Rice Farmers in U.S. Benefit From Surging Prices

WILLIAMS, Calif. — Dipping its left wing, a canary-yellow biplane makes a sharp turn and dives over a flooded field, showering rice on the shallow water fifteen feet below.

It's aerial seeding season for rice farmers in California, which produces about 20% of the crop grown in America. With the price of rice surging internationally, much of the medium-grain rice being planted between the Sutter Butte mountains and California's Coastal Range has already being sold, even though harvest still is months away.

"It's nuts," the head of the California Rice Exchange, a platform where processors bid on and buy rice, Pat Daddow, said. "We've sold an ungodly amount of rice, the price has nearly doubled — and this is the crop they're just beginning to plant."

The greater demand and new foreign customers driving the global price hike have been a boon to American farmers, who are welcoming the reprieve after years of shouldering high fuel and fertilizer costs and weak prices for their grain.

Commodity traders and economists attribute the global price increases to everything from weather — a drought in Australia, floods in Asia — to the declining value of the dollar, the jump in fuel costs and increased buying power in countries like China and India, an economist and rice expert with the U.S. Department of Agriculture, Nathan Childs, said.

The cyclone that ravaged Burma more than a week ago, killing tens of thousands and displacing many more, also devastated the impoverished country's rice-growing heartland. The country had produced enough to feed itself, and was expected to export up to 600,000 tons of rice to neighbors including Sri Lanka and Bangladesh this year.

But one of the main factors pushing up prices this month is a peculiarity of the rice market. Although rice is a staple around the world, less than 8% of the global crop is traded internationally. Most of it is eaten less than 60 miles from where it's grown.

That means that when some of the largest producers curtail exports to protect prices at home, the international marketplace reels and prices for imported varieties soar, Mr. Childs said.

The most expensive rice varieties can't be grown in America. But with imported types such as such as Thai jasmine and Indian basmati selling for $1,000 and $2,000 a ton, respectively, farmers here are still reaping profits. California's cooler weather produces mostly medium- and short-grain rice varieties, the moist, sticky kinds favored for sushi or risotto. With some of its main competitors out of the market — Australia due to a long drought, Egypt because of a decision to cut back on exports — the price of medium-grain rice rose from $551 a ton in April 2007 to $750 a ton a year later.

The long-grain varieties that grow better in the warmer climates of Arkansas, Mississippi, and Louisiana went from $397 a ton in April 2007 to $794 a year later as competitors such as India and Brazil also pulled back from the international market.

So even though the global crop is larger than ever, and American production is strong, third-generation California rice farmer Zachary Dennis will get a good deal for the grain he's planting right now.

"This is probably the first year in a while that we'll do more than break even," Mr. Dennis said as rice from the biplane seeding his fields pelts the cab of his truck.