Low prices for rice pushed this family toward specialty markets. Now their product competes for shelf space in Taiwan.

The Martin family has traveled vertically on the rice production chain. In order to climb from the slender profit margins provided--or dictated--by a basic commodity grain, they grow specialty rice types, such as Arborio and Baldo plus the aromatic types, Basmati and Jasmine. In the mix, they've become grain traders on an international scale.

Sonny Martin, the family patriarch, was 2 years old when he moved to the farm where he now lives, near Bernie, Mo. And a lot has changed there since his arrival in the 1950s. His father, Marlin, was of that singular generation that braved the humid scrub and swamps of southeast Missouri to clear and drain land that has developed into some of the state's most productive farm ground. In these few counties that make up Missouri's Bootheel, farmers visiting from outside the cusp of Crowley's Ridge know they've arrived somewhere far from home. From cotton fields to furrow-flood irrigation, things look and are done differently. That's particularly the case with rice, ensconced within its levies and flooded with water to control weeds.

But for Bootheel farmers, rice has become common. Since 1974, when rice allotments were eliminated, Missouri acreage has grown dramatically. Bruce Beck, University of Missouri extension agronomist at Poplar Bluff, figures Missouri had about 5,000 acres of rice pre-1974. Over time, driven by good price and price support, Missouri rice acres increased, climbing to a record 206,000 a couple years ago. Now, owing to a market slump, Beck estimates Missouri acres have slid back to around 175,000. Beck said that Missouri probably has suitable land enough to reach 300,000 acres of rice production, but it's a moot point without better market support. In fact, according to baseline numbers from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri, U.S. rice yields per acre will climb steadily over the next 10 years, overcoming a slight decrease in planted acres to put more rice on the market. But even with an increase in projected domestic use (and increased imports to go with it) rice prices, according to FAPRI projections, won't top the loan deficiency payment by 2012.

That's the kind of outlook that sent the Martin family searching for ways to boost margins.

Markets change
"We've been growing rice since the 1970s," said Sonny. "And the boys have grown up with rice and they want to keep growing it. But the price got cheap, so we started looking for ways to increase our margins."

That search drew the Martins toward specialty markets. They started by growing Baldo (an Italian rice popular in Mediterranean countries) about 5 years ago. Initial shipments went by container to Turkey as rough rice, harvested rice still in its hull. Sonny said that the project was a success, at least looking at it in the short term. But the process made the family stop to think: If the Turks should back out of a contract, the Martins would be left holding a non-processed, specialty rice with no well-defined domestic market. The closest rice mill to their farm is the Riceland facility at New Madrid, a large-scale mill that isn't geared toward small runs for specialty rice. If faced with a contract glitch for specialty rice, the Martins knew they'd have a product with no real local outlet; something that would have to be unloaded on the pet food market--at a low-tier price, the end market for rice that fails to meet food-grade specifications.

The thought pushed the Martins, and especially the middle son, Mike, to consider building their own rice mill.

Mike said that looking around Missouri and seeing increasing rice acreage reinforced the idea that opportunities to widen profit margins probably existed outside of the fight for a few pounds additional yield each year.

"We wanted to add value," he said. "We'd always heard that. We'd heard farmers need to add value."

But the astute agricultural entrepreneur will tell you that adding value comes at a cost; that plying new markets is a significant investment in time--and capital. For the Martins to crack the specialty market with their own brand of rice, access to a mill was paramount. So they built one on the farm.

The mill has allowed Martin Rice Company to grow several specialty rice types and find which ones met the most demand.

Jasmine, an aromatic rice, has been a particular success and is the reason Martin Rice Company has a presence in Taiwan.

Good tasting, good timing
The story of how Martin rice made it to Taiwan is partly serendipity, partly your tax dollars in action and a good bit of hard work by the folks at Martin Rice Company.

The tax dollars figure in at the state level. The Missouri Department of Agriculture (MDA), through its international marketing program, has worked to identify and build markets with far-away trading partners. In the course of their efforts, they've isolated markets that have a demand for Missouri products or goods that can be suitably produced in Missouri. Taiwan is one of those markets. In fact the MDA's presence in Taiwan includes a staffed trade office. In the course of one of the Taiwanese staffer's visit to the United States, the Martins had the opportunity to offer a sample bag of their jasmine rice. Upon return to Taiwan, the staffer tried the rice and to his and the Martin's delight raved about its quality and flavor. Turns out the doors of international commerce open one at a time. Martin Rice Company's initial demand in the Taiwanese market was one person on payroll for the state of Missouri. But for an Asian market accustomed to jasmine rice from Thailand, which is sometimes diluted with lower value rice types, discovering a source of high-quality jasmine rice in the United States was enough to spark interest.

It was serendipity that accounted for the timing of the discovery. It came at a time when Taiwan was prepared to enter the World Trade Organization (WTO). Prior to 2002 the country traditionally had a fiercely protectionist approach toward rice imports, choosing to keep its domestic growers insulated from world markets. But Taiwan had to ease import restrictions to meet criteria to enter the WTO, opening the door for import opportunities.

At the time, Mike Martin traveled to Taiwan for a first-hand look at the market.

"I'm glad I went," he said. "It gave me a perspective on the market's potential. Because the WTO had just been implemented there, it made for a level playing field."

One reason Martin Rice Company could get on the shelf at retail outlets in Taiwan is that they were entering the premium rice market. Mike said that for medium-grain table rice, there would be no point in an effort to penetrate the market. That rice is locally grown and still protected within limits of WTO rules.

"[And] rice is so common over there that you've got to target a specialty market to get any attention," Mike said.

Jasmine rice, according to Mike, is considered second only to Japanese black rice in terms of the Taiwanese consumer's perceptions of what constitutes a premium rice. And while jasmine rice originated in nearby Thailand, according to Mike, imports from that country tend to be cut with more common rice types, leaving room to outperform them in terms of quality even if freight costs are higher.

For Mike, quality is a sticking point. From packaging rice in cloth bags, which invokes a sense of high-cost packaging (Mike says it is actually high-cost packaging), to the milling process, he insists that Martin Rice Company not skimp on quality.

Part of the reason is for product differentiation; delivering 100 percent jasmine instead of a diluted mix sets them apart from the competition. But the main reason is reputation.

"When your name is on the bag, you want quality," said Mike. "The USDA allows for #1 rice or #2 rice. But what I want in our bag is 'Martin-grade rice'."

Mike said that regardless of the market, domestic or international, quality must be unquestionable.

"People ask, 'What's "done" to your rice?'" said Mike. "I tell them that it's all grown by USDA standards with U.S. food safety rules. And that, well, I feed it to my kids."

Closer than ever
With today's container-based shipping, transporting goods over long distances, especially to countries that deliver great quantities of imports to the United States, is cheaper than ever.

"The world market is on our back step these days. Containers have revolutionized trade," said Mike. He added that he can load a 44,000-pound heavy 20-foot dry container and ship it to Taiwan cheaper than trucking it across the United States to California. With so much inflow of goods from Taiwan, shipping companies are looking for paid return on containers, making shipping rates to Taiwan favorable.

Still, cheap shipping and low on-farm margins for U.S.-grown commodities means supply-chain climbing may become more common, which worries Mike. For in every economic decision lies the cost of opportunity, and money spent to build processing facilities and develop a market could have been spent on more land or other investments. Moreover, moving up the supply chain via capital spent on single-use facilities, branding and marketing brings a new kind of risk to farming operations. Mike understands that the pioneer in any value-added enterprise, in effort to eke out additional margin on a product, faces a risk inherent in the very idea of "value-added." He fears that direct competitors will ride for free on the market built (and paid for) by the innovator.

Inasmuch as that risk is a truth of the bare-fisted nature of trade, Mark Hitt, administrator for the Missouri Department of Agriculture's international marketing program, can't directly assuage the notion. But he puts it in context. Hitt said that so far, growers of specialty crops like tofu soybeans or jasmine rice don't face much direct competition from their neighbors, or even farmers in Arkansas, Illinois and Iowa. It's growers from places like Australia and Thailand that seek the same markets. And Hitt identifies a unique characteristic that not every grower of rice or soybeans will possess.

"These producers are innovators," Hitt said. "They have more than a mindset. They have a work ethic and a passion."

And once they have customers, Hitt said the producers have a grave commitment to be consistent in delivering what's promised--in quantity and quality--regardless of what weather pattern or disease pops up in a growing year.

It is innovative marketing and that niche-market passion that delivers Martin rice over the world, from the domestic food service market, to markets like Taiwan and door to door via the Internet.

They're committed to delivering quality in every bag of rice. When you sell a product that's ready for the end consumer the equation is simple. As Mike points out: "We know that if you have something that's better in quality than everyone else, you get a premium. If you have something that's the same as everyone else, you are going to spend a lot of money to sell it. For us, it's about survival. We can live with a thin margin, so long as there is a margin."

Learn more
For more information about the Martin Rice Company, from the farm's history to rice recipes and how to order rice straight from the farm, visit www.martinrice.com.

To find out more about the Missouri rice industry, go to the Missouri Rice Page at www.agebb.missouri.edu/rice/.