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Columbia market to provide stable exports for U.S. rice

The first shipments arrived in Columbia in November 2012.


By Sarah Winnan
Manager, International
Promotion
USA Rice Federation
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Colombia has become a potential growth market for U.S. rice exports, following the implementation of the U.S-Colombia Trade Promotion Agreement (TPA) this year. As required by the TPA, an export trading company, Colombia Rice Export Quota, Inc. (COL-RICE) was established to administer the tariff-rate quota (TRQ) for U.S. rice imported by Colombia.

The Board of Directors of COL-RICE is made up of 16 members – eight from the United States and eight from Colombia. The U.S. board members consist of six producers, one from each of the rice-producing states, one miller and one merchant.

50-50 Net Revenue Split

The licenses to import all 79,000 tons for the 2012 tender were successfully auctioned with an average price of $91.33 per metric ton. The first shipments arrived in Colombia at the end of November, and all of the TRQ rice is expected to arrive by the end of the calendar year. The 2012 TRQ brought in $7.2 million in gross revenue; net revenue is expected to be announced and distributed in early 2013.

The cost of establishing and administering COL-RICE will be deducted from the gross revenues. The net revenue will then be divided evenly (50-50) between Colombia and the United States. Colombia has indicated that they will be using their share to invest in modernizing their local rice industry.

The United States will divide its share among the six state rice-research boards based on their average rice production from the past three years (the distribution formula stated in COL-RICE’s bylaws). Each state will use the revenue to conduct traditional rice research.

How The TRQ Works

The TRQ amount increases yearly at a rate of 4.5 percent until it is eliminated in 2030. The out of quota tariff rate remains at 80 percent for the first six years (until 2018), after which it will decrease by about six percentage points per year until it too is eliminated in 2030. The 2013 auction will be held Feb. 4-6, 2013, for 82,555 MT (milled basis).

The opening of the Colombia market will provide a significant and stable market for U.S. rice and will have the added benefit of supporting research initiatives in the individual rice-producing states. With federal rice research dollars declining, this is a welcome source of revenue that is essential to keeping the U.S. rice industry competitive in the global market.

To learn more, visit www.usarice.com.

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