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 June 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 August 7, 1997 is 2,443,667 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
                                                      Ended June 30,
                                                     1997       1996
                                                  ----------------------

Net sales                                           $113,385    $97,407

Cost of sales                                        101,929     90,864
                                                  ----------------------
    Gross profit                                      11,456      6,543

Selling, general and
  administrative expenses                              8,879      6,425
                                                  ----------------------
    Operating income                                   2,577        118

Interest expense                                       6,121      4,619
Interest income                                         (674)      (566)
Other income and expense                                  59        121
                                                  ----------------------
Loss before income taxes                              (2,929)    (4,056)

Provision for income tax benefit                      (1,142)    (1,460)
                                                  ----------------------
Net loss                                             ($1,787)   ($2,596)
                                                  ======================
Preferred stock dividend
  requirements                                         1,483      1,483
                                                  ----------------------
Net loss applicable
  to common stock                                    ($3,270)   ($4,079)
                                                  ======================
Loss per applicable
  common and common equivalent
  share:

  Primary                                             ($1.34)    ($1.67)
                                                  ======================
  Fully diluted                                       ($1.34)    ($1.67)
                                                  ======================

See Notes to Consolidated Financial Statement
Page 1<PAGE>

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

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

Current assets:
  Cash                                                $4,199     $3,235
  Accounts receivable, net                            70,778     64,062
  Inventories
    Finished goods                                    74,320     75,969
    Raw materials                                     42,751     46,289
  Prepaid expenses                                     3,592      2,441
  Deferred income taxes                                2,791      2,791
                                                  ----------------------
    Total current assets                             198,431    194,787


Other assets                                          20,606     21,216
Receivable from ERLY                                  24,546     24,166
Property, plant and equipment, net                    57,407     57,959
                                                  ----------------------
  Total assets                                      $300,990   $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)

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

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable                                     $ 88,822   $ 77,616
  Accounts payable                                    51,320     57,845
  Accrued expenses                                    19,586     18,733
  Current portion of long-term debt                      468        438
                                                  ----------------------
    Total current liabilities                        160,196    154,632

Long-term debt                                        96,298     96,144

Deferred income taxes                                  4,763      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                                    9,446     11,233
  Cumulative foreign currency translation
    adjustments                                       (1,321)    (1,394)
                                                  ----------------------
  Total stockholders' equity                          39,733     41,447
                                                  ----------------------
    Total liabilities and stockholders' equity      $300,990   $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)
                                                      Three Months
                                                       Ended June 30,
                                                     1997       1996
                                                  ----------------------
OPERATING ACTIVITIES:
  Net earnings                                       ($1,787)   ($2,596)
  Adjustments to reconcile net earnings to net cash
    provided by (used in) in operating activities:
    Depreciation and amortization                      1,898      1,419
    Mortgage note discount accretion                     161        139
    Loss on sales of property                              -          5
    Deferred income taxes, net                        (1,142)    (1,460)
    Changes in assets and liabilities that
      provided (used) cash:
      Accounts receivable                             (6,716)      (999)
      Inventories                                      5,187      6,156
      Prepaid expenses                                (1,151)      (302)
      Other assets                                       186       (772)
      Receivable from ERLY                              (380)      1,290
      Accounts payable                                (6,525)    (5,476)
      Accrued expenses                                   853      3,459
                                                  ----------------------
  Net cash provided by
    operating activities                              (9,416)        863

INVESTING ACTIVITIES:
  Property, plant and equipment additions               (809)      (988)
  Proceeds from sales of assets                            -         20
                                                  ----------------------
  Net cash used in
    investing activities                                (809)      (968)

FINANCING ACTIVITIES:
  Increase (decrease) in notes payable                11,206      1,435
  Proceeds from issuance of long-term debt               117        117
  Repayment of long-term debt                            (94)       (21)
  Other, net                                             (40)         -
                                                  ----------------------
  Net cash provided by (used in)
    financing activities                              11,189      1,531
                                                  ----------------------
NET INCREASE IN CASH                                     964      1,426

CASH:
  Beginning of the period                              3,235      2,803
                                                  ----------------------
  End of the period                                   $4,199     $4,229
                                                  ======================
See Notes to Consolidated Financial Statement
Page 4<PAGE>

<TABLE>

                         AMERICAN RICE, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          Three Months Ended June 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                      -          -          -        (1,787)       -      (1,787)

Foreign currency 
  translation                 -          -          -          -            73        73
                         ---------  ---------  ---------  ---------  ---------  ---------

Balance June 30, 1997       $3,878     $2,444    $25,286     $9,446    ($1,321)   $39,733
                         =========  =========  =========  =========  =========  =========

<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 June 30, 1997 and 
for each of the three month periods ended June 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 Acquistion 
occurred on the first day of the operating period presented (thousands of 
dollars, except per share):

								Three Months
                                                Ended June 30,
                                                    1996
                                                  --------
      Net Sales                                   $115,629
      Net Earnings (loss)                           (5,119)
      Earnings (loss) per share:
        Primary                                    $ (2.70)
        Fully diluted                                (2.70)

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 June 30, 1997, ARI was not in compliance with one of 
the covenants related to interest coverage. The Company has obtained a waiver 
to this covenant as of the June 30, 1997 measuring date. 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 June 30, 1997 and March 31, 1997 respectively, the outstanding 
balances on this loan were $83.7 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 three months ended June 30, 
1997 and 1996 totaled $49.7 million and $93.4 million, respectively, and 
repayments during the same periods totaled $38.5 million and $92 million, 
respectively.  ARI made cash payments for interest and financing fees of 
approximately $2 million and $1.8 million during the three months ended June 
30, 1997 and 1996, respectively.  ARI did not pay any federal or state income 
taxes during the three months ended June 30, 1997 and 1996, respectively.

5.  Commitments and Contingencies

The Company is involved in legal proceedings that arise in the ordinary course 
of its business, all of which are routine in nature except for the matters 
noted below. While the results of such litigation cannot be predicted with 
certainty, the Company believes that the resolution of such legal proceedings, 
including the matters noted below, will not have a material adverse effect on 
the consolidated financial position or consolidated results of operations of 
ARI; however, as with any litigation, the ultimate outcome is unknown. 
Accordingly, no provision for any liability that might result has been made in 
the Consolidated Financial Statements.

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 G.D. Murphy and D.A. Murphy, Chairman and President, respectively, of 
ARI and ERLY. ARI and ERLY were named as codefendants in the lawsuit by an 
amendment to the original petition in September 1995. This is a dispute 
between the general partner of a proposed real estate development and G.D. 
Murphy and D.A. Murphy. Damages sought are in the range of $10 million, plus 
attorneys' fees and punitive damages. ARI and ERLY were named as defendants in 
the lawsuit because of their actions to obtain restraining orders to prevent 
threatened foreclosures on ERLY common stock pledged as collateral by G.D. 
Murphy and to stop interference by the plaintiff in the lawsuit with ARI's 
mortgage note financing, as well as certain other alleged activities, 
including knowing participation in breaches of fiduciary duties, civil 
conspiracy with the Murphys, and conversion. The plaintiff recently added a 
claim that the Company and ERLY were the alter egos of the Murphys. In order 
to minimize legal expenses, ARI, ERLY, and the Murphys are using common legal 
counsel in this matter and have agreed to share legal expenses ratably.

The Company has also been named as a codefendant with Messrs. John M. Howland 
and George E. Prchal in a lawsuit filed in February 1997 in the U.S. District 
Page 7<PAGE>
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 have also been directors of ARI since October 
1993 and prior to October 1993 were officers of ARI (See Item 10 herein). 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 restraining order 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.

On July 24, 1997, Farmers Rice Milling Company ("FRM"), a Louisiana 
corporation and beneficial owner of 171,933 shares of ERLY, filed a derivative 
complaint on behalf of ARI and ERLY against Gerald D. Murphy, Douglas A. 
Murphy, the Company, and ERLY in the United States District Court, Central 
District of California. The complaint alleges among other things that Gerald 
D. Murphy endangered ARI and ERLY by pledging ERLY stock owned personally by 
him, as part of a proposed real estate development (see above paragraph 
regarding Tenzer lawsuit). Both the Company and ERLY are nominal defendants. 
The lawsuit was brought on behalf of the Company and ERLY.

6. New Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board ("FASB") issued 
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 
128"). SFAS No. 128, which is effective for periods ending after December 15, 
1997, specifies the computation, presentation and disclosure requirements  of 
earnings per share ("EPS") and supersedes Accounting Principles Board Opinion 
No. 15 ("APB No. 15"). SFAS 128 requires a dual presentation of basic and 
diluted EPS. Basic EPS, which excludes the impact of common stock equivalents, 
replaces primary EPS. Diluted EPS, which utilizes the average market price per 
share as opposed to the greater of the average market price per share or 
ending market price per share when applying the treasury stock method in 
determining common stock equivalents, replaces fully diluted EPS.  Pro forma 
basic and diluted EPS for all historical periods presented, assuming SFAS No. 
128 was effective at the beginning of each such historical period, would not 
be materially different than the presentations using APB No. 15.

Such SFAS is effective for periods ending after December 15, 1997. In June 
1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income, and SFAS 
No. 131, Disclosures About Segments of an Enterprise and Related Information.  
SFAS No. 130 establishes standards for reporting and displaying of 
comprehensive income and its components. SFAS No. 131 establishes standards 
for the way that public business enterprises report information about 
operating segments and related information in interim and annual financial 
statements. SFAS No. 130 and 131 are effective for periods beginning after 
December 15, 1997.  These three statements will not have any effect on the 
Company's 1997 financial statements, however, management is evaluating what, 
if any, additional disclosures may be required when these three statements are 
implemented.
Page 8<PAGE>

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

Net Sales. Net sales increased $16.0 million, or 16.4%, from $97.4 million in 
fiscal 1997 to $113.4 million in fiscal 1998. The sales increase was composed 
of $16.2 million in olives sales due to the Acquisition and $707 thousand in 
increases in sales of exported rice partially offset by a $947 thousand 
decline in sales of rice in the U.S. 

Gross Profit. Gross profit was 10.1% of sales for the fiscal 1998 quarter and 
6.7% for the same period in 1997. Gross profit increased $5.0 million from 
$6.5 million in the fiscal 1997 third quarter to $11.5 million in fiscal 1998, 
due primarily to the Acquisition. 
Page 9<PAGE>
Selling, general and administrative expense. Selling, general and 
administrative expense increased $2.5 million to $8.9 million in the fiscal 
1998 quarter due primarily to higher advertising and promotional expenses 
associated with the Acquisition.

Interest. Interest expense increased $1.5 million from $4.6 million in the 
fiscal 1997 period to $6.1 million in fiscal 1998 due to higher average 
balances outstanding, primarily as a result of the Acquisition, and higher 
average interest rates. 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.

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 June 30, 1997, ARI was not in compliance with one of 
the covenants related to interest coverage. The Company has obtained a waiver 
to this covenant as of the June 30, 1997 measuring date. 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 June 30, 1997 and March 31, 1997 respectively, the outstanding 
balances on this loan were $83.7 million and $71.5 million, bearing interest 
at the prime rate of 8.5%. The borrowing base under this line of credit at 
June 30, 1997 was $85 million and the maximum borrowing during the three 
months ended June 30,1997 was $84.7 million. 

In July, 1997 ARI completed a sale and leaseback transaction with MDFC 
Equipment Leasing Corporation ("MDFC") for substantially all of its olive 
processing machinery and equipment located in Visalia, California. ARI 
realized proceeds from the sale of approximately $9 million which were used 
for operating purposes. ARI has leased these assets from MDFC for a seven year 
term with a two year extension option. 

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). In addition to the MDFC sale and leaseback transaction 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. 
Page 10<PAGE>
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 
become due and payable. The consolidated cash flow for the quarter ended June 
30, 1997 was $4.2 million. Contingent interest of $430.4 thousand was accrued 
during the quarter. The total contingent interest accrued and unpaid at June 
30, 1997 was $1.0 million. Additional contingent interest of $286.9 thousand 
and $534.6 thousand will accrue in July and August 1997 and over the period 
from September 1, 1997 to February 28, 1998, respectively. 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 June 30, 1997.  As of June 30, 1997, the Preferred 
B dividends accumulated but not declared are $21.2 million and the Preferred C 
dividends accumulated but not declared are $3.1 million.

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

The Company is involved in legal proceedings that arise in the ordinary course 
of its business, all of which are routine in nature except for the matters 
noted below. While the results of such litigation cannot be predicted with 
certainty, the Company believes that the resolution of such legal proceedings, 
including the matters noted below, will not have a material adverse effect on 
the consolidated financial position or consolidated results of operations of 
ARI; however, as with any litigation, the ultimate outcome is unknown. 
Accordingly, no provision for any liability that might result has been made in 
the Consolidated Financial Statements.

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 G.D. Murphy and D.A. Murphy, Chairman and President, respectively, of 
ARI and ERLY. ARI and ERLY were named as codefendants in the lawsuit by an 
amendment to the original petition in September 1995. This is a dispute 
between the general partner of a proposed real estate development and G.D. 
Murphy and D.A. Murphy. Damages sought are in the range of $10 million, plus 
attorneys' fees and punitive damages. ARI and ERLY were named as defendants in 
the lawsuit because of their actions to obtain restraining orders to prevent 
threatened foreclosures on ERLY common stock pledged as collateral by G.D. 
Murphy and to stop interference by the plaintiff in the lawsuit with ARI's 
mortgage note financing, as well as certain other alleged activities, 
including knowing participation in breaches of fiduciary duties, civil 
conspiracy with the Murphys, and conversion. The plaintiff recently added a 
claim that the Company and ERLY were the alter egos of the Murphys. In order 
to minimize legal expenses, ARI, ERLY, and the Murphys are using common legal 
counsel in this matter and have agreed to share legal expenses ratably.
Page 11<PAGE>
The Company has also been named as a codefendant 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 have also been directors of ARI since October 
1993 and prior to October 1993 were officers of ARI (See Item 10 herein). 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 restraining order 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.

On July 24, 1997, Farmers Rice Milling Company ("FRM"), a Louisiana 
corporation and beneficial owner of 171,933 shares of ERLY, filed a derivative 
complaint on behalf of ARI and ERLY against Gerald D. Murphy, Douglas A. 
Murphy, the Company, and ERLY in the United States District Court, Central 
District of California. The complaint alleges among other things that Gerald 
D. Murphy endangered ARI and ERLY by pledging ERLY stock owned personally by 
him, as part of a proposed real estate development (see above paragraph 
regarding Tenzer lawsuit). Both the Company and ERLY are nominal defendants. 
The lawsuit was brought on behalf of the Company and ERLY.

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits

11.1  Computation of Earnings Per Share

27    Financial Data Schedule

(b)  During the quarter ended June 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 12<PAGE>
								
Exhibit 11.1

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


                                                      Three Months
                                                      Ended June 30,
                                                     1997       1996
                                                  ----------------------

PRIMARY EARNINGS (LOSS) PER SHARE

  Net earnings                                       ($1,787)   ($2,596)

  Less dividends on preferred stock:
    Series B                                          (1,295)    (1,295)
    Series C                                            (188)      (188)
                                                  ----------------------
                                                      (1,483)    (1,483)
                                                  ----------------------
  Earnings (loss) applicable to
    common stock                                     ($3,270)   ($4,079)
                                                  ======================
  Average common and common
    equivalent shares outstanding:
    Common                                             2,444      2,444
    Preferred Series A                                   -          -
                                                  ----------------------
                                                       2,444      2,444
                                                  ======================
    Earnings (loss) per share
        applicable to common stock                    ($1.34)    ($1.67)
                                                  ======================


Continued on next page
<PAGE>

Exhibit 11.1 (Continued)

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

                                                      Three Months
                                                      Ended June 30,
                                                     1997 *     1996 *
                                                  ----------------------

FULLY DILUTED EARNINGS PER SHARE


  Net earnings                                       ($1,787)   ($2,596)


  Less dividends on preferred stock:
    Series C                                            (188)      (188)
                                                  ----------------------
  Earnings applicable to
    common stock                                     ($1,975)   ($2,784)
                                                  ======================
  Average common and common
    equivalent shares outstanding:
    Common                                             2,444      2,444
    Preferred Series A                                   778        778
    Preferred Series B                                 5,600      5,600
                                                  ----------------------
                                                       8,822      8,822
                                                  ======================
    Earnings per share
        applicable to common stock                    ($.22)     ($.32)
                                                  ======================



    * 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.