Given that much of the world was recovering from a global economic downturn, 2010 was a particularly good year for rice. During calendar year 2010, the value of U.S. rice exports increased $179 million over 2009 to reach $2.35 billion, eclipsing the previous record set in 2008 when prices reached record levels. The volume of exports rose by 1.063 million metric tons (MT), 31 percent higher than in 2009, a new record.
Regionally, the Middle East and Asia/Oceania both surpassed Central America as the second-most important market for U.S. rice. Surprisingly to some, total U.S. rice exports to Central America have declined more than 23 percent, and paddy rice exports, specifically, have decreased 31 percent since 2005, even though the United States currently has a free trade agreement with Central America.
To reverse this trend, two years ago, USA Rice Federation began promotions in Guatemala, Honduras and El Salvador, the lowest per capita rice consumers in Central America. These efforts resulted in a four percent increase in rice imports last year compared to 2009.
Global Growth Markets
There are several current and potential markets for U.S.-grown rice in countries around the globe that stand out, including Mexico, Turkey, Nigeria, Korea, Israel, Liberia and Cuba.
In 2008, the global economic downturn resulted in lower exports to Mexico; however, the market has substantially recovered. USA Rice invests 20 percent of its promotions budget in Mexico, the largest export market for U.S. rice, 90 percent of which is paddy rice. Last year, Mexico exports totaled 817,934 MT, which is valued at $313.4 million.
The second-largest country market for U.S. rice in 2010 was Turkey, which saw imports surge to a record 427,600 MT. Roughly 140,000 MT were medium grain paddy rice from the South. With encouragement from USA Rice, two companies have introduced brands of Southern medium grain “Jupiter” rice onto the market in Turkey. Previously, Southern medium grain rice was only used for blending with local or other imported rice and had no identity in the marketplace.
In 2008, Nigeria reduced import tariffs from about 85 percent to 10 percent for brown and broken rice and to 30 percent for milled rice. Since then, there have been significant imports of U.S. parboiled rice. To encourage this market, USA Rice launched a promotional campaign in 2009 featuring local U.S. rice brands. In 2010, imports surpassed 75,000 MT to reach a new record, almost equaling the total imports over the last 15 years. This market is expected to continue to grow as USDA projects that total Nigerian rice imports from all origins will set a record in 2011, surpassing 2.1 million MT.
The United States has a fixed country-specific quota with South Korea of 50,076 MT (milled basis) and can compete for a share of the global quota, which will grow to 203,470 MT by 2014. In 2010, U.S. rice exports to South Korea reached 104,700 MT, approaching the record set in 2008, when a number of rice-exporting countries imposed export restrictions.
In the Middle East, USA Rice began promotional activities in Israel and the West Bank in 2008. In 2010, exports to this market reached a record 47,400 MT, roughly 3.5 times the exports in 2007. The rice is mostly medium grain from California.
Finally, a USA Rice initiative supporting Private Voluntary Organizations (PVOs) in Liberia has resulted in 10,110 MT of food aid rice to that country – a 58 percent increase of imports over 2009. USA Rice has a food aid outreach program to PVOs, supporting rice in monetization and school feeding programs.
Potential Rice Markets
There is no market that has more potential for U.S.-grown rice than Cuba, which has imported no U.S. rice since the spring of 2008. Each year, Cuba imports 500,000 and 700,000 MT of rice, but the market remains closed to U.S. rice because of outdated and counterproductive U.S. policy toward the island nation. USA Rice continues to maintain relations with the Cuban Interests Section (the equivalent of an Embassy, but the United States has no diplomatic relations with Cuba) and Alimport, the agency responsible for agricultural imports in Cuba. USA Rice also supports legislative efforts to liberalize the U.S. trade and travel policies with Cuba.
Looking ahead, USA Rice expects continued incremental increases in imports of U.S. rice into Mexico. Additionally, in the short term, if the U.S.-Colombia Free Trade Agreement is approved by Congress, then the U.S. industry will gain access for 79,000 MT of that rice market.
Rice remains one of the most sensitive agricultural commodities in world trade, facing subsidized production, highly protected markets and stiff competition.
Despite positive export growth, U.S. rice faces tough competition from nearby rice exporting markets in Latin America, such as Argentina and Uruguay. It has been reported that Haiti has recently purchased a shipment of rice from Uruguay. Typically, more than 90 percent of Haiti’s rice imports come from the United States.
To bolster the competitiveness of U.S.-grown rice, USA Rice recently formed the Rice Marketability and Competitiveness Task Force charged with fostering the development of U.S. rice varieties that offer superior quality while maintaining higher yields. According to some of our export customers, U.S. long-grain rice kernel length, uniformity and color are not what they once were.
With the USDA projecting significant reductions in rice acreage in the Southern region this year, U.S. rice export success may ultimately be limited by supply, rather than opportunity.
Jim Guinn is the Vice President, International Promotion, with the USA Rice Federation.