Trade
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Although the United States produces less than 2 percent of the
world's rice, it is a major exporter, accounting for more than 10
percent of the annual volume of global rice trade. The United
States is regarded as a consistent, reliable, and timely supplier
of high-quality rice in both the long- and combined
medium/short-grain global markets. Exports are important to the
U.S. rice industry, as the global market accounts for about half of
its annual sales volume.
U.S. rice imports have been increasing in the last 25 years,
from about 4 percent of the domestic market in the second-half of
the 1980s to more than 15 percent by 2008/09 (August-July). Most
U.S. rice imports are aromatic varieties from Asia--jasmine from
Thailand and basmati from India and Pakistan.
U.S. Rice Exports
U.S. rice exports include rough or unmilled rice, parboiled
rice, brown rice, and fully milled rice. The demand for rough rice
by the top two markets--Mexico and Central America--has grown
considerably over the past 15 years. The United States is the only
major exporter that allows rough-rice exports. Other exporters
restrict rough-rice shipments to protect their domestic milling
industries.
Overall, the United States exports about half of its rice crop,
mostly to Mexico, Central America, Northeast Asia, the Caribbean,
and the Middle East and ships smaller volumes to Canada, the
European Union (EU-27), and Sub-Saharan Africa. The largest
rice-importing region in the world is Sub-Saharan Africa, but the
bulk of its imports are supplied by low-priced Asian exporters.
While Sub-Saharan Africa is the largest destination for U.S. food
aid shipments of rice, the region also makes substantial commercial
purchases. The Middle East (with Iran, Iraq, and Saudi Arabia the
biggest buyers) is the second- or third-largest global rice import
market. The United States has lost market share in these two
regions over the past two decades, mostly because of strong
competition from Asian suppliers, particularly Thailand and
India.
The EU-27 purchases mostly long-grain brown rice from the United
States, which it fully mills and then ships to markets in the
region. Buyers of U.S. rice in the EU-27 pay a substantially lower
import tariff on brown rice than on fully milled rice. Fully milled
U.S. rice is not competitive with Asian suppliers in the EU-27,
largely because of the tariff structure. U.S. exports to the region
have remained well below historic levels since 2006, mainly because
of the discovery in August 2006 of trace amounts of genetically
enhanced (GE) rice in some U.S. commercial shipments. The U.S. rice
industry has since taken substantial measures to ensure that all
U.S. supplies--for both domestic and international markets--are
GE-free.
Trade agreements under the World Trade Organization
(WTO) and the North American Free Trade
Agreement (NAFTA) have helped increase the level of U.S. rice
exports in the global market since the mid-1990s. As part of the
1994 Uruguay Round Agreement, which established the WTO, Japan and
South Korea agreed to partially open their domestic markets to
imported rice. In 2002, Taiwan also agreed to partially open its
domestic market to rice imports. Northeast Asia has since become
one of the largest markets for U.S. rice exports, and a stable
export market, since their annual import levels are determined by
their WTO commitments.
NAFTA has benefited the U.S. rice industry by expanding Mexico
as a market. Until the 1990s, Mexico was a minor importer of rice,
mostly buying from Asian sources. Since NAFTA's implementation in
1994, Mexico has become the largest market for U.S. rice. Mexico's
per capita rice consumption is quite low compared with other
countries in the region and, thus, has the potential to
increase.
In most global markets, the U.S. rice industry faces tough
competition from Asian suppliers, with Thailand the world's largest
rice exporting country, followed by Vietnam, Pakistan, India, and
China. Including the United States, these six countries account for
more than four-fifths of the total volume of annual rice
exports.
U.S. Rice Imports
U.S. rice imports have increased in recent decades, largely
because of the growing demand for aromatic varieties, partly driven
by the expanding population of rice-consuming ethnic groups.
Aromatics, primarily jasmine and basmati rice, are imported from
Thailand, India, and Pakistan. U.S. plant breeders have yet to
develop aromatic rice varieties with the same characteristics as
Asian varieties. Imports of aromatic rice are expected to continue
increasing until U.S. breeders develop varieties that satisfy this
part of domestic demand.
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