California Rice Growers Anticipate Upturn in Production, Demand

THERE are smiles on the faces of rice farmers here at the Richvale Cafe, the community co-op diner in the middle of California's agricultural Sacramento Valley.

Japanese Prime Minister Morihiro Hosokawa's expected announcement today that his country will open its rice market to foreign imports beginning in April 1995, is only the latest in a string of events that has turned around this much-maligned industry in recent years.

Monsoons and earthquakes in Japan, Korea, and Vietnam, as well as off years for rice growing in European countries, have created a scarcity of rice that has sent world market prices soaring 60 percent since early September. The per capita consumption of rice for Americans has doubled in 10 years and soared even higher in California, where Asian and Hispanic populations are growing.

``There is real cause for optimism,'' says Bryce Lundberg, a lifelong rice farmer here. ``And it's about time.... We've been in the dumps for a decade.''

There is cause for optimism among American taxpayers as well: Higher market prices may mean the end of costly price supports for the heavily-subsidized industry. The federal government has been making up the difference between the $10.71 world market price and the $6.50 that American farmers have fetched on average in recent years.

Japan's announcement comes after lengthy and intense negotiations with the United States in Geneva, where the Uruguay Round of the General Agreement on Tariffs and Trade has taken place. GATT Director General Peter Sutherland on Saturday urged Foreign Minister Tsutomu Hata to accept the proposal, and government sources said Mr. Hosokawa would likely make the announcement today.

JAPAN produces and uses approximately 10 million metric tons of rice annually, but for 20 years has refused to import rice from any country. Initially, new imports will make up about 4 percent of the Japanese market, or about 400,000 metric tons, rising to 800,000 metric tons by the year 2000.

``We believe that the Japanese will source about 50 percent of this from California,'' says William Huffman, vice president of communications for the Farmer's Rice Cooperative (FRC). The FRC markets 40 percent of California's rice production, which this year reached $307 million. ``This is what we have been looking for to finally bring us economic prosperity,'' Mr. Huffman says.

The Japan Food Agency recently announced emergency guidelines to compensate for weather-related shortages. To supplement dwindling supplies of medium-grain table rice, the Japanese are expected to buy up to 500,000 tons from California, about one-third of the state's annual output, according to FRC president Ralph Newman Jr.

The demand is so great that local rice millers and distributors here report a steady barrage of phone calls with bids from Japanese buyers. The bids have continued to leapfrog each other for months. ``We're not used to things going this well,'' says Allen Garcia, a rice grower for 20 years. ``We're more used to being the bad guy.''

Partly because of California's prolonged six- to seven-year drought, the state's 2,700 rice growers have been taking it on the chin and pocketbook since the mid-1980s. About 600,000 acres between Chico and Sacramento contain the hardpan soils that hold water for months with little seepage - the conditions necessary to grow rice. But the water needs of other farmers, industrial users, and city dwellers reduced the number of acres of rice to about 200,000 a few years ago.

``Visitors would come in here during drought and see these flooded rice fields and remark angrily, `That doesn't look like a very good use of water,' '' says Robert Herkert, field manager for the Rice Industry Association.

Rice growers have cut water use dramatically (30 percent over 10 years), increased crop yields, slashed pesticide use, and cooperated with environmentalists.

``There is no other commodity group that has done so much in cleaning up their act,'' says Marc Reisner, a leading authority on water issues in the West.

This year, about 440,000 acres are back in rice production, and world and US demand may draw in other acreage. That has some people worried.

``If we get back up to our historic highs of a decade ago, I will be concerned on what effects water diversions to rice will have on the state's fish populations,'' Mr. Reisner says.

But for now, the industry is on the way to more rice, more profits, and the potential for far less government restraint.