are normalized.

Exports at that level would have made Cuba the second-biggest importer of U.S. rice in 2012-13. Mexico was the top importer of U.S. rice that year with 856,000 metric tons, according to the U.S. Department of Agriculture Economic Research Service. Haiti was next with 366,000 metric tons.

Donald Sagrera is a former rice farmer whose family still works about 600 acres south of Abbeville.

He said he’s heard that opening exports to Cuba could raise the price of a barrel of rice by about $2. Rice is currently selling at $23-$24 a barrel, according to the AgCenter.

“I don’t know how much difference it will make,” Harrell said. “It would create a lot more demand, and that should help prices.”

Rice prices have swung wildly over the last five years. The peak price was $615 a metric ton in August 2011. The low point was in May 2014, when the price dropped to $403.

Farmers also have had to cope with high fuel costs and hurricanes Rita and Ike, which pushed salt water into fields as far north as La. 335 in Vermilion Parish, AgCenter rice specialist Johnny Saichuk said.

Before the hurricanes, Vermilion accounted for roughly one-fifth of Louisiana’s rice acreage, according to the AgCenter. But rice is sensitive to saltwater intrusion.

The new farm bill’s effects could be another blow to rice farmers.

Louisiana rice producers received nearly $2 billion in rice subsidies between 1995 and 2012, according to calculations by the Environmental Working Group. That ranks third among states.

The new farm bill eliminates direct payments and requires farmers to choose between protection based on price or revenue and whether those values fall below government-established levels.

“We’re getting ready to find out if we can make it or not,” Saichuk said.