Anheuser-Busch to Buy Rice Mill : Court Must Approve Acquisition of Sacramento Facility

Anheuser-Busch will enter California’s rice-milling business with the contemplated purchase of Pacific International Rice Mills in Woodland, northwest of Sacramento.

Tentative agreement was announced Thursday between the nation’s leading brewer and the Rice Growers Assn. of California, which bought the milling facility in mid-1984. However, the purchase is subject to approval by a federal court.

The court last May ordered RGA, based in West Sacramento, to divest itself of the mill for antitrust reasons. The milling-and-marketing cooperative--the state’s largest--paid nearly $12 million for the facility, better known as PIRMI, triggering a government challenge on the ground that the acquisition would give the cooperative a majority share of California’s rice industry, thus reducing effective competition.

Since that finding, RGA has had to operate the mill, which employs 115 people, separately from its own operations. Because of that order and the need for court review, neither Anheuser-Busch nor RGA would disclose terms of the sale.

The Anheuser-Busch subsidiary involved in the sale, Busch Agricultural Resources, does not intend to use the Yolo County plant to produce brewing rice, as it does at a similar facility in Jonesboro, Ark., spokesman James Morice said. Instead, it will continue to mill medium-grain rice for retail sale to continue the brewer’s diversification program.

“This is not vertical integration,” Morice said. “It’s product expansion.”

RGA’s cross-town rival in West Sacramento, Farmers’ Rice Cooperative, said it welcomed the announcement as likely to bring stability to the state’s depressed rice market. “With their resources, they will help re-establish PIRMI as a viable competitor . . . and this will give growers affiliated with PIRMI an opportunity for economic success,” said Ralph Newman, president of Farmers’ Rice.

Anheuser-Busch is a major Farmers’ Rice customer for low-grade brewing rice, spokesman Bill Huffman said, adding that the acquisition will not alter that relationship.

Almost since the day it bought PIRMI in 1984, RGA has been embroiled in costly antitrust litigation and rocked by management decisions that last fall resulted in unexpectedly low final returns to its growers--so low, in fact, that many were sent bills asking them to repay some of the funds that they had been advanced in anticipation of higher earnings.

New management took over last September and has been striving to slash operating costs and overhaul record-keeping, communications and marketing operations. Before the PIRMI purchase, RGA handled nearly half of the state’s rice crop, but since then it has lost members and market share to Farmers’ Rice, the No. 2 miller.

RGA lost 350 of its 2,000 members during the annual enrollment that ended Feb. 15, President Michael L. Cook said. This will slash production by about 3.5 million 100-pound sacks (so-called hundredweights) to about 13 million.

Farmers’ Rice, meanwhile, has added 275 growers to bring its roster to 1,250 growers, Huffman said.