Rice Milling

One of the smaller segments of U.S. grain milling, rice milling was worth roughly $3.55 billion in 2008, according to the U.S. Census Bureau. Because rice growing is concentrated heavily in the southern and western United States, most of the U.S. rice mills operate in these regions. Arkansas, California, Louisiana, Mississippi, Missouri, and Texas produce 99 percent of all rice grown in the United States. According to the U.S. Department of Agriculture's National Agricultural Statistical Service, 2008-2009 domestic rice production totaled 220 million hundredweight (cwt), an eight percent increase from the previous year. Area harvested was up by four percent to 3.1 million acres, and average yield increased by 239 pounds in 2009 to an estimated 7,085 pounds per acre. Overall, the U.S. rice industry faced increasing pressure from high quality imports from Thailand and India.

Per capita rice consumption doubled between the late 1970s and the late 2000s, reaching an average of 24 pounds per person. Increases reflect the product's nutritional merits, low cost, and consumer appeal as well as a growing market for ethnic foods in the United States. Marketed as a healthy food, rice contains only trace amounts of fat and naturally provides protein, thiamin, riboflavin, niacin, phosphorous, iron, and potassium. It is also cholesterol free, gluten free, and low in sodium.

Rice grows to maturity in 100 to 120 days. When rice is harvested, it is dried for stable storage and sold to a rice mill. At this stage, the rice is referred to as "paddy" or "rough" rice. Using high-tech machinery, millers shell the rice by removing the inedible hull surrounding each individual grain. Beneath the hull, rice grains still possess seven natural bran layers. In this state, the rice is sold as brown rice. If brown rice is "polished" to remove the bran, it is sold as white rice. Discarded bran may be used to extract oils or as a food ingredient.

Because polishing rice removes some of the grain's natural ingredients, some millers employ a procedure called "parboiling" to ameliorate nutrient losses. Parboiled rice is soaked in pressurized water, steamed, and dried before milling. In addition to helping grains preserve their nutrients, parboiling helps produce grains that fluff better and are less sticky when cooked. Parboiled grains, however, take longer to cook.

Other rice mill products include brewers rice, enriched rice, and precooked rice. Brewers rice is made of small, broken rice fragments leftover after shelling and polishing and is primarily used by pet food manufacturers and brewers. Enriched rice contains artificially replaced nutrients. Precooked rice is cooked and dehydrated after it is milled.

In 2009, direct food use rice accounted for approximately 58 percent of all rice sold in the United States. Rice used in processed food items accounted for another 21 percent of domestic use. Beer making and pet food manufacturing accounted for 11 percent and 10 percent of domestic rice use, respectively. A very small amount (less than one percent) of domestic rice is used to make sake.

Current Conditions

According to industry statistics, an estimated 141 rice mills cleaned, polished, or processed $2 billion in rice in 2009. The workforce numbered 5,600 workers. Of these establishments, 101 were rice milling operations that accounted for nearly 72 percent of market share. States with the highest concentration, in descending order, were California, Texas, Arkansas, Louisiana, and Missouri.

The milling rate remained relatively steady, between 68 percent and 69 percent, during the 2000s, with the average milling rate in 2009 at 68.36 percent. Milling rate describes how much of the rice comes through the milling process without being broken. The milling rate is important because broken milled rice is worth only 30 to 50 percent of unbroken milled rice.

Rice prices grew rapidly during the latter part of the 2000s. Average farm prices of long-grain rice skyrocketed from $4.49 per cwt during the 2002-2003 season to $16.80 per cwt during the 2008-2009 season. The global recession and changes in export policy caused prices to soften somewhat during the 2009-2010 season to between $14.05 and $14.25 per cwt. Rice production continued to expand on tight demand into 2010. In August 2010, Southwest Delta Farm Press reported that estimated rice production for 2009-2010 was expected to hit a record 245.9 million cwt. Average yield was expected to be an estimated 7,039 pounds per acre, down slightly from 7,085 pounds per acre in 2009-2010.

Industry Leaders

The industry is dominated by Riceland Foods, Inc., of Stuttgart, Arkansas, which is the largest rice miller and marketer worldwide. Riceland is a farmer-owned cooperative, made up of over 9,000 farmers from Arkansas, Louisiana, Mississippi, Missouri, and Texas. In 2009, Riceland reported sales of nearly $1.23 billion.

Riviana Foods, which holds a 22 percent market share in the United States, is headquartered in Houston, Texas. Riviana became a wholly owned subsidiary of Ebro Puleva, S.A., a leading Spanish food conglomerate, in 2004. American Rice, Inc., another leader in this industry, emerged from bankruptcy in late 1999. In an effort to solve its financial woes, American Rice merged with Spain-based SOS Cuetara S.A. in 2004. Most other milling companies are regionally based.

America and the World

Because U.S. rice producers export approximately 40 percent of milled rice, the global economy, as well as political and social affairs of the world, directly affect rice producers' profits. In addition, U.S. trade policy also impacts rice producers. For example, in the mid-2000s, Cuba represented a potentially significant export market for U.S. rice. In 2004-2005, Cuba imported more than 700,000 metric tons of rice. Of that total, U.S. producers supplied 177,000 metric tons. However, by 2008-2009, Cuba's poor economic situation caused rice imports to decline to 425,000 metric tons, of which the United States supplied only 12,000 metric tons. Not only did Cuba's imports decrease, but U.S. policy changed so that pre-payment is now required for agricultural commodities purchased by Cuba. Thus, U.S. rice producers are affected both by global economic conditions as well as U.S. trade policy.

The top U.S. rice export markets in the 2008-2009 season were Mexico (7.12 million metric tons), Japan (3.36 million metric tons), Haiti (2.76 million metric tons), Venezuela (2.27 million metric tons), and Canada (2.18 million metric tons).