DIRECTOR TERMS EXPIRE

Four directors have terms that will expire at the annual membership meeting on November 9, 2010. They are: John E. Stephens, Position No. 1; Charles S. Rodgers, Position No. 2; Clarence Bryan “Pete” Moery, III, Position No. 3; and Gregory “Peck” Kerksieck, Position No. 4.

As required in our bylaws, the nominating committee has met and renominated all directors. If any active member is interested in seeking a director position, our bylaws state:

“Any active member may then nominate an active member as a candidate for any director position to be filled by mailing a nomination as directed by the Board of Directors, pursuant to the provisions of this Article stating the name of the candidate and the position for which nominated. Such nomination must be seconded by signatures of at least fifteen (15) active members of the Association and must be received at least 60 days prior to the date of the Annual Meeting.”

If you would like to nominate any active member for a director position, please contact the Stuttgart main office or member records for a nomination form. The accounting firm of Erwin & McCorkindale, Stuttgart, must receive nominations for any position by September 10, 2010.

Please remember when you make nominations that a portion of Article 6(a) of our bylaws states:

“Each of said Directors shall be a member or a representative of a member in good standing of the Association and a patron thereof currently marketing 65% or more of the rice owned by the member through the Association. No person engaged in business in competition with the Association shall be eligible to serve as a director, and if a majority of the Board of Directors finds at any time following a hearing that any director is so engaged or affiliated, such person shall thereupon cease to be a director.”

The results of the voting will be announced at the annual membership meeting in November.

HOSKYN COMMENDED BY ARKANSAS RICE RESEARCH & PROMOTION BOARD

Jerry Hoskyn was honored recently for his 22 years of service on the Arkansas Rice Research & Promotion Board. Wayne Wiggins, current chairman of the board, presented Hoskyn with a plaque recognizing his years of work that included sitting as chairman from 1993-1995 and again from 2007-2009. Hoskyn is the current Vice Chairman and Vice President of the Board of Directors of Producers Rice Mill, Inc..

Jay Coker was appointed by Governor Beebe to succeed Hoskyn as the new Producers Rice Mill, Inc. representative on the Arkansas Rice Research & Promotion Board.

DOCUMENTATION REQUIRED FOR 2010 DELIVERIES

Just a reminder – As per the 2010 Sign-Up Policy, we are requiring all sales invoices/summary sheets from seed dealers, lab reports and FS 578 reports be returned to our Stuttgart member records department. If you fail to return all these documents, you WILL NOT be able to deliver your rice until all the paperwork can be processed.

FIRST ADVANCE SET

Your board of directors has authorized a first advance on the 2010 rice crop of 105% of loan for long grain in the regular (eligible)
seasonal pool and the world price pool. The advance for medium grain in the regular (eligible) seasonal pool and the world price pool
will be 140% of loan. Eligible long grain in the pricing pool will be advanced 100% of loan.

As an example, below is the first advance on the following milling yields:

Drying charges will remain the same as last year. If you have questions, please contact your local elevator manager.

HOLD AGREEMENTS

All members who regularly want a portion of their first advance money held until after January 1, 2011, have been mailed a “Hold
Agreement.”

If you have not signed and returned your form, please do so immediately. It must be signed and returned to our office before you deliver your rice.

If you have questions or would like to have all or a portion of your money held for late payment, please contact the member records department today, 870-673-4444, Ext. 449

IMPORTANT: All members participating in the pricing pool must return their follow-up sheet before they deliver any rice.

WHITE HOUSE PROMISES AG DISASTER ASSISTANCE

Senator Blanche Lincoln has been assured by the Obama administration that $1.5 billion in disaster assistance would be provided administratively in order to help offset some of the losses suffered by many rice producers in 2009–when heavy rains and flooding at and near harvest reduced crop yields and quality and increased harvest costs. The provisions include a supplemental direct payment of 90% for producers located in a 2009 disasterdeclared county and that suffered a crop loss of at least 5%.

NATIONAL RICE MONTH CELEBRATES 20th ANNIVERSARY!

September, 2010, marks the 20th anniversary of the official proclamation of National Rice Month (NRM). Over the past 20 years, with
strong support from rice producers and millers, NRM has grown into a well-known national promotion educating consumers about the U.S. rice industry and boosting U.S. rice sales nationwide.

Show your pride in the U.S. rice industry by ordering T-shirts, aprons, balloons, hats, wooden spoons, reusable grocery bags and much more. For the first time, National Rice Month premium items are available for purchase on the USA Rice Federation Web site at riceinfo@usarice.com. An image of each product is featured on the site.

MANAGER'S MESSAGE

At the beginning of each crop year, we like to identify developments in the U.S. and around the world that have the potential to significantly impact rice prices during the upcoming marketing year. As in the past, our analysis has been divided between potentially bullish (positive) and bearish (negative) developments for the market. Since the vast majority of the rice we receive at Producers is long grain, our analysis is primarily focused on factors with the potential of affecting the long grain fundamentals.

POTENTIAL BULLISH DEVELOPMENTS:

(1) Wheat: Since late June, world wheat futures have shot up like a 4th of July rocket. The world wheat markets are reacting to
severe drought conditions impacting wheat production in the Black Sea countries of Russia, Kazakhstan and Ukraine, along with a
significantly reduced wheat crop in Canada. During the 2009/10 crop year, the countries of Canada, Kazakhstan, Russia and Ukraine
represented 41% of the world’s wheat exports. Responding to the worst drought conditions in 100 years, on August 5th Prime Minister
Vladimir Putin placed a temporary ban on Russian wheat exports. Since June 9th, the September wheat futures contract on the
Chicago Board of Trade has exploded from $4.421⁄2 per bushel to $8.41 per bushel on August 6th. The current wheat developments
bring back recent memories of the 2007/08 crop year when a runaway wheat market ignited historically high commodity prices for all
grains including rice. When wheat prices become extremely high relative to rice prices, many Asian and African countries will
substitute rice consumption for wheat. If world wheat prices remain extraordinarily high, world rice consumption will benefit and
increase during the 2010/11 marketing year.
(2) Flooding in Major Rice Countries: China – Beginning this spring, southern China and the Yangtze River valley have received
twice their normal rainfall. In addition to the excess rainfall, this region of China has already been hit by two typhoons as the annual
tropical storm season has just begun. The flooding along the Yangtze River is described as the worst since the great 1998 Yangtze
River flood. The Chinese government is currently projecting rice production will be down 10–15% in this very important rice growing
region of China. The country is reported to be sitting on a large surplus of rice stocks. However, it will be interesting to monitor
whether China buys rice from its neighboring countries of Thailand and Vietnam during the upcoming 2010/11 marketing year.
Pakistan - The world’s fourth largest rice exporting country is also experiencing some of the worst flooding in its history. Reportedly
most of the damage is in Pakistan’s main rice producing area. The degree of impact this flooding will have on Pakistan’s ability to
export rice during the 2010/11 marketing year is not yet known. This situation should be monitored.
(3) Decline in 2011 U.S. Rice Acres likely: If current U.S. long grain prices remain low during most of the 2010/11 marketing year,
we anticipate a significant drop in 2011 U.S. long grain rice acres. Since current U.S. long grain prices are well below the cost of
production for most U.S. rice farmers, a significant cut in next year’s rice acreage is inevitable. Larger wheat acreage in the mid-south
will likely result from the strong wheat prices and will naturally limit acreage available for rice planting next spring. Also, if wheat prices
remain strong into early 2011, it will likely stimulate higher corn and soybean prices which should lead to another acreage battle next
spring between corn and soybeans. In short, a likely decline in 2011 U.S. long grain rice acres and another acreage battle between
corn and soybeans should be supportive of U.S. rice prices especially during the second half of the 2010/11 marketing year.
(4) Impact of extreme heat on yields: One has to wonder about the impact of this year’s extreme heat on both field and milling
yields. For most of July and the first part of August (during the heading and grain filling stages), daytime temperatures have exceeded
100 degrees with overnight temperatures remaining in the 80s. The fact that early field yield reports out of Texas and south Louisiana
have been disappointing to date may be the first indication of how the extreme heat has impacted this year’s rice crop.

POTENTIAL BEARISH DEVELOPMENTS:

(1) Record 2010 U.S. Rice Crop: USDA is currently forecasting the overall 2010 U.S. rice crop at a record 245.9 million cwts. which
would shatter the prior record set in 2004 by 13.5 million cwts. The 2010 U.S. long grain crop is also projected to reach an all time
high of 187.2 million cwts. If USDA’s projections prove to be accurate, the 2010 long grain crop would be a staggering 34.5 million
cwts. or 23% higher than the 2009 U.S. long grain crop.
(2) Near Record 2010/11 long grain ending stocks projected: USDA is currently projecting U.S. long grain ending stocks for the
2010/11 marketing year will swell to 47.1 million cwts which would be the largest ending long stocks since 1986. If USDA’s projections
hold, U.S. long grain stocks on July 31, 2011 would be up a whopping 121% from the previous year.
(3) Record 2010 world rice crop: USDA is currently forecasting the world rice crop during 2010/11 will reach a record 459.17 million
metric tons on a milled rice basis. With the record size crop, USDA is also projecting world ending stocks during the 2010/11 crop
year will increase by 2.55 million metric tons or 3%. Unless the current rice crops in the field around the world deteriorate dramatically
from present conditions, it appears there will be an adequate supply of rice in the world during the 2010/11 crop year.
(4) Monsoon returns to India: In 2009 the driest monsoon rainy season since 1972 resulted in a 12% drop in India’s rice production.
The significant drop in India’s 2009 rice production even fueled speculation India may have to resort to importing some rice during the
2009/10 crop year, but unfortunately that never materialized. Thanks to the wettest July in five years, India’s 2010 monsoon appears
to have returned to normal. India’s Meteorological Department is also forecasting above normal monsoon rainfall for August and
September. If the monsoon rains continue as they have been forecasted, India could achieve a record rice production of 100 million
metric tons in 2010. This has fueled speculation among world rice analysts that India could resume non-Basmati exports for the first
time in three years.

As you can see, there are a lot of potentially bullish and bearish developments that will influence U. S. rice prices during the 2010/11 marketing year. In summarizing our initial thoughts going into the 2010/11 marketing year, even if 2010 field yields are disappointing due to this summer’s searing heat, the U.S. will still have to deal with a record 2010 long grain crop. We believe a lot of the excess long grain crop will have to be marketed before we can begin to realize better rice prices. Since U.S. domestic demand for rice is historically steady yet rising at a modest annual rate, it will be the export market the U.S. rice industry will have to turn to in order to market the excessive amount of rice produced this year. Unfortunately, the genetically engineered rice event announced on August 18, 2006 continues to haunt the U.S. rice industry’s ability to sell U.S. long grain into the European market which was once a large traditional U.S. export market. We believe the U.S. rice industry will likely not realize better rice prices until a large portion of the record 2010 long grain crop is marketed off into the world’s rice market. This year’s wildcard is the current wheat problems in various countries around the world. Should the severity of the current world wheat shortage deteriorate even further, this could be the “game changing” event the U.S. long grain industry needed for the 2010/11 marketing year.

Sincerely,

Keith Glover
President & CEO