Global Rice Markets are Distorted by Bad Actors, Contributing to U.S. Trade Deficits USA Rice Testifies at Commerce Department

  • Global Rice Markets are Distorted by Bad Actors, Contributing to U.S. Trade Deficits USA Rice Testifies at Commerce Department

    May 18, 2017
    USA Rice's Cummings (far right) delivers U.S. rice message on trade
    Bob-Cummings-Testimony-on-Trade
    WASHINGTON, DC -- The Department of Commerce hosted a day-long hearing with witnesses from across the U.S. economy to examine reasons for bilateral deficits with 13 U.S. trading partners.  USA Rice, participating in the agriculture panel, explained that while the U.S. rice industry generates a $1.2 billion trade surplus, “a majority of the countries being examined, including China, the European Union, India, Japan, Korea, Taiwan, Thailand, and Viet Nam intervene heavily in the rice market, and the result is restricted access for U.S. rice or unfair competition in foreign markets.” In his testimony, USA Rice Chief Operating Officer Bob Cummings further noted that “globally rice is one of the most heavily protected crops in terms of domestic support, border protection, and export controls,” and that, like nearly all of U.S. agriculture, export success hinges on good trade agreements. “Well-negotiated and enforced trade agreement are the key to helping the U.S. rice industry contribute to reducing bilateral trade deficits.  Where there are good, solid trade agreements, increased rice exports follow.  We need look no further than the Uruguay Round Agreements and establishment of the WTO, NAFTA, and the U.S. Colombia Free Trade Agreement for evidence,” he said. Today’s hearing was in response to President Trump’s executive order of March 31 to the Secretary of Commerce, the U.S. Trade Representative, and other trade agencies to prepare an Omnibus Report on Significant Trade Barriers.  Canada, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Switzerland, Taiwan, Thailand, and Viet Nam were specifically being examined today.   Cummings said USA Rice and other agriculture groups have mounted a campaign to highlight the significant contributions agriculture makes to U.S. exports and remind the administration of the importance of a forward-looking trade policy that supports good trade agreements, strives to open new markets, and undertakes aggressive enforcement against trading partners that don’t live up to their international obligations.   “U.S. rice exports in isolation will not resolve the bilateral trade deficits identified by the administration.  However, action by the U.S. government to support exports from America’s highly efficient agricultural sector is an important part of the solution. To that end, existing trade agreements that are working well for agriculture should not be undone, and enforcement can and should be stepped up,” concluded Cummings.
  • LITTLE NOTICED, FIRST U.S. RICE SHIPMENT TO CUBA SINCE 2008

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    The nonpartisan U.S.-Cuba Trade and Economic Council says the first shipment of U.S. rice to Cuba in nine years apparently passed unnoticed in the ongoing debate over trade with the island nation. Based in New York, the council, which produces monthly reports on commerce involving the countries, says the comparatively small cargo of 157.8 tonnes of parboiled rice, some mixed with grain, was worth $252,000 and sailed from the Houston area. According to the council, U.S. ag exports to Cuba totaled $232 million in 2016, up by 36% from $170.6 million in 2015. Frozen chicken meat accounted for 41% of sales in 2016; soybeans, soy oil, and soy meal were 28%; and corn was 16%. Since 2012, frozen chicken has been the number one purchase by Havana, although purchases plummeted to $78 million in 2015 during the bird flu epidemic. Sales rebounded to $95 million last year. The rice shipment occurred at the end of 2016, but it takes a while for exports to be tallied by the Census Bureau and made public. Far larger rice sales, with a cumulative value of nearly $191 million, were recorded from 2002 to 2008.
     
    U.S. farm groups have argued for a change in law to allow private financing of ag exports to Cuba. The sales were exempted from the overall U.S. trade embargo in 2000, but payment must be made in cash upon delivery. Some $5.3 billion in U.S. goods have been sold under the terms of the 2000 law. This article was produced in collaboration with the Food & Environment Reporting Network, an independent, nonprofit news organization producing investigative reporting on food, agriculture, and environmental health.
  • REAP threatens to shutdown mills from tomorrow

  • Rice Exporters Association of Pakistan (REAP) has announced to shutdown rice mills from Monday if the goods transporter strike issue persists. Addressing a press conference here on Saturday at Karachi Press Club, Mahmood Moulvi Chairman REAP has shown serious concern over the goods transporters' strike said due to the recent transportation problems, all exports have almost come to halt. He said that all the stakeholders of export trade are facing huge financial losses and now compel to stop operation aimed to reducing losses. Although, transporters are on strike from the last few days, the federal and provincial governments' authorities are not handling the matter properly. "The country's overall and particularly rice exports are already facing many challenges in the world market and declining sharply, while now the transport strike is further damaging the exports", he added. In the current situation, when mills are processing rice but failed to dispatch the commodity due to transports' strike, rice millers and exporters have decided to shut down their mills aimed to minimise losses, the chairman REAP said. Rice exporters have no other option except to go on strike and close their rice mills till the problem resolved. He has appealed Prime Minister Mian Muhammad Nawaz Sharif, ministry of commerce and Chief Minister Sindh Syed Murad Ali Shah to intervene in the matter and resolve the issue on top priority basis as all import and export trade activities are halted because of goods transporters' strike. Rafique Suleman former chairman REAP said that all traders respect the court's decision, but there should some way out to resolve the issue. He said that as the imported goods are not being released from ports due to strike, the both ports Karachi Port and Port Qasim will be completely packed in next two days making the import and export impossible due to congestion. He said holy month of Ramazan is also approaching fast and this is the time to supply commodities in different parts of the country. Markets may face shortage, if immediately supply will not be restored, he added. In addition, the delay in exports consignments may also resulted in cancellation of export orders mainly as buyers could not bear the late supply. He said that while the Prime Minister and federal ministers are making efforts to enhance the exports to earn more foreign exchange for the country, the strike is directly hurting these efforts. Former chairman said that there is need to devise a proper policy for the movement of heavy transport in the city to end the issue that is directly hurting the country's economy. On the occasion, Anwar Mian Noor former chairman REAP, Safdar Mehkari and other leading exporters were also present.
  • A rice farmer’s life

  • In celebration of IR8's 50th year, IRRI has called on photographers to submit their own interpretation and depiction of a rice farmer's life.

    All submissions are under the Creative Commons license. Submissions are owned by the photographer and he/she has given IRRI permission to publish his/her photo at the IRRI website and on any other medium for the duration of the contest The names, locations, or any identifying elements of the entrants were not shown during the blind judging process.The panel of judges is composed of selected IRRI staff members and external reviewers from the advertising and photography industries.
    Winners
    a thirsty rice farmer by numai chandra ghosh

    1st | Nimai Chandra Ghosh

    A thirsty rice farmer in the field quenches his thirst with water brought by his son.

    Drying is an art and skill

    2nd | Rama Venkatraman

    Drying is an art and a skill: Parboiling, a task largely done by women in parts of Africa, involves partially boiling rice in the husk and drying it well before it is milled.

    preparing seedlings by md hafizul islam

    3rd | Md Hafizul Islam

    Preparing seedlings

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  • The global market post-2008 rice crisis era

  • The 2007-08 rice price spike seems like a distant dream now considering the calmness in the rice market in the past few years despite El Niño and other weather-related scares. 
    Rice market in Bangladesh (Photo: IRRI)

    Rice market in Bangladesh (Photo: IRRI)

    The 2007-08 rice price spike seems like a distant dream now considering the calmness in the rice market in the past few years despite El Niño and other weather-related scares. Rice prices in the international market have been very stable after a steep decline in 2013 (Fig. 1). The record production in 2016-17, which is expected to reach 480 million tons (milled rice equivalent) as compared with 472 million tons last year has kept the prices stable (Fig. 2). The normal monsoon in many Asian rice-growing countries contributed to this bumper crop. As shown in Fig. 2, this is the sixth record crop in the past seven years. The leftover rice stocks in Thailand to the tune of 18 million tons from the rice mortgage scheme that was abandoned in 2014 have also kept the market stable in the past few years. According to a published report, the government plans to sell the last batch of 8 million tons of mortgage stock this year. Of the 8 million tons of stocks, 3 million tons have been reported to be food grade whereas the rest are for industrial use. Fig.1. Thai 25% broken rice price (September 2001-February 2017) This will also be the sixth year in a row in which India will be exporting 10 million tons or more of rice since removing the export ban on nonbasmati rice in 2011. India’s entry into nonbasmati market coincided with the Thai mortgage scheme, neutralizing the unilateral action of Thailand to increase rice prices through its mortgage scheme. Thailand was unable to sell rice in the market and ended up stockpiling mortgage stocks. These mortgage stocks, in turn, helped keep the market stable during El Niño years. Both India and Thailand have helped this market to remain calm even in time of uncertainties. It is also sheer coincidence that, in the same year, India took everyone by surprise by taking the top spot in the export market, and China stormed into the rice market as the second-largest importer with 2.9 million tons of imports. Since then, China has overtaken Nigeria as the largest importer with imports reaching 5 million tons in 2016-17. This does not even include an additional couple of million tons of rice that enters China through cross-border trade from Vietnam and Myanmar. Other major Asian importers such as Indonesia, the Philippines, and Malaysia continue to import 3 to 5 million tons of rice together depending on their domestic production. Outside Asia, many sub-Sahara African (SSA) countries continue to remain the biggest clients for Asian rice. In the past two decades, SSA rice imports have increased nearly three times from 4 million tons in 1997 to 11.6 million tons in 2017. This has happened despite the more than doubling of domestic production from 6.7 to 15.5 million tons during the same period. Both India and Thailand account for the bulk of SSA rice imports from Asia. The overall upward trend of the volume of the global rice trade that was set in motion in the early 1990s continues to stay on track even after a change in sentiment of the importing countries during the post-2008 crisis to pursue self-sufficiency and reduce reliance on foreign rice. The current trade volume now accounts for nearly 9% of global production as compared with less than 7% during the 2008 rice crisis and 3.5% in 1990. What does this mean for now and the future? The record production in the past several years has kept a lid on the price but the rice stocks of the top five exporters (India, Thailand, Vietnam, Pakistan, and the United States) have steadily declined in these record production years from 41 million tons in 2012-13 to 28 million tons in 2016-17 in the face of strong demand growth (Fig. 3). In the past decade, rice consumption has increased by nearly 14% from 418.5 million tons in 2006-07 to 475.5 million tons in 2016-17. In terms of inventory as a proportion of total demand (the stock-to-use ratio), a convenient measure of supply and demand interrelationships, the ratio has declined from 30% to 20% during this period. But the good news is that this is still 5% greater than what it was during the rice crisis in 2007. As we move into the main rice-growing season in 2017, the low stock-to-use ratio, which acts as a buffer against any weather-induced supply uncertainties, is likely to be in the mind of market makers. If the monsoon is disrupted in a few rice-growing countries, the market should be able to absorb these shocks and remain stable. But, large-scale disruption in supply due to extreme weather events such as flood and drought could create anxiety in the market. It is also important to note that without Thai rice mortgage stocks, which supported the market in the past few years, there will be added pressure on price if monsoon falters in key rice-growing countries. Looking into the future, the uptrend in rice trade is likely to continue despite some protectionism feeling among importing countries after the rice crisis. But, rising popularity of rice in many non-Asian countries, including Sub- Saharan Africa and the Middle East is likely to support the uptrend in rice trade in the future. Both India and China are also likely to play key roles, although on different sides of the global rice market. Ideally, one would like to see the global rice market to grow to 15–20% of total production for market stability and future food security. On the flip side, the active participation of India and China in global rice trade may bring a degree of uncertainty to the market because of their sheer size and their focus on domestic food security. Politicians will continue to fiddle with domestic and trade policies to support farmers and achieve greater domestic price stability and in the process may bring greater volatility to the international market. The other traditional exporters in Asia namely Thailand, Vietnam, and Pakistan will continue to remain stable suppliers of rice to the international market. The emergence of Myanmar as a growing exporter should also help the stability of rice prices in the future.
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  • Rice Today | April - June, 2017 Vol. 16 No. 2