Riceland Foods: Biggest Name in the State’s Biggest Crop

King Cotton may have an alliterative ring, but it is rice that rules in Arkansas.

Arkansas is the No. 1 rice-producing state in the nation. Nearly 50 percent of all rice consumed in the United States comes from the 1.5 million Arkansas acres of rice planted each year.

And in the rice industry, there is no bigger name than Riceland Foods Inc. of Stuttgart, the country’s largest rice cooperative and the world’s largest rice miller.

Formed in 1921, Riceland provides marketing services for rice, soybeans and wheat grown by its 9,000 farmer-members in Arkansas, Louisiana, Mississippi, Missouri and Texas. Each year, its 1,900 employees receive, store, transport, process and market more than 125 million bushels of grain. Riceland’s sales topped $870 million in fiscal 2003.

If it didn’t have to operate in the shadow of Riceland, Producers Rice Mill Inc., also of Stuttgart, would probably be a household name. With sales of $250 million in fiscal 2003, Producers Rice is among the 25 largest private companies in Arkansas. Both companies should do better for fiscal 2004 since the past growing season yielded record crops that brought better prices than the industry has seen in years.

Arkansas also is home to the largest meat — or, as it’s marketed, protein — company in the world: Tyson Foods Inc., a Fortune 500 company that has annual revenue of about $27 billion. Whether you eat chicken, beef or pork, there’s about a 25 percent chance it comes from Tyson.

Northwest Arkansas’ hill country farmers, finding row crop farming all but impossible, turned to the poultry industry and found prosperity. Poultry took off after World War II with farmers growing for integrated companies like Tyson. The integrator provides chicks and feed and then processes and markets the meat.

Tyson dates back some 70 years to when John Tyson drove a truckload of Arkansas chickens to Chicago for a $235 profit. Today, his grandson, Johnny, is chairman and CEO, but it was the middle-generation Tyson, Don, who built it into the giant it is today.

The company always had steady growth, but it really took off with the 1989 acquisition of Holly Farms, the 1998 purchase of Hudson Foods and the buyout of IBP Inc. in 2001.

Poultry is now the largest contributor to Arkansas agriculture. By 1980, egg production in the state was larger than the value of the cotton crop.

“Where would Arkansas be today without the poultry industry?” asks Milo J. Shult, vice president for agriculture at the University of Arkansas.

The pastures, fertilized with poultry litter, have fostered the growth of dairy and beef cattle herds in the western hills.

The Riceland Story

Arkansas farmers weren’t the first to plant rice. But it turned out that the hard-pan clay soil that lay four to six inches under the silt-loam soil of the Grand Prairie was ideally suited for the water-intensive crop.

Before rice cultivation, the Grand Prairie had been used mostly for grazing cattle and harvesting hay. Farmers knew the land wouldn’t grow cotton and considered it worthless for row farming.

Eventually, Midwestern farmers who migrated south brought a different crop and culture with them. Reservoirs constructed for irrigation provided another attraction, and the Grand Prairie became a nationally known venue for waterfowl hunting.

Although rice had been grown in the state in the late 1800s, William H. Fuller, an Ohioan who settled at Carlisle in Lonoke County, is credited with demonstrating the profit potential of rice in 1904. He harvested 5,225 bushels from 70 acres.

Rice fever spread quickly. By 1920, Arkansas harvested a crop of 8.6 million bushels of rice from 175,000 acres.

When prices dropped after World War I, farmers realized that they had no way to stockpile their rice in hopes of higher prices in the future. Nor did they have a means of extracting value from the rice for their benefit.

The solution: a cooperative.

On Sept. 23, 1921, the Arkansas Rice Growers Cooperative Association, the forerunner to Riceland Foods, was formed.

After World War II, technological advances on the farm, as well as at the rice mill, provided a larger volume of rice for marketing. To move the rice, the cooperative began packaging and advertising its products under the Riceland Rice label in 1946. Although the cooperative struggled in its early years, it grew and eventually became Riceland Foods Inc.

Today’s farmers and large agribusinesses pay close attention to issues of fair trade and access to global markets.

In its fiscal 2003, Riceland took in 145.5 million bushels of rice, soybeans and wheat, including 112.5 million bushels of rice. These products are exported to more than 60 foreign destinations, including Canada, Mexico, Central and South America, the Caribbean, Europe, the Middle East, Africa and Scandinavia.

Richard E. Bell, chief executive officer and president for 27 years, sees steady growth ahead for the cooperative.

Long a leading exporter of rice, Riceland has worked in recent years to capture the domestic market. Before Bell became president in 1977, the cooperative exported 65 percent of its rice to foreign markets.

Riceland got a big domestic boost from the North American Free Trade Agreement and other trade pacts, Bell said. Because of NAFTA, Mexico has become the leading export market for U.S. rice. And with California rice growers focusing on the Japanese market that opened up under a trade agreement, Riceland was able to expand its domestic market, he said.

Now the company’s sales are 75 percent domestic. U.S. consumption has quadrupled in the past decade and now averages more than 27 pounds of rice per person annually (although the popularity of low-carbohydrate diets may reverse the trend).

Important domestic customers include Anheuser-Busch, the world’s largest brewery, and makers of processed rice products like Kellogg’s, Minute Rice, General Mills and Gerber. Riceland also markets a broad line of rice, oil and shortening products to the food-service industry and restaurants, fast-food chains and cafeterias.

Powerful Force

Throughout its history, agriculture has been the foundation of Arkansas’ economy — and its culture. Simply put, Arkansas enjoys the perfect convergence of rich soil, a long growing season and good rainfall to produce just about any kind of crop imaginable.

There’s historical evidence that Indians farmed the area beginning about 1000 B.C., long before Europeans set foot on what is now Arkansas. The Quapaw raised chickens and turkeys here in the 1600s, along with corn, beans and fruits.

White settlers came in hoping to change the land, but in many ways, the land changed them. The culture of the various regions of the geographically diverse state has been dictated by the lay of the land, from the ancient hills of the northwest to the flat farmland of the Delta.

The land even defined us as a state — not totally Southern, not totally Midwestern or Southwestern, but distinctly Arkansas.

About one-half of the state’s land is devoted to agriculture. Arkansas’ 14.6 million acres of farmland are divided among 48,000 farms, which average about 304 acres. Crop farms average more than 500 acres, while livestock operations average more than 200 acres in size.

Despite the steady growth of metropolitan areas, ceaseless efforts to attract industry and automation that dramatically reduced the need for farm labor, Arkansas remains a largely rural state and agriculture is its largest industry. It still plays a significant role in all 75 counties, said Shult.

Arkansas farms generate more than $6 billion in revenue each year. Add to this the value of food processing and ag-related service industries, and the agricultural industry accounts for a quarter of the state’s economy — more than $13.5 billion a year of the gross state product. The state, 27th in area and 33rd in population, is the nation’s 12th-largest agricultural producer, as measured by farm income, according the Arkansas Farm Bureau.

Agriculture and forestry still employ one out of every five Arkansans despite recent technological advances and the rise of the industry and services sectors.

As a result, Shult said, lawmakers across the state still have close ties with the agriculture sector, which helps the industry maintain its powerful base for obtaining favorable legislation. Term limits have changed the dynamics, but, Shult said, “I don’t think the appreciation for agriculture has been lost in the Legislature.”

Changing Times

Like all living things, agriculture has had to make changes to survive. Once cotton was king and an entire way of life was wrapped around the large plantations of the Delta area.

When Arkansas became a state in 1836, the per-capita income was $68, which was $3 above the national average. Wealthy cotton producers more than made up for the state’s widespread poverty.

The R.E. Lee Wilson family owned 65,000 acres in Mississippi County, and many of the towns were Wilson-owned. The family enterprise, one of the largest cotton growing enterprises in the world, employed more than 11,000 at its height in the 1930s.

Towns sprang up around the Delta, with doctors and teachers and merchants to support the labor-intensive agri way of life. But there were good times and hard times in agriculture over the years. Cotton booms and busts were commonplace. Farmers suffered from floods and drought, and the Great Depression saw farm foreclosures and bank failures.

But unlike flood and drought, automation came and never left. After the Depression, tractors began replacing mules and harvesters began replacing pickers. Pine Bluff was the site of the first commercially viable mechanical cotton picker, an invention of John D. Rust, which was improved on and manufactured by Ben Pearson’s operations.

Mechanization allowed farmers to plant more, and improvements in fertilizers and herbicides dramatically increased the yields per acre. In 1940, 75 percent of working Arkansans earned their living directly from farming. By 1970, that figure had fallen to 7 percent.

Corporate farming had replaced subsistence farming in a single generation. According to the latest state agriculture census figures, 60 percent of all farm product sales are controlled by the largest 7 percent of farms.

Here are some other statistics the Arkansas Public Policy Panel, a grass-roots activist group headed by Bill Kopsky, gleaned from the latest farm census taken in 1997.

• There are 12 percent fewer poultry farmers than a decade before, but the average size of a poultry operation has increased by 58 percent.

• There are 25 percent fewer rice farms, but the average size has increased 78 percent.

• There are 30 percent fewer cotton farmers, but the size of cotton farms has increased 160 percent.

• There are less than half as many hog farms, but the average size of hog farms has increased 385 percent.

• Corporate-owned farms have grown 31 percent, while independently owned family farms have dropped 9 percent.

All of those are trends that will continue.

Although Americans tend to get teary-eyed over the demise of the “family farm,” many of the large farming operations are actually family-owned corporations. Family farms, then, have actually gotten bigger — but the number of families in the farming business has shrunk dramatically.

How has all this change affected the culture of the state? Obviously, the prime farm areas of the state are losing population as people leave to find work. The Arkansas Public Policy Panel claims farm consolidation is concentrating rural wealth into fewer and fewer hands. And it objects to government farm subsidy programs that it says encourage farm consolidation by discriminating against small and independent operators.

The growth of large farms and poultry processing plants also brought pollution from chemicals and fertilizers — a problem now being addressed after being prompted by lawsuits.

Forest for the Trees

Also falling under the agriculture umbrella are the state’s numerous companies that grow trees and make lumber and paper. They are among the largest and best-known operations in the state — Georgia-Pacific, International Paper, Potlatch, Weyerhaeuser and the Arkansas-based companies of Deltic Timber, Anthony Timberlands and Anthony Forest Products.

When white settlers arrived, 96 percent of Arkansas was covered with forests. By the 1880s, the arrival of a rail network provided timber companies access to the forests and to the lumber markets.

From 1879 to 1909, Arkansas lumber production increased to the point that the timber industry employed 73 percent of all factory wage earners in Arkansas. By the end of the 1920s, the timber boom was over and many of the big mills had closed up and moved west, leaving behind decimated timberland.

Those that stayed began to realize that to survive they needed a continuing supply of timber — sustainable forestry. The Crossett Co. was the pioneer in modern tree farming. Today much of that company’s holdings belong to Georgia-Pacific, the largest timber company in the state with some 3,500 employees. Its thousands of acres of trees were sold to Plum Creek Timber Co.

Today, 56 percent of the state, 18.8 million acres, remains in forest. Hardwoods and hardwood-pine mixed forests make up 73 percent of the total forest area.

Agri Future

The state’s agriculture industry, like the rest of the economy, has diversified as well as consolidated, which helps reduce market risks. It has also seen almost unimaginable technological advances and more are on the way.

Research done by agriculture scientists at the University of Arkansas and even at some of the large agribusinesses and farm-supply companies have introduced improved crop varieties that require less dependence on chemicals for weeds and pest control. Use of genetically modified crops, while still meeting philosophical resistance in some parts of the world, is a growing trend among farmers.

Farmers now use global positioning system technology to help them determine where to plant and how best to use fertilizer and reduce runoff. As Shult put it, “We don’t have the human labor we used to, but the tractor driver has to be computer literate.”

With its combination of soil, climate and rainfall, Arkansas has the potential of diversifying even further as conditions change. If prices of row crops continue to be poor, Shult said, farmers could take advantage of alternative crops and turn to raising turf, bedding plants, nursery trees, organic crops or vegetables.

Another area for the future, Shult said, could be raising crops for energy sources, such as a soy-diesel plant.

One of the foremost issues facing the agri industry, particularly rice farmers and the large paper mills, is the draining of the underground water supply. The aquifers are declining throughout the Delta region.

Although talk about depleting the aquifer dates back 50 years or more, only now are agricultural interests getting serious about taking conservation measures.

According to a recent report released by the Arkansas Soil & Water Conservation Commission, the state’s deeper water source, the Sparta aquifer, may be permanently harmed in 30 years if current consumption rates hold or increase. Scientists say the alluvial aquifer, the primary source for water across the Delta and Grand Prairie region is in danger of going dry by 2015. Because of the decline in the water level of alluvial aquifers, farmers — and cities — must dig deeper wells and tap into the Sparta. 

Arkansas’ Commodities 

Rank Among U.S. States

• Rice — 1
• Broilers — 2
• Catfish — 2
• Turkeys — 3
• Cotton — 4
• Grain Sorghum — 7
• Eggs — 8
• Soybeans — 9
• Grapes — 12
• Timber — 12
• Peaches — 13
• Pecans — 13
• Hogs — 16
• Beef Cattle — 16

Exports

2002 value in millions

• Rice — $369
• Poultry and related products — $253
• Soybeans and related products — $231
• Cotton — $181
• Wheat and related products — $90
• All exports — $1,900

Source: Arkansas Farm Bureau