Texas rice farmers hope for increased trade opportunities
Posted August 4
RAYWOOD, Texas — Ray Stoesser rumbled around his quiet green fields in a mud-caked SUV, noting the minute gradations of the land, which is subtly terraced to allow water to flow downhill, irrigating the fields in slow succession.
"We're going uphill, believe it or not," Stoesser said. After more than a half century of farming, he knows what each field needs and when, harvest after harvest. "Just like taking care of your backyard," he said.
The Houston Chronicle reports if Stoesser's land hasn't changed, the economic conditions have. Rice prices have declined for several years, averaging about 10 cents a pound last year, because of competition from huge rice producers like Vietnam and Thailand as well as increases in agricultural productivity that have boosted supplies. Over the past few decades, hundreds of rice farmers in Southeast Texas have given up the crop entirely.
But in mid-July, the Texas rice industry — which is worth about $100 million per year to farmers — was granted a reprieve: a deal to allow U.S. rice sales to China. The industry estimates that China soon could buy 250,000 tons of U.S. rice per year, out of the 9 million tons it produces, which could boost prices significantly.
Although trade between the two countries had been liberalized when China entered the world trade organization in 2001, trade in rice remained off the table. An agreement to allow exports has been in the making for nearly a decade, with talks launched by George W. Bush, continued under Barack Obama and ultimately concluded under President Donald Trump. The deal sets complex safety standards to prevent pests from entering China with rice imported from America, which, if met, opens a market of more than 1 billion rice eaters to U.S. farmers.
The agreement comes at a critical time as the Trump administration prepares to renegotiate the North American Free Trade Agreement, potentially threatening agricultural exports to the rice industry's biggest customer, Mexico.
For the Stoesser farm, selling to China could mean a slightly bigger financial cushion in a business that can see a year's income decimated by floods or drought or both.
"If we could get to 16 cents instead of 10 cents a pound, it would take a lot of risk out," Stoesser said. "Trade is the answer to our problems."
The last few decades have left the Stoessers feeling isolated.
The flat, humid counties east of Houston used to be full of rice fields — in 1968, 70 square miles of Liberty County were planted with the crop. Growing up in the area, Ray's son, Neal, always saw the rice business as his future, and he didn't finish college.
"I went to the University of Rice Farming, I guess," he said, while piloting a giant combine around the field, gobbling up stalks with a 40-foot-wide reaper and separating them from the grains.
The Stoessers have owned land since Neal's great-grandfather came to the area from Germany in the late 1800s, and Neal has been driving a combine since he was old enough to climb up into the cab, as his 8- and 4-year-old sons do now. Over that time, the Stoesser farm has grown to cover several thousand acres as the family bought out surrounding farms.
The rest of Texas' rice industry, however, has shrunk to 187,000 acres from more than 600,000 in the 1950s. In Liberty County, the 70 square miles of rice fields is now 8.
"I hate to say it, but when I was in high school, there were 70 farmers," Neal said. Now there are just three in Liberty County — Neal, his father and his brother, Grant.
Several reasons are behind the decline, including the encroachment of suburban housing developments, which raised land prices to the point where it made more sense to sell than keep farming. Today, Texas accounts for about 6 percent of U.S. rice production, far behind the leader, Arkansas, which accounts for about half.
But Texas rice farmers have a few things working in their favor. New seed varieties allowed them to nearly double the yield per acre, with the assistance of experts from Texas A&M's field offices. And federal crop subsidy programs have kept them afloat through thin years, paying out $1.8 billion to Texas rice farmers between 1995 and 2014, according to a database maintained by the Environmental Working Group, an advocacy organization that opposes farm subsidies.
Meanwhile, the rice industry has tried to expand its market by boosting Americans' rice consumption. Stoesser runs the Texas Rice Council, which collects payments from the state's rice farmers for joint marketing efforts, such as one that produced a bumper sticker on his Yukon SUV. "Eat Rice," it reads. "Potatoes make your butt big."
In one regard, they've made progress. Americans now eat 26 pounds of rice per year on average, which is nearly triple their consumption in the 1970s. But that increase is driven largely by immigrant communities that favor jasmine and basmati varieties, mostly imported from Thailand, India and Pakistan, over American medium and long grain rice.
Back in 2005, Greg Yielding took a trip to China.
Nothing terribly official for the executive director of the Arkansas Rice Growers Association — just a few visits with people like the U.S. Department of Agriculture's representative in China and the office of COFCO, China's state-owned food importer. At that point, the prospect of selling rice to China seemed like a hopeless quest — "The ultimate example of selling ice to the Eskimos," as one California official put it.
But Yielding heard differently. Chinese supermarket executives, he said, thought they could market American rice as a high-end, safer alternative to their own crops, which had suffered waves of contamination. On successive visits, funded by grants from the USDA, Yielding engaged a market research company to have young women hand out samples of U.S. rice at luxury supermarkets in big cities.
"I couldn't tell you that there was something better about it, but they tried it, they liked the taste of it, they liked the cooking quality," said Yielding, who soon started working for the U.S. Rice Producers Association, a Houston-based trade group. "I just kept making contacts and finding out that the Chinese wanted to buy U.S. rice."
And at the time, China was about to undergo a much larger shift.
For decades, in the name of national security, China had maintained a goal of producing 95 percent of its grain domestically. Around 2012, rocked by food safety scandals, China backed off that target, allowing it to slip to 85 percent. The U.S. went from exporting about $100 million in grain and feed from the U.S. in 2007 to a peak of $4.9 billion in 2015.
"That 10 percent is big for agricultural exporters," said Luis Ribera, an agricultural trade expert at Texas A&M.
Rice, however, was still barred entirely, since the two countries hadn't agreed on a common food safety protocol. So, a few years ago, the USDA started facilitating trips by Chinese scientists to visit U.S. farms and rice mills. Ray Stoesser helped shepherd them around in Arkansas.
"The Chinese were optimistic about what they saw," he said, extolling the quality and sanitation of U.S. facilities.
The Rice Producers Association, of which Stoesser is a member, wasn't the only group working for market access — the USA Rice Federation, a coalition of farmers and millers, was sponsoring exchanges as well. Rice mills remove the tough husk from rice grains to make it edible. The millers were particularly keen on the Chinese market, since all the rice going there would be milled in the U.S., in contrast to the largely unmilled "rough" rice that goes to Mexico and South America.
Two years ago, USA Rice's executive director, Betsy Ward, said she thought U.S. negotiators had a deal with China. But they could never get it signed by the Chinese, which Ward thinks may have had to do with the Obama administration having other trade priorities — such as the massive Trans Pacific Partnership, which pointedly didn't include China.
After Trump's agriculture secretary, Sonny Perdue, took office, Ward said her group met with him four times about getting the rice agreement done. Only a few weeks after Perdue visited China to celebrate a deal allowing exports of beef, the rice deal was finally signed.
It was a relief, after more than a decade of work. But the road forward may not be easy.
"It's a very complex agreement and gives them room to find problems when they decide they want to," Ward said.
Whatever the Chinese demand, the Stoesser family stands ready to satisfy it. And the local economy in Liberty County has a stake in their success as well: More acres of rice planted mean more seed and fertilizer ordered, more storage used, more people employed (the Stoesser farm employs about 20).
But even China may not be enough, if trade deals with other countries go south. Ray Stoesser is exasperated over the failure of successive White Houses to allow rice exports to Cuba, which was the largest buyer of Texas rice before trade was embargoed in the 1960s. The Trump administration recently rolled back the small steps that Obama had taken to liberalize trade.
"That's a no-brainer," Stoesser said. "If we can trade with China, why can't we trade with Cuba?"
And now, there's a new worry: The reopening of negotiations with Mexico and Canada over NAFTA. If Trump chose to put tariffs on Mexican manufactured goods, as he's threatened, Mexico could retaliate by limiting its imports of U.S. agricultural products — like rice.
"We've got to have that," Stoesser said, of NAFTA. "I don't see Trump taking that away. If he did ." he trails off, and looks out the window of the truck, as the fields roll by, one freshly tilled under.
"Get a whiff of this dirt," he said. "It just smells good."