by Luke Jones
Posted 5/26/2014 12:00 am
Updated 6 months ago
Arkansas is known as the largest rice-producing state in the country, and typically the name “Riceland” goes along with that distinction. But Riceland — No. 5 among the state’s largest private companies with revenue of $1.3 billion last fiscal year — isn’t the only large, farmer-owned rice miller in the state.
Producers Rice Mill, Riceland’s neighbor in Stuttgart, is also one of the largest privately owned companies in Arkansas: No. 18 with revenue of $568.5 million in the fiscal year that ended July 31, 2013.
Producers was formed in 1943 and is owned by about 2,000 farmers, compared with Riceland’s 5,500. The company is an important employer for the region and has around 500 workers. Riceland, by comparison, has about 1,500.
Since Producers began in Stuttgart, it’s expanded to 11 locations throughout eastern Arkansas and western Mississippi. It manufactures milled rice, parboiled rice, brown rice, instant rice and rice flour.
In its first year, Producers milled 143,500 bushels and had assets of $125,000. By 2004, it was up to 14 million bushels per year. Through the decades it expanded in Stuttgart and added locations in Wynne, DeWitt, Eudora, Fair Oaks, Marianna, Pine Bluff, Wilmot, Wilson and Yellow Bend, as well as a large plant in Greenville, Mississippi.
Now the company handles between 60 million and 65 million bushels of rice per year, said Keith Glover, who has served as chief executive officer since 1988.
“That’s a little bit over 20 percent of the state’s rice crop,” he said. “Riceland is the biggest rice company in the U.S., and we’d be second.”
Producers and Riceland are very similar; Glover said the latter is larger simply by virtue of having started earlier.
“We do compete. We have customers we sell rice to, and many of those customers are also buying from [Riceland] as well,” Glover said. “But a lot of customers really want two suppliers. They don’t want to have all their eggs in one basket, so to speak, and many times for a particular customer we might be a primary supplier, and they’re the backup, and vice versa. That’s just kind of the way it works out.”
Producers provides two services to farmers: milling and marketing.
“Farmers grow rice, and they deliver it,” Glover said. “We provide a service to them in the fall, handling their harvest and storing rice. Our other function is the marketing of the rice for them.”
The company sells to retail establishments as well as food service and industrial sectors, where broken rice is used in the pet food industry. Glover said these three segments are fairly equal in the company’s business model.
However, Glover said, the company isn’t big on promoting its own brand. Another company’s rice in a supermarket may actually be Producers rice packaged under a different name. The company packs for around 100 brands.
“In the retail side, there’s a lot of rice we sell to repackers, where we sell them the bulk rice and they take it and package it under their brand,” he said.
Glover said about 70 percent of Producers rice is sold in the U.S. Export markets include Haiti, Saudi Arabia and Africa, and in the past Producers has sold rice in places like Iraq and the European Union.
“Our main focus is trying to service our farmer-members and trying to meet their needs during the harvest,” Glover said. “We’re also taking care of our milled rice customers. There’s a lot coming here in 2014. The USDA indicated that rice makers could be up as much as 41 percent from last year with added rice. Obviously, that presents additional challenges for us in trying to market it. Since the domestic market has stayed steady, odds are we as an industry will have to look to export markets.”
Export markets can be tougher, Glover said, because that’s where the company has stiffer competition from Riceland.
There’s also some volatility in the business that comes with the weather. “2010’s summer was the hottest since 1954,” Glover said. “We had the poorest quality rice crops since then.”
Last summer, Glover said, was comparatively cooler than the previous ones, and “because of that, our quality improved dramatically. Also, our farmers set a record. So the weather does have an impact on our crop both on field yields and also on quality. We prefer summers that, temperature-wise, are normal to slightly cooler than normal.”
That cooler weather was evident in the company’s revenue in 2013: $568 million, up 18.8 percent from the previous year.
The good news for Producers is that, being in the food industry, it was mostly immune to the effects of the Great Recession.
“Especially when you’re talking about a product that has such a good value for consumers, like rice. If people have to tighten their pocketbooks, rice gives them a good value,” Glover said, pointing out that a product that can cost about 50 cents per pound looks pretty attractive if a family is on a tight budget.
Sales were hurt in the food service sector, he said, but “we did see a little pickup in the retail with the supermarket side.”