SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


                                FORM 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934


               For the three months ended September 30, 1997


                     Commission File Number 0-17039


                            American Rice, Inc.
           (Exact Name of Registrant as Specified in its Charter)



            Texas                                76-0231626
(State or other Jurisdiction of      (I.R.S. Employer Identification No.)
  Incorporation or Organization)



    411 North Sam Houston Parkway East
             Houston, Texas                              77060
 (Address of Principal Executive Offices)             (Zip Code)


                            (281) 272-8800
                     Registrant's Telephone Number,
                          Including Area Code


Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes [X] No [ ]

The number of shares outstanding of the registrant's common stock, $1 par 
value, as of November 13, 1997 is 2,443,859 shares
<PAGE>

PART 1 - FINANCIAL INFORMATION
Item 1.  Financial Statements


                     AMERICAN RICE, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Thousands of Dollars)
                                 (Unaudited)

                                    Three Months         Six Months
                                Ended September 30,  Ended September 30,
                                   1997      1996      1997      1996
                                ----------------------------------------

Net sales                         $93,196  $121,513  $206,581  $218,920

Cost of sales                      80,504   106,346   182,433   197,210
                                ----------------------------------------
    Gross profit                   12,692    15,167    24,148    21,710

Selling, general and
  administrative expenses           9,430     8,442    18,309    14,867
                                ----------------------------------------
    Operating income                3,262     6,725     5,839     6,843

Interest expense                    6,571     5,569    12,692    10,188
Interest income                      (604)     (600)   (1,278)   (1,166)
Other (income) and expense             82       231       141       352
                                ----------------------------------------
Earnings (loss) before
  income taxes                     (2,787)    1,525    (5,716)   (2,531)

Provision for 
  income taxes (benefit)           (1,051)      549    (2,193)     (911)
                                ----------------------------------------
    Net earnings (loss)           ($1,736)     $976   ($3,523)  ($1,620)
                                ========================================
Preferred stock dividend
  requirements                      1,483     1,483     2,965     2,965
                                ----------------------------------------
Net loss applicable
  to common stock                 ($3,219)    ($507)  ($6,488)  ($4,585)
                                ========================================
Loss per applicable
  common and common equivalent
  share:

  Primary                          ($1.32)    ($.21)   ($2.65)   ($1.88)
                                ========================================
  Fully diluted                    ($1.32)    ($.21)   ($2.65)   ($1.88)
                                ========================================
See Notes to Consolidated Financial Statements
Page 1<PAGE>



               			AMERICAN RICE, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                          (Thousands of Dollars)

                                                 September 30, March 31,
                                                     1997         1997
                                                  ----------------------
ASSETS                                            (Unaudited)

Current assets:
  Cash                                                $2,923     $3,235
  Accounts receivable, net                            62,832     64,062
  Inventories
    Finished goods                                    68,423     75,969
    Raw materials                                     46,633     46,289
  Prepaid expenses                                     4,554      2,441
  Deferred income taxes                                2,791      2,791
                                                  ----------------------
    Total current assets                             188,156    194,787


Other assets                                          21,313     21,216
Receivable from ERLY                                  24,755     24,166
Property, plant and equipment, net                    58,429     57,959
                                                  ----------------------
  Total assets                                      $292,653   $298,128
                                                  ======================

Continued on next page

See Notes to Consolidated Financial Statement
Page 2<PAGE>

                  AMERICAN RICE, INC. AND SUBSIDIARIES
                  CONSOLIDATED BALANCE SHEETS (CONTINUED)
               (Thousands of Dollars, except share amounts)

                                                 September 30, March 31,
                                                     1997        1997
                                                  ----------------------
                                                  (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable                                     $ 73,387   $ 77,616
  Accounts payable                                    53,649     57,845
  Accrued expenses                                    18,718     18,733
  Current portion of long-term debt                    1,454        438
                                                  ----------------------
    Total current liabilities                        147,208    154,632

Long-term debt                                       103,971     96,144

Deferred income taxes                                  3,676      5,905

Commitments and contingencies (Note 5)                     -          -

Stockholders' equity:
  Preferred stock, $1.00 par value; 4,000,000
    shares authorized;
    Series A- 777,777 convertible shares issued
      and outstanding, liquidation preference
      of $19,989                                         778        778
    Series B- 2,800,000 convertible shares issued
      and outstanding, liquidation preference
      of $14,000                                       2,800      2,800
    Series C- 300,000 shares issued
      and outstanding, liquidation preference
      of $1,500                                          300        300
  Common stock, $1.00 par value; 10,000,000
    shares authorized; 2,443,892 shares
    issued and outstanding                             2,444      2,444
  Paid-in capital                                     25,286     25,286
  Retained earnings                                    7,710     11,233
  Cumulative foreign currency translation
    adjustments                                       (1,520)    (1,394)
                                                  ----------------------
  Total stockholders' equity                          37,798     41,447
                                                  ----------------------
    Total liabilities and stockholders' equity      $292,653   $298,128
                                                  ======================

See Notes to Consolidated Financial Statement
Page 3<PAGE>

                  AMERICAN RICE, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (Thousands of Dollars)
                              (Unaudited)
                                                        Six Months
                                                    Ended September 30,
                                                     1997       1996
                                                  ----------------------
OPERATING ACTIVITIES:
  Net earnings                                       ($3,523)   ($1,620)
  Adjustments to reconcile net earnings to net cash
    provided by (used in) in operating activities:
    Depreciation and amortization                      3,755      3,237
    Mortgage note discount accretion                     328        284
    (Gain) loss on sales of property                    (150)       138
    Deferred income taxes, net                        (2,229)    (1,141)
    Changes in assets and liabilities that
      provided (used) cash:
      Accounts receivable                              1,230    (12,410)
      Inventories                                      7,202      9,266
      Prepaid expenses                                (2,113)      (643)
      Other assets                                      (949)    (1,537)
      Receivable from ERLY                              (589)       374
      Accounts payable                                (4,196)    (1,548)
      Accrued expenses                                   (15)     4,414
                                                  ----------------------
  Net cash provided by
    operating activities                              (1,249)    (1,186)

INVESTING ACTIVITIES:
  Property, plant and equipment additions             (3,373)    (1,998)
  Campbell olive acquisition					     -    (33,952)
  Proceeds from sales of assets                          150      2,299
                                                  ----------------------
  Net cash used in
    investing activities                              (3,223)   (33,651)

FINANCING ACTIVITIES:
  Increase (decrease) in notes payable                (4,229)    34,646
  Proceeds from issuance of long-term debt             9,080        233
  Repayment of long-term debt                           (565)      (137)
  Other, net                                            (126)         3
                                                  ----------------------
  Net cash provided by (used in)
    financing activities                               4,160     34,745
                                                  ----------------------
NET INCREASE IN CASH                                    (312)       (92)

CASH:
  Beginning of the period                              3,235      2,803
                                                  ----------------------
  End of the period                                   $2,923     $2,711
                                                  ======================
See Notes to Consolidated Financial Statement
Page 4<PAGE>

<TABLE>

                         AMERICAN RICE, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          Six Months Ended September 30, 1997
                               (Thousands of Dollars)
                                     (Unaudited)
<CAPTION>


                                                                      Foreign     Total
                                              Additional             Currency   Stock -
                         Preferred   Common     Paid-in  Retained   Translation Holders'
                           Stock      Stock     Capital  Earnings   Adjustments  Equity
                         ---------  ---------  ---------  ---------  ---------  ---------
<S>                      <C>        <C>        <C>        <C>        <C>        <C>
Balance April 1, 1997       $3,878     $2,444    $25,286    $11,233    ($1,394)   $41,447

Net loss                      -          -          -        (3,523)       -       (3,523)

Foreign currency 
  translation                 -          -          -          -          (126)      (126)
                         ---------  ---------  ---------  ---------  ---------  ---------

Balance September 30, 1997  $3,878     $2,444    $25,286     $7,710    ($1,520)   $37,798
                         =========  =========  =========  =========  =========  =========

<FN>
See Notes to Consolidated Financial Statements
</TABLE>
Page 5<PAGE>

AMERICAN RICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.  Basis of Presentation

The consolidated financial statements presented herein at September 30, 1997 
and for each of the three and six month periods ended September 30, 1997 and 
1996 are unaudited; however, all adjustments which are, in the opinion of 
management necessary for a fair presentation of the financial position, 
results of operations and cash flows for the periods covered have been made 
and are of a normal, recurring nature.  The results of the interim periods are 
not necessarily indicative of results for the full year.  The consolidated 
balance sheet at March 31, 1997 is derived from the March 31, 1997 audited 
consolidated financial statements but does not include all disclosures 
required by generally accepted accounting principles. Although management 
believes the disclosures are adequate, certain information and disclosures 
normally included in the notes to the financial statements has been condensed 
or omitted as permitted by the rules and regulations of the Securities and 
Exchange Commission.  These financial statements should be read in conjunction 
with the audited financial statements and notes thereto included in American 
Rice, Inc.'s ("ARI" or the "Company") Annual Report on Form 10-K for the 
fiscal year ended March 31, 1997.

2. Olive Business Acquisition

On July 5, 1996, the Company acquired the domestic and foreign olive business 
from Campbell Soup Company ("CSC Olives") for approximately $38 million (the 
"Olive Acquisition"). Assets acquired include domestic inventories and fixed 
assets, all of the outstanding common stock of Compania Envasadora Loreto, 
S.A., a Spanish company which comprises the foreign olive business and fifty-
one percent of the stock of Sadrym California, a marketer of olive processing 
machinery. The purchase was funded primarily from ARI's credit facilities. The 
Olive Acquisition was accounted for as a purchase, and the results of 
operations of the acquired business are included in ARI's consolidated 
financial statements after July 5, 1996.

Operating results reflected in the accompanying financial statements do not 
include CSC Olives operating activities before July 5, 1996.  The following 
summarized unaudited pro forma information assumes the Olive Acquisition 
occurred on the first day of the operating period presented (thousands of 
dollars, except per share):

						Three Months           Six Months
                                  Ended September 30,   Ended September 30,
                                        1996                   1996
                                      --------               --------
      Net Sales                       $122,314               $237,943
      Net Earnings (loss)                  865                 (4,254)
      Earnings (loss) per share:
        Primary                          $(.25)                $(2.95)
        Fully diluted                     (.25)                 (2.95)

3. Notes Payable 

ARI has an $85 million revolving credit line with Harris Trust and Savings 
Bank ("Harris"). Funds available for borrowing (including letters of credit of 
up to $20.0 million) under this revolving credit loan at any time may not 
exceed 85% of eligible accounts receivable (or 90% of accounts receivable 
backed by acceptable letters of credit from customers), 75% of eligible rough 
Page 6<PAGE>
rice inventory, and 70% of eligible finished goods inventory. The line is 
collateralized by substantially all of ARI's accounts receivable and 
inventory. In addition, this facility contains restrictive covenants which, 
among other things, require the attainment of certain financial ratios and 
provide limitations on capital expenditures, lease obligations, and prohibit 
dividend payments. As of September 30, 1997, ARI was not in compliance with 
certain of the covenants related to interest coverage, adjusted funded debt 
and adjusted tangible net worth. Subsequently, the Company obtained waivers
from compliance with these covenants from Harris covering the period up
to and including November 29, 1997.
The line also contains certain cross default provisions with 
the indenture for the 13.0% mortgage notes due 2002. The Harris revolving 
credit line bears interest at ARI's option at either the prime rate or the 
London Interbank Offered Rate plus an applicable margin based upon ARI's 
adjusted funded debt ratio as defined, with outstanding principal and interest 
due upon termination of the agreement, which continues in full force and 
effect until May 31, 1999 or until terminated with five days written notice 
from ARI subsequent to May 31, 1997. At September 30, 1997 and March 31, 1997 
respectively, the outstanding balances on this loan were $69.1 million and 
$71.5 million, bearing interest at the prime rate of 8.5%.

4.  Statement of Cash Flows
   
Borrowings under the revolving credit line in the six months ended September 
30, 1997 and 1996 totaled $96.7 million and $166.3 million, respectively, and 
repayments during the same periods totaled $100.9 million and $131.7 million, 
respectively.  ARI made cash payments for interest and financing fees of 
approximately $10.9 million and $9.3 million during the six months ended 
September 30, 1997 and 1996, respectively.  ARI did not pay any federal or 
state income taxes during the six months ended September 30, 1997 and paid 
$230 thousand during the six months ended September 30, 1996.

5.  Commitments and Contingencies

In April 1995, a lawsuit was filed in the district court of Harris County, 
Texas by Kingwood Lakes South, L.P. and Tenzer Company, Inc., as plaintiffs 
against Gerald D. Murphy and Douglas A. Murphy. The Company and ERLY were 
named as defendants in the lawsuit by amendment to the original petition in 
September 1995. This lawsuit is a dispute between the general partner of a 
proposed real estate development and Gerald D. Murphy and Douglas A. Murphy 
over their contractual obligations, if any, to the partnership. The Company 
and ERLY were named as defendants in the lawsuit allegedly because of their 
efforts to obtain restraining orders to prevent threatened foreclosures on the 
ERLY Common Stock pledged as collateral by Gerald D. Murphy, which threatened 
ARI's Note financing. The lawsuit also alleges certain other activities by the 
Company and ERLY, including knowing participation in breaches of fiduciary 
duties, fraud, and civil conspiracy with Gerald D. Murphy and Douglas A. 
Murphy. A restraining order was issued preventing foreclosure on the shares 
pledged by Mr. Murphy but such restraining order was subsequently terminated. 
The plaintiffs then obtained 333,333 shares of the pledged stock which was 
thereafter sold. In order to minimize legal expenses, the Company, ERLY, 
Gerald D. Murphy and Douglas A. Murphy are using common legal counsel in this 
matter. Gerald D. Murphy has agreed to pay up to 50% of such expenses after 
any insurance recoveries as determined by the members of the board of 
directors not a party to the lawsuit. On September 9, 1997, the jury in this 
litigation returned two alternative verdicts in favor of the plaintiffs and 
the plaintiffs were required to elect between those verdicts. The plaintiffs 
elected the jury's tort claim verdict in the amount of $9,657,000, rendered 
jointly and severally against Gerald D. Murphy, Douglas A. Murphy, the 
Company, and ERLY, along with separate awards of punitive damages against 
Gerald D. Murphy of $3,000,000, Douglas A. Murphy of $500,000, the Company of 
$100,000, and ERLY of $100,000. The defendants have filed motions before the 
Page 7<PAGE>
trial court for judgment in defendants' favor not withstanding the verdict and 
for a reduction of the amounts awarded by the jury based, in part, on the 
absence of evidence to support those amounts. In the event any judgment is 
entered against the Company or ERLY, the Company and ERLY intend to appeal 
that judgment. At this time, prior to the trial court's rulings on the 
defendants' expected motions to set aside or reduce the verdicts, the Company 
cannot state whether or not the outcome of this litigation may have a material 
impact on its or ERLY's financial condition. It may be some time before an 
actual final judgment is entered.

On July 24, 1997, The Powell Group, a diversified holding company based in 
Baton Rouge, Louisiana (the "Powell Group"), through its wholly owned 
subsidiary, Farmers Rice Milling Company, Inc., a Louisiana corporation 
("Farmers Rice") filed a shareholder derivative complaint purportedly on 
behalf of the Company and ERLY against Gerald D. Murphy, Douglas A. Murphy, 
the Company, and ERLY in the United States District Court, Central District of 
California. Farmers Rice recently amended the complaint to add all the other 
directors of the Company and ERLY as defendants. In the complaint, Farmers 
Rice alleges (1) breach of fiduciary duty, (2) waste of corporate assets and 
(3) illegal corporate loan. The derivative complaint further requests 
injunctive relief prohibiting the Company and ERLY from making allegedly 
ongoing litigation defense payments on behalf of Gerald D. Murphy and Douglas 
A. Murphy and requiring ongoing indemnification by such individuals to the 
Company and ERLY. Both the Company and ERLY are nominal defendants with the 
lawsuit being brought on behalf of the Company and ERLY against Gerald D. 
Murphy and Douglas A. Murphy. The complaint principally challenges certain 
litigation expenditures incurred by the Company in connection with litigation 
to which the Company, ERLY, Gerald D. Murphy, and Douglas A. Murphy are 
parties, which is described in the immediately preceding paragraph. While the 
complaint alleges that such expenditures were improperly incurred, in fact, 
all expenditures and the involvement of the Company in the underlying 
litigation were fully authorized by the Company's Board of Directors. The 
Company filed a motion to dismiss the lawsuit due to the Powell Group's 
failure to either make a demand on the board of directors to take action with 
respect to the wrongs alleged or to very specifically allege the facts which 
demonstrate why a demand on the board would be futile. The Company also argued 
that the issues in the derivative action were issues which the disinterested 
directors in pre-litigation resolutions had taken steps to resolve, such that 
these issues were properly dealt with in the first instance by the boards 
themselves. The Court agreed and dismissed the complaint without prejudice. 
The Company does not expect the Powell Group to re-file the lawsuit.

The Company was named as a co-defendant with Messrs. John M. Howland and 
George E. Prchal in a lawsuit filed in February 1997 in the U.S. District 
Court for the Southern District of Texas by Rice Milling & Trading 
Investments, LTD., an Isle of Man Company ("RMTI"). In 1994, ARI entered into 
an agreement with RMTI for processing the Company's rice through RMTI's 
facility in Jeddah, Saudi Arabia. Messrs. Howland and Prchal were officers of 
RMTI through January 1997, and prior to October 1993 they were officers of 
ARI. Messrs. Howland and Prchal were directors of ARI from October 1993 
through October 1997. In January 1997, RMTI ceased shipping ARI's rice through 
its Jeddah facility and terminated the employment of Messrs. Howland and 
Prchal. The lawsuit alleges among other things ARI failed to perform under the 
terms of the agreement and Messrs. Howland and Prchal breached their fiduciary 
duties to RMTI. On April 21, 1997, ARI obtained a preliminary injunction from 
the U.S. District Court for the Southern District of Texas ordering RMTI to 
desist and refrain from purchasing rice of U.S. or Vietnam origin from any 
supplier other than ARI and from introducing and/or marketing rice of U.S. and 
Vietnam origin in Saudi Arabia targeted against ARI's U.S. origin and Vietnam 
origin rice. In October 1997, ARI voluntarily terminated this injunction. RMTI 
Page 8<PAGE>
has added claims of fraud, participation in breach of duty, and tortuous 
interference against ARI. The date for the trial has not been set.

Item 2. Management's Discussion and Analysis of Financial Condition and 
Results Of Operations

Overview

The Company purchases and processes rough rice into branded and commodity rice 
for sale in both international and domestic markets. Demand for branded rice 
products is relatively constant and margins are typically higher than those 
for commodity rice products. Demand for commodity rice products is relatively 
constant globally, but demand for U.S. grown commodity rice is dependent upon 
supply and cost relative to other sources of supply. Supply and costs for both 
branded and commodity products depend on many factors including governmental 
actions, crop yields and weather, and such factors can persist through one or 
more fiscal years. 

In general, management believes that it is insulated from many of the effects 
of rough rice price fluctuations for the following reasons: (i) the Company's 
net sales are proportionately weighted toward the relatively higher margin 
branded products, (ii) approximately one-half of the Company's rough rice 
purchases, excluding rough rice milled under contract for others, are made as 
spot market purchases and matched against commodity orders at prices providing 
a favorable margin to costs, (iii) the Company's high rice inventory turnover 
rate of approximately five times per year reduces the Company's exposure to 
seasonal price fluctuations, and (iv) the Company's diversity of rice sources 
and rice customers increases the ability of the Company to take advantage of 
supply and demand imbalances.

On July 5, 1996, the Company acquired the domestic and foreign olive business 
of Campbell Soup Company for approximately $38 million. Assets acquired 
include domestic inventories and fixed assets, all of the outstanding common 
stock of Compania Envasadora Loreto, S.A., a Spanish company which comprises 
the foreign olive business, and fifty-one percent of the stock of Sadrym 
California, a marketer of olive processing machinery. The purchase was funded 
primarily from ARI's credit facilities. The Olive Acquisition is accounted for 
as a purchase, and the results of operations of the acquired business are 
included in the Company's consolidated financial statements after July 5, 
1996. 

Historically, sales of olives have pronounced seasonal elements, with higher 
sales occurring in conjunction with holiday consumption. Accordingly, because 
the quarterly period ending December 31 contains both the Thanksgiving and 
Christmas holidays, the two holidays of highest consumption, it will have 
significantly higher sales than the other three quarters of the fiscal year. 
Margins normally follow the seasonal pattern of sales.

Three Months Ended September 30, 1997 Compared to 
Three Months Ended September 30, 1996

Net Sales. Net sales decreased $28.3 million, or 23.3%, from $121.5 million in 
the September quarter of fiscal 1997 to $93.2 million in the September quarter 
of fiscal 1998. The sales decrease was composed of $33.3 million and $3.1 
million in declines in export and U.S. rice sales, respectively, partially 
offset by $8.1 million in increases in sales of olives. Export sales declines 
were experienced in four Middle East markets and in Africa.

Gross Profit. Gross profit was 13.6% of sales in the fiscal 1998 quarter and 
Page 9<PAGE>
12.5% for the same period in 1997. Gross profit declined $2.5 million from 
$15.2 million in the fiscal 1997 quarter to $12.7 million in fiscal 1998 due 
primarily to lower sales.

Selling, general and administrative expense. Selling, general and 
administrative expense increased $1.0 million to $9.4 million in the fiscal 
1998 quarter due primarily to higher advertising and promotional expenses.

Interest. Interest expense increased $1.0 million from $5.6 million in the 
fiscal 1997 period to $6.6 million in fiscal 1998 due primarily to higher 
average balances outstanding. Interest expense in both periods includes 
amortization of capitalized debt issuance costs and accretion of the $6 
million original issue discount on the $100 million in principal amount of 
13.0% mortgage notes due 2002.

Six Months Ended September 30, 1997 Compared to 
Six Months Ended September 30, 1996

Net Sales. Net sales decreased $12.3 million, or 5.6%, from $218.9 million in 
fiscal 1997 to $206.6 million in fiscal 1998. The sales decrease was composed 
of $32.6 million and $4.0 million in declines in export and U.S. rice sales, 
respectively, partially offset by and $24.3 million in increases in sales of 
olives. Export sales declines were experienced primarily in Middle East 
markets and in Africa.

Gross Profit. Gross profit was 11.7% of sales in fiscal 1998 and 
9.9% for the same period in 1997. Gross profit increased $2.4 million from 
$21.7 million in fiscal 1997 to $24.1 million in fiscal 1998, due primarily to 
the Olive Acquisition. 

Selling, general and administrative expense. Selling, general and 
administrative expense increased $3.4 million to $18.3 million in fiscal 1998 
due primarily to higher advertising and promotional expenses associated with 
the Olive Acquisition.

Interest. Interest expense increased $2.5 million to $12.7 million in fiscal 
1998 due primarily to higher average balances outstanding.

Liquidity and Capital Resources

ARI requires liquidity and capital primarily for the purchase of raw materials 
and to invest in property, plant and equipment necessary to support 
operations. Historically, ARI has financed both working capital and capital 
expenditures through internally generated funds and by funds provided by 
credit lines.

ARI has an $85 million revolving credit line with Harris Trust and Savings 
Bank ("Harris"). Funds available for borrowing (including letters of credit of 
up to $20.0 million) under this revolving credit loan at any time may not 
exceed 85% of eligible accounts receivable (or 90% of accounts receivable 
backed by acceptable letters of credit from customers), 75% of eligible rough 
rice inventory, and 70% of eligible finished goods inventory. The line is 
collateralized by substantially all of ARI's accounts receivable and 
inventory. In addition, this facility contains restrictive covenants which, 
among other things, require the attainment of certain financial ratios and 
provide limitations on capital expenditures, lease obligations, and prohibit 
dividend payments. As of September 30, 1997, ARI was not in compliance with 
certain of the covenants related to interest coverage, adjusted funded debt 
and adjusted tangible net worth. Subsequetly, the Company obtained waivers
from compliance with these covenants from Harris covering the period up to
and including November 29, 1997.
Page 10<PAGE>
The line also contains certain cross default provisions with 
the indenture for the 13.0% mortgage notes due 2002. The Harris revolving 
credit line bears interest at ARI's option at either the prime rate or the 
London Interbank Offered Rate plus an applicable margin based upon ARI's 
adjusted funded debt ratio as defined, with outstanding principal and interest 
due upon termination of the agreement, which continues in full force and 
effect until May 31, 1999 or until terminated with five days written notice 
from ARI subsequent to May 31, 1997. At September 30, 1997 and March 31, 1997 
respectively, the outstanding balances on this loan were $69.1 million and 
$71.5 million, bearing interest at the prime rate of 8.5%. The borrowing base 
under this line of credit at September 30, 1997 was $79.6 million and the 
maximum borrowing during the six months ended September 30, 1997 was $84.7 
million. The Company has requested a $10 million increase in the line of 
credit.

In July, 1997 ARI completed a sale and leaseback transaction with for 
substantially all of its olive processing machinery and equipment located in 
Visalia, California (the "Visalia Lease"). ARI realized proceeds from the sale 
of approximately $8.9 million which were used for operating purposes. ARI has 
leased these assets from for a seven year term with a two year extension 
option.  The transaction is being accounted for as a capital lease with the 
proceeds recorded as a liability that is reduced by lease payments over the 
lease term.

In August, 1997 ARI reached an agreement with Aqaba Packaging Company ("APC") 
whereby APC will purchase, receive, store, process, and bag rice shipped in 
bulk to APC's Rice Terminal at Aqaba, Jordan.  Additionally, the agreement 
provides that ARI can purchase rice from this facility for delivery to ARI's 
customers in the Middle East, primarily Saudi Arabia. The Company is currently 
discussing various financing arrangements to insure that sufficient levels of 
inventories are maintained by APC to meet ARI's and APC's sales requirements 
in Middle East markets.  

In the quarter ended June 30 and currently, the liquidity of the Company has 
been impaired primarily as a result of the loss of financing associated with 
the RMTI agreement (see Note 5 to the Financial Statements and Part II - Legal 
Proceedings). Without the RMTI agreement, the general corporate financing 
required for the Company's sales and marketing in Saudi Arabia is 
significantly greater. The Company has had to utilize its credit lines to 
maintain the inventory position for its Saudi Arabia sales and has thus 
reduced the availability for its domestic activities. In addition to 
increasing the use of the Company's credit lines, the Company has also 
experienced an increase in its accounts payable. In addition to the Visalia 
Lease and the APC agreement discussed above, management is exploring several 
other opportunities to improve liquidity. However, no assurances can be given 
the Company can conclude the other arrangements being considered.

The Mortgage Notes provide for interest payments semiannually on February 28th 
and August 31st, accruing fixed interest at an annual rate of 13.0%, an 
effective yield rate of 14.4%.  In addition to fixed interest, the Mortgage 
Notes bear contingent interest of 4.0% of consolidated cash flow (as defined) 
up to a limit of $40.0 million of consolidated cash flow during the fiscal 
year in which such interest accrues. Contingent interest accrues in each 
semiannual period (as defined) in which consolidated cash flow in such period 
and the immediately preceding semiannual period is equal to or greater than 
$20.0 million.  Contingent interest is payable semiannually, but ARI may elect 
to defer all or a portion of any such payment to the extent that (a) the 
payment of such portion of contingent interest will cause ARI's adjusted fixed 
charge coverage ratio (as defined) for the two consecutive applicable 
semiannual periods to be less than 2.0:1 and (b) the principal of the Mortgage 
Notes corresponding to such contingent interest has not then matured and 
Page 11<PAGE>
become due and payable. The consolidated cash flow for the quarter ended 
September 30, 1997 was $5.0 million. Contingent interest of $376.5 thousand 
was accrued during the quarter. The total contingent interest accrued and 
unpaid at September 30, 1997 was $1.4 million. Additional contingent interest 
of $445.5 thousand will accrue over the period from October 1, 1997 to 
February 28, 1998. To date, no contingent interest has been paid because the 
applicable fixed cost coverage ratio permits deferral of payment.

ARI's Preferred B and C stock carries annual cumulative, non-participating 
dividends of $5.2 million and $750 thousand respectively.  No dividends have 
been declared or paid as of September 30, 1997.  As of September 30, 1997, the 
Preferred B dividends accumulated but not declared are $22.5 million and the 
Preferred C dividends accumulated but not declared are $3.3 million.

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

In April 1995, a lawsuit was filed in the district court of Harris County, 
Texas by Kingwood Lakes South, L.P. and Tenzer Company, Inc., as plaintiffs 
against Gerald D. Murphy and Douglas A. Murphy. The Company and ERLY were 
named as defendants in the lawsuit by amendment to the original petition in 
September 1995. This lawsuit is a dispute between the general partner of a 
proposed real estate development and Gerald D. Murphy and Douglas A. Murphy 
over their contractual obligations, if any, to the partnership. The Company 
and ERLY were named as defendants in the lawsuit allegedly because of their 
efforts to obtain restraining orders to prevent threatened foreclosures on the 
ERLY Common Stock pledged as collateral by Gerald D. Murphy, which threatened 
ARI's Note financing. The lawsuit also alleges certain other activities by the 
Company and ERLY, including knowing participation in breaches of fiduciary 
duties, fraud, and civil conspiracy with Gerald D. Murphy and Douglas A. 
Murphy. A restraining order was issued preventing foreclosure on the shares 
pledged by Mr. Murphy but such restraining order was subsequently terminated. 
The plaintiffs then obtained 333,333 shares of the pledged stock which was 
thereafter sold. In order to minimize legal expenses, the Company, ERLY, 
Gerald D. Murphy and Douglas A. Murphy are using common legal counsel in this 
matter. Gerald D. Murphy has agreed to pay up to 50% of such expenses after 
any insurance recoveries as determined by the members of the board of 
directors not a party to the lawsuit. On September 9, 1997, the jury in this 
litigation returned two alternative verdicts in favor of the plaintiffs and 
the plaintiffs were required to elect between those verdicts. The plaintiffs 
elected the jury's tort claim verdict in the amount of $9,657,000, rendered 
jointly and severally against Gerald D. Murphy, Douglas A. Murphy, the 
Company, and ERLY, along with separate awards of punitive damages against 
Gerald D. Murphy of $3,000,000, Douglas A. Murphy of $500,000, the Company of 
$100,000, and ERLY of $100,000. The defendants have filed motions before the 
trial court for judgment in defendants' favor not withstanding the verdict and 
for a reduction of the amounts awarded by the jury based, in part, on the 
absence of evidence to support those amounts. In the event any judgment is 
entered against the Company or ERLY, the Company and ERLY intend to appeal 
that judgment. At this time, prior to the trial court's rulings on the 
defendants' expected motions to set aside or reduce the verdicts, the Company 
cannot state whether or not the outcome of this litigation may have a material 
impact on its or ERLY's financial condition. It may be some time before an 
actual final judgment is entered.

On July 24, 1997, The Powell Group, a diversified holding company based in 
Baton Rouge, Louisiana (the "Powell Group"), through its wholly owned 
subsidiary, Farmers Rice Milling Company, Inc., a Louisiana corporation 
("Farmers Rice") filed a shareholder derivative complaint purportedly on 
behalf of the Company and ERLY against Gerald D. Murphy, Douglas A. Murphy, 
Page 12<PAGE>
the Company, and ERLY in the United States District Court, Central District of 
California. Farmers Rice recently amended the complaint to add all the other 
directors of the Company and ERLY as defendants. In the complaint, Farmers 
Rice alleges (1) breach of fiduciary duty, (2) waste of corporate assets and 
(3) illegal corporate loan. The derivative complaint further requests 
injunctive relief prohibiting the Company and ERLY from making allegedly 
ongoing litigation defense payments on behalf of Gerald D. Murphy and Douglas 
A. Murphy and requiring ongoing indemnification by such individuals to the 
Company and ERLY. Both the Company and ERLY are nominal defendants with the 
lawsuit being brought on behalf of the Company and ERLY against Gerald D. 
Murphy and Douglas A. Murphy. The complaint principally challenges certain 
litigation expenditures incurred by the Company in connection with litigation 
to which the Company, ERLY, Gerald D. Murphy, and Douglas A. Murphy are 
parties, which is described in the immediately preceding paragraph. While the 
complaint alleges that such expenditures were improperly incurred, in fact, 
all expenditures and the involvement of the Company in the underlying 
litigation were fully authorized by the Company's Board of Directors. The 
Company filed a motion to dismiss the lawsuit due to the Powell Group's 
failure to either make a demand on the board of directors to take action with 
respect to the wrongs alleged or to very specifically allege the facts which 
demonstrate why a demand on the board would be futile. The Company also argued 
that the issues in the derivative action were issues which the disinterested 
directors in pre-litigation resolutions had taken steps to resolve, such that 
these issues were properly dealt with in the first instance by the boards 
themselves. The Court agreed and dismissed the complaint without prejudice. 
The Company does not expect the Powell Group to re-file the lawsuit.

The Company was named as a co-defendant with Messrs. John M. Howland and 
George E. Prchal in a lawsuit filed in February 1997 in the U.S. District 
Court for the Southern District of Texas by Rice Milling & Trading 
Investments, LTD., an Isle of Man Company ("RMTI"). In 1994, ARI entered into 
an agreement with RMTI for processing the Company's rice through RMTI's 
facility in Jeddah, Saudi Arabia. Messrs. Howland and Prchal were officers of 
RMTI through January 1997, and prior to October 1993 they were officers of 
ARI. Messrs. Howland and Prchal were directors of ARI from October 1993 
through October 1997. In January 1997, RMTI ceased shipping ARI's rice through 
its Jeddah facility and terminated the employment of Messrs. Howland and 
Prchal. The lawsuit alleges among other things ARI failed to perform under the 
terms of the agreement and Messrs. Howland and Prchal breached their fiduciary 
duties to RMTI. On April 21, 1997, ARI obtained a preliminary injunction from 
the U.S. District Court for the Southern District of Texas ordering RMTI to 
desist and refrain from purchasing rice of U.S. or Vietnam origin from any 
supplier other than ARI and from introducing and/or marketing rice of U.S. and 
Vietnam origin in Saudi Arabia targeted against ARI's U.S. origin and Vietnam 
origin rice. In October 1997, ARI voluntarily terminated this injunction. RMTI 
has added claims of fraud, participation in breach of duty, and tortuous 
interference against ARI. The date for the trial has not been set.
Page 13<PAGE>

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits

4.3   By-Laws of American Rice, Inc., as amended

11.1  Computation of Earnings Per Share

27    Financial Data Schedule

(b)  During the quarter ended September 30, 1997, Registrant did not file any 
Form 8-K Reports.

Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.


                                           American Rice, Inc.
                                           -------------------
                                               Registrant

                                       By: /S/ Joseph E. Westover
                                       ---------------------------
                   				                    Joseph E. Westover			
                                       Vice-President / Controlle
Page 14<PAGE>

Exhibit 4.3
                                 BY-LAWS
                                   OF
                           AMERICAN RICE, INC.

                 (AS AMENDED THROUGH SEPTEMBER 9, 1992)

ARTICLE I
OFFICES

1.1   The principal office of the corporation shall be located in Houston, 
Texas.

1.2   The corporation may also have offices at such other places both within 
and without the State of Texas as the board of directors may from time to time 
determine or the business of the corporation may require.

ARTICLE II
MEETINGS OF SHAREHOLDERS

2.1   Meetings of shareholders for any purpose may be held at such time and 
place as shall be stated in the notice of the meeting or in a duly executed 
waiver of notice thereof.

2.2   Annual meetings of shareholders, commencing with the year 1992 shall be 
held on the date scheduled at the discretion of the board of directors which 
shall be no later than October 30th, to begin at 10:00 a.m., at which the 
shareholders shall elect a board of directors and transact such other business 
as may properly be brought before the meeting (As amended September 9, 1992.)

2.3   Special meetings of the shareholders for any purpose or purposes may be 
called by the president and shall be called by the president or secretary at 
the request in writing of a majority of the board of directors, or at the 
request in writing of shareholders owning one-tenth of all the shares entitled 
to vote at the meetings.  A request for a special meeting shall state the 
purpose or purposes of the proposed meeting, and business transacted at any 
special meeting of shareholders shall be limited to the purposes stated in the 
notice.

2.4   Written notice stating the place, day and hour of the meeting and, in 
the case of a special meeting, the purpose or purposes for which the meeting 
is called, shall be delivered not less than ten nor more than fifty days 
before the date of the meeting, either personally or by mail, by or at the 
direction of the president, the secretary, or the officer or persons calling 
the meeting, to each shareholder of record entitled to vote at such meeting.

2.5   The holders of a majority of the shares issued and outstanding and 
entitled to vote thereat, present in person or represented by proxy, shall 
constitute a quorum at all meetings of the shareholders for the transaction of 
business except as otherwise provided by statute or by the articles of 
incorporation.  If, however, a quorum shall not be present or represented at 
any meeting of the shareholders, the shareholders entitled to vote thereat, 
present in person or represented by proxy, shall have power to adjourn the 
meeting from time to time, without notice other than announcement at the 
meeting, until a quorum shall be present or represented.  At such adjourned 
meeting, provided a quorum shall be present or represented thereat, any 
business may be transacted which might have been transacted if the meeting had 
been held in accordance with the original notice thereof.

2.6   If a quorum is present at any meeting, the vote of the holders of a 
majority of the shares entitled to vote, present in person or represented by 
proxy, shall decide any question brought before such meeting, unless the 
question is one upon which a different vote is required by law or by the 
articles of incorporation.

2.7   Each outstanding share having voting power shall be entitled to one vote 
on each matter submitted to a vote at a meeting of shareholders.  A 
shareholder may vote either in person or by proxy executed in writing by the 
shareholder or by his duly authorized attorney-in-fact.

2.8   Any action required or which may be taken at a meeting of the 
shareholders may be taken without a meeting if a consent in writing, setting 
forth the action so taken, shall be signed by all the shareholders entitled to 
vote with respect to the subject matter thereof.

ARTICLE III
DIRECTORS

3.1   The number of directors that shall constitute the whole board of 
directors shall be not less than one.  Such number of directors shall from 
time to time be fixed and determined by the directors and shall be set forth 
in the notice of any meeting of shareholders held for the purpose of electing 
directors.  The directors shall be elected at the annual meeting of 
shareholders, except as provided in Section 3.2, and each director elected 
shall hold office until his successor shall be elected and qualify.  Directors 
need not be residents of Texas or shareholders of the corporation.

3.2   Any vacancy occurring in the board of directors may be filled by a 
majority of the remaining directors though less than a quorum of the board of 
directors.  A director elected to fill a vacancy shall be elected for the 
unexpired term of his predecessor in office.

3.3   The number of directors may be increased or decreased from time to time 
as provided in these bylaws but no decrease shall have the effect of 
shortening the term of any incumbent director. Any directorship to be filled 
by reasons of an increase in the number of directors may be
filled by election at any annual or special meeting of shareholders called for 
that purpose or by the board of directors for a term of office continuing only 
until the next election of one or more directors by the shareholders; provided 
that the board of directors may not fill more than two such directorships 
during the period between any two successive annual meetings of shareholders.
(As amended June 26, 1989.)

3.4   Any director may be removed either for or without cause at any special 
meeting of shareholders duly called and held for such purpose.

MEETINGS OF THE BOARD OF DIRECTORS

3.5   Meetings of the board of directors, regular or special, may be held at 
such time and place as shall be stated in the notice of meeting or in a duly 
executed waiver of notice thereof.

3.6   The first meeting of each newly elected board of directors shall be held 
at such time and place as shall be fixed by the vote of the shareholders at 
the annual meeting and no notice of such meeting shall be necessary to the 
newly elected directors in order legally to constitute the meeting, provided a 
quorum shall be present.  In the event that the shareholders fail to fix the 
time and place of such first meeting, it shall be held without notice 
immediately following the annual meeting of shareholders, and at the same 
place, unless by the unanimous consent of the directors then elected and 
serving such time or place shall be changed.

3.7   Regular meetings of the board of directors may be held upon such notice, 
or without notice, and at such time and at such place as shall from time to 
time be determined by the board.

3.8   Special meetings of the board of directors may be called by the chairman 
of the board of directors or the president and shall be called by the 
secretary on the written request of two directors.  Notice of each special 
meeting of the board of directors shall be given to each director at least two 
days before the date of the meeting.

3.9   Attendance of a director at any meeting shall constitute a waiver of 
notice of such meeting, except where a director attends for the express 
purpose of objecting to the transaction of any business on the ground that the 
meeting is not lawfully called or convened.  Except as may be otherwise 
provided by law or by the articles of incorporation or by the bylaws, neither 
the business to be transacted at, nor the purpose of, any regular or special 
meeting of the board of directors need be specified in the notice or waiver of 
notice of such meeting.

3.10   At all meetings of the board of directors a majority of the directors 
shall constitute a quorum for the transaction of business and the act of a 
majority of the directors present at any meeting at which there is a quorum 
shall be the act of the board of directors, unless otherwise specifically 
provided by law, the articles of incorporation or the bylaws.  If a quorum 
shall not be present at any meeting of directors, the directors present 
thereat may adjourn the meeting from time to time, without notice other than 
announcement at the meeting, until a quorum shall be present.

3.11   The board of directors, by resolution passed by a majority of the full 
board, may from time to time designate a member or members of the board to 
constitute committees, including an executive committee, which shall in each 
case consist of one or more directors and shall have and may exercise such 
powers, as the board may determine and specify in the respective resolutions 
appointing them.  A majority of all the members of any such committee may 
determine its action and fix the time and place of its meetings, unless the 
board of directors shall otherwise provide.  The board of directors shall have 
power at any time to change the number, subject as aforesaid, and members of 
any such committee, to fill vacancies and to discharge any such committee.

3.12    Any action required or permitted to be taken at a meeting of the board 
of directors or any committee may be taken without a meeting if a consent in 
writing, setting forth the action so taken, is signed by all the members of 
the board of directors or committee, as the case may be.

3.13   By resolution of the board of directors, the directors may be paid 
their expenses, if any, of attendance at each meeting of the board of 
directors and may be paid a fixed sum for attendance at each meeting of the 
board of directors or a stated salary as director.  No such payment shall 
preclude any director from serving the corporation in any other capacity and 
receiving compensation therefor.

ARTICLE IV
NOTICES

4.1   Any notice to directors or shareholders shall be in writing and shall be 
delivered personally or mailed to the directors or shareholders at their 
respective addresses appearing on the books of the corporation.  Notice by 
mail shall be deemed to be given at the time when the same shall be deposited 
in the United States mail, postage prepaid.  Notice to directors may also be 
given by telegram.

4.2   Whenever any notice is required to be given under the provisions of the 
statutes or of the articles of incorporation or of these bylaws, a waiver 
thereof in writing signed by the person or persons entitled to such notice, 
whether before or after the time stated therein, shall be deemed equivalent to 
the giving of such notice.

ARTICLE V
OFFICERS

5.1   The officers of the corporation shall be elected by the board of 
directors and shall consist of a president, a vice-president, a secretary and 
a treasurer.  The board of directors may also elect a chairman of the board, 
an assistant president, additional vice presidents, and one or more assistant 
secretaries and assistant treasurers.  Two or more offices may be held by the 
same person, except that the offices of president and secretary may not be 
held by the same person.

5.2   The board of directors shall elect a president, one or more vice 
presidents, a secretary and a treasurer, none of whom need be a member of the 
board.  The board of directors shall have the power to enter into contracts 
for the employment and compensation of officers for such terms
as the board deems advisable.

5.3  The board of directors may appoint such other officers and assistant 
officers and agents as it shall deem necessary, who shall hold their offices 
for such terms and shall have such authority and exercise such powers and 
perform such duties as shall be determined from time to time by the board of 
directors by resolution not inconsistent with these bylaws.

5.4   The salaries of all officers of the corporation shall be fixed by the 
board of directors.  

5.5   The officers of the corporation shall hold office until their successors 
are elected or appointed and qualify, or until their death or until their 
resignation or removal from office.  Any officer elected or appointed by the 
board of directors may be removed at any time by the board, but such removal 
shall be without prejudice to the contract rights, if any, of the person so 
removed.  Election or appointment of an officer or agent shall not of itself 
create contract rights.  Any vacancy occurring in any office of the 
corporation by death, resignation, removal or otherwise shall be filled by the 
board of directors.

THE CHAIRMAN OF THE BOARD

5.6   The chairman of the board, if one be elected, shall preside at all 
meetings of the board of directors and shall have such other powers and duties 
as may from time to time be prescribed by the board of directors, upon written 
directions given to him pursuant to resolutions duly adopted by the board of 
directors.

THE PRESIDENT

5.7   The president shall be the chief executive officer of the corporation, 
shall have general and active management of the business of the corporation 
and shall see that all orders and resolutions of the board of directors are 
carried into effect. He shall preside at all meetings of the shareholders.

THE VICE PRESIDENT

5.8   The vice presidents in the order of their seniority, unless otherwise 
determined by the board of directors, shall, in the absence or disability of 
the president, perform the duties and have the authority and exercise the 
powers of the president. They shall perform such other duties and have such 
other authority and powers as the board of directors may from time to time 
prescribe or as the president may from time to time delegate.

THE SECRETARY AND ASSISTANT SECRETARIES

5.9   The secretary shall attend all meetings of the board of directors and 
all meetings of shareholders and record all of the proceedings of the meetings 
of the board of directors and of the shareholders in a minute book to be kept 
for that purpose and shall perform like duties for the standing committees 
when required.  He shall give, or cause to be given, notice of all meetings of 
the shareholders and special meetings of the board of directors, and shall 
perform such other duties as may be prescribed by the board of directors or 
president, under whose supervision he shall be.  He shall keep in safe custody 
the seal of the corporation and, when authorized by the board of directors, 
shall affix the same to any instrument requiring it and, when so affixed, it 
shall be attested by his signature or by the signature of an assistant 
secretary or of the treasurer.

5.10   The assistant secretaries in the order of their seniority, unless 
otherwise determined by the board of directors, shall, in the absence or 
disability of the secretary, perform the duties and exercise the powers of the 
secretary.  They shall perform such other duties and have such other powers as 
the board of directors may from time to time prescribe or as the president may 
from time to time delegate.

THE TREASURER AND ASSISTANT TREASURERS

5.11   The treasurer shall have custody of the corporate funds and securities 
and shall keep full and accurate accounts and records of receipts, 
disbursements and other transactions in books belonging to the corporation, 
and shall deposit all moneys and other valuable effects in the name and to the 
credit of the corporation in such depositories as may be designated by the 
board of directors.

5.12   Treasurer shall disburse the funds of the corporation as may be ordered 
by the board of directors, taking proper vouchers for such disbursements, and 
shall render to the president and the board of directors, at its regular 
meetings, or when the president or board of directors so requires, an account 
of all his transactions as treasurer and of the financial condition of the 
corporation.

5.13   If required by the board of directors, the treasurer shall give the 
corporation a bond of such type, character and amount as the board of 
directors may require.

5.14   The assistant treasurers in the order of their seniority, unless 
otherwise determined by the board of directors, shall, in the absence or 
disability of the treasurer, perform the duties and exercise the powers of the 
treasurer.  They shall perform such other duties and have such other powers as 
the board of directors may from time to time prescribe or the president may 
from time to time delegate.

ARTICLE VI
CERTIFICATES REPRESENTING SHARES

6.1   The shares of the corporation shall be represented by certificates 
signed by the president or a vice president and the secretary or an assistant 
secretary of the corporation, and may be sealed with the seal of the 
corporation or a facsimile thereof.

6.2   The signatures of the president or vice president and the secretary or 
assistant secretary upon a certificate may be facsimiles if the certificate is 
countersigned by a transfer agent, or registered by a registrar, other than 
the corporation itself or an employee of the corporation.  In case any officer 
who has signed or whose facsimile signature has been placed upon such 
certificate shall have ceased to be such officer before such certificate is 
issued, it may be issued by the corporation with the same effect as if he were 
such officer at the date of its issue.

LOST CERTIFICATES

6.3   The board of directors may direct a new certificate to be issued in 
place of any certificate theretofore issued by the corporation alleged to have 
been lost or destroyed. When authorizing such issue of a new certificate, the 
board of directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms and 
conditions as it deems expedient and may require such indemnities as it deems 
adequate to protect the corporation from any claim that may be made against it 
with respect to any such certificate alleged to have been lost or destroyed.

6.4   Upon surrender to the corporation or the transfer agent of the 
corporation of a certificate representing shares duly endorsed or accompanied 
by proper evidence of succession, assignment or authority to transfer, a new 
certificate shall be issued to the person entitled thereto and the old 
certificate canceled and the transaction recorded upon the books of the 
corporation.

CLOSING OF TRANSFER BOOKS

6.5   For the purpose of determining shareholders entitled to notice of or to 
vote at any meeting of shareholders, or any adjournment thereof, or entitled 
to receive payment of any dividend, or in order to make a determination of 
shareholders for any other proper purpose, the board of directors may provide 
that the stock transfer books shall be closed for a stated period but not to 
exceed, in any case, fifty days.  If the stock transfer books shall be closed 
for the purpose of determining shareholders entitled to notice of or to vote 
at a meeting of shareholders, such books shall be closed for at least ten days 
immediately preceding such meeting. In lieu of closing the stock transfer 
books, the board of directors may fix in advance a date as the record date for 
any such determination of shareholders, such date in any case to be not more 
than fifty days and, in case of a meeting of shareholders, not less than ten 
days prior to the date on which the particular action, requiring such 
determination of shareholders, is to be taken. If the stock transfer books are 
not closed and no record date is fixed for the determination of shareholders 
entitled to notice of or to vote at a meeting of shareholders, or shareholders 
entitled to receive payment of a dividend, the date on which notice of the 
meeting is mailed or the date on which the resolution of the board of 
directors declaring such dividend is adopted, as the case may be, shall be the 
record date for such determination of shareholders. When a determination of 
shareholders entitled to vote at any meeting of shareholders has been made as 
provided in this section, such determination shall be applied to any 
adjournment thereof except where the determination has been made through the 
closing of the stock transfer books and the stated period of closing has 
expired.

REGISTERED SHAREHOLDERS

6.6   The corporation shall be entitled to recognize the exclusive right of a 
person registered on its books as the owner of shares to receive dividends, 
and to vote as such owner, and shall not be bound to recognize any equitable 
or other claim to or interest in such share or shares on the part of any other 
person, whether or not it shall have express or other notice thereof, except 
as otherwise provided by the laws of Texas.

LIST OF SHAREHOLDERS

6.7   The officer or agent having charge of the transfer books for shares 
shall make, at least ten days before each meeting of shareholders, a complete 
list of the shareholders entitled to vote at such meeting, arranged in 
alphabetical order, with the address of each and the number of shares held by 
each, which list, for a period of ten days prior to such meeting, shall be 
kept on file at the registered office of the corporation and shall be subject 
to inspection by any shareholder at any time during usual business hours.  
Such list shall also be produced and kept open at the time and place of the 
meeting and shall be subject to the inspection of any shareholder during the 
whole time of the meeting.  The original share ledger or transfer book, or a 
duplicate thereof, shall be prima facie evidence as to who are the 
shareholders entitled to examine such list or share ledger or transfer book or 
to vote at any meeting of the shareholders.

ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS

7.1   Subject to the provisions of the articles of incorporation relating 
thereto, if any, dividends may be declared by the board of directors, in its 
discretion, at any regular or special meeting, pursuant to law.  Dividends may 
be paid in cash, in property or in the corporation's own shares, subject to 
any provisions of the articles of incorporation.

7.2   Before payment of any dividend, there may be set aside out of any funds 
of the corporation available for dividends such sum or sums as the directors 
from time to time, in their absolute discretion, think proper as a reserve 
fund for meeting contingencies, or for equalizing dividends, or for repairing 
or maintaining any property of the corporation, or for such other purpose as 
the directors shall think conducive to the interest of the corporation, and 
the directors may modify or abolish any such reserve in the manner in which it 
was created.

CHECKS

7.3   All checks or demands for money and notes of the corporation shall be 
signed by such officer or officers or such other person or persons as the 
board of directors may from time to time designate.

FISCAL YEAR

7.4   By resolution of the board of directors the fiscal year of the 
corporation shall be March 31.

SEAL

7.5   The corporate seal shall be in such form as may be prescribed by the 
board of directors. The seal may be used by causing it or a facsimile thereof 
to be impressed or affixed or in any manner reproduced.

BOOKS AND RECORDS

7.6   The corporation shall keep correct and complete books and records of 
account and shall keep minutes of the proceedings of its shareholders and 
board of directors, and shall keep at its registered office or principal place 
of business, or at the office of its transfer agent or registrar, a record of 
its shareholders, giving the names and addresses of all shareholders and the 
number and class of the shares held by each.

ARTICLE VIII
AMENDMENTS

8.1   The bylaws may be altered, amended, or repealed or new bylaws may be 
adopted by a majority of the whole board of directors at any regular or 
special meeting.

ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS

9.1   Article 2.02-1 of the Texas Business Corporation Act permits the 
corporation to indemnify its present and former directors and officers to the 
extent and under the circumstances set forth therein.  In addition, in some 
instances, indemnification is required by such Article.  The corporation 
hereby elects to and does hereby indemnify all such persons to the fullest 
extent permitted or required by such Article promptly upon request of any such 
person making a request for indemnity hereunder.  Such obligation to so 
indemnify and to so make all necessary determinations may be specifically 
enforced by resort to any court of competent jurisdiction.  Further, the 
corporation shall pay or reimburse the reasonable expenses of such persons 
covered hereby in advance of the final disposition of any proceeding to the 
fullest extent permitted by such Articles and subject to the conditions 
thereof.
<PAGE>

Exhibit 11.1

                   AMERICAN RICE, INC. AND SUBSIDIARIES
                    COMPUTATION OF EARNINGS PER SHARE
               (Thousands of Dollars Except Per Share Data)


					  Three Months          Six Months
                             Ended September 30,   Ended September 30,
                                1997       1996       1997       1996
                           --------------------------------------------

PRIMARY EARNINGS (LOSS) PER SHARE

  Net earnings (loss)         ($1,736)      $976    ($3,523)   ($1,620)



  Less dividends on preferred stock:
    Series B                   (1,295)    (1,295)    (2,590)    (2,590)
    Series C                     (188)      (188)      (375)      (375)
                           --------------------------------------------
                               (1,483)    (1,483)    (2,965)    (2,965)
                           --------------------------------------------
  Loss applicable to
    common stock              ($3,219)     ($507)   ($6,488)   ($4,585)
                           ============================================
  Average common and common
    equivalent shares outstanding:
    Common                      2,444      2,444      2,444      2,444
    Preferred Series A              -          -          -          -
                           --------------------------------------------
                                2,444      2,444      2,444      2,444
                           ============================================

  Loss per share
   applicable to common stock  ($1.32)     ($.21)    ($2.65)    ($1.88)
                           ============================================

Continued on next pag
<PAGE>

Exhibit 11.1 (Continued)

                   AMERICAN RICE, INC. AND SUBSIDIARIES
                    COMPUTATION OF EARNINGS PER SHARE
               (Thousands of Dollars Except Per Share Data)

                                 Three Months            Six Months
                               Ended September 30,   Ended September 30,
                                1997       1996       1997       1996 
                           --------------------------------------------

FULLY DILUTED EARNINGS PER SHARE *


  Net earnings (loss)         ($1,736)      $976    ($3,523)   ($1,620)


  Less dividends on preferred stock:
    Series C                     (188)      (188)      (375)      (375)
                           --------------------------------------------
  Earnings (loss) applicable to
    common stock              ($1,924)      $788    ($3,898)   ($1,995)
                           ============================================
  Average common and common
    equivalent shares outstanding:
    Common                      2,444      2,444      2,444      2,444
    Preferred Series A            778        778        778        778
    Preferred Series B          5,600      5,600      5,600      5,600
                           --------------------------------------------
                                8,822      8,822      8,822      8,822
                           ============================================

    Earnings (loss) per share
     applicable to common stock ($.22)      $.09      ($.44)     ($.23)
                           ============================================

    * This calculation is presented in accordance with Regulation
    S-K item 601(b)(11) although it is contrary to paragraphs 14, 30,
    and 40 of APB Opinion No. 15 because it produces an antidilutive
    result. The Opinion provides that a computation on a fully
    diluted basis which results in an improvement in earnings
    per share when compared to primary earnings per share
    (antidilution) not be taken into account. Therefore fully diluted
    earnings per share reported on the income statement are the same
    as primary earnings per share.