Specialized commercial rice arms in the South--those with at least 50 percent of their production value from rice and with at least $40,000 in total crop and livestock production--experienced improved financial conditions in 1986 compared with most other types of specialized farms. Government deficiency payments and loan programs were significant factors in their financial health. Midsized farms with sales of $100,000-$149,999 had the least favorable returns structure. U.S. rice production in the South is concentrated along the gulf coast and the Mississippi River. The five States in those areas produced 75-80 percent of all U.S. rice. Specialized rice farms on the gulf coast had the lowest net returns and the highest costs.