The Economic Impact of Hybrid Rice in the Mid-South

This study quantified the economic impact of the introduction of RiceTec® hybrid rice in the mid-south (Arkansas, Louisiana and Mississippi). Third party data were collected from The University of Arkansas and Mississippi State University for yield, head rice yield, and milled rice yield for 23 locations throughout the Mississippi and Arkansas Delta from 2003-2013. Weather data (temperature, relative humidity and solar radiation) were compiled daily for each station so that yield estimates could account for genetic differences in responses to various climatic anomalies. As such, credible yield estimates could be obtained by year, location and variety (hybrid, conventional, Clearfield and Clearfield hybrids) to estimate premiums or discounts relative to a base (in this study the base is conventional and Clearfield lines). Using existing publically available data on percentage of acreage planted to hybrids and Clearfield hybrids a total state “hybrid and Clearfield hybrid premium” in bushels per acre could be estimated. These premiums were multiplied by 2014 USD rice prices to obtain a “total gain” associated to the RiceTec® breeding program. Given that yields were estimated for each “type” of rice an associated standard deviation of yield could also be obtained to illustrate yield variability across these types. From this a simulation was run to simulate 10,000 rice varieties associated with each “type” of rice. University Extension production budgets were then used to estimate cost of production (which included different seed herbicide costs) for each type of rice to obtain a profit function. As such, head-to-head comparisons could be made in terms of profitability between two sets of variety substitutes: (1) hybrid vs conventional and (2) Clearfield vs Clearfield hybrid. Lastly, IMPLAN was used to estimate the “value added” defined as “the sum of employee compensation, proprietary income, other property-type income and indirect business taxes” associated with the additional rice produced attributed to the RiceTec® hybrid program.