Rough Rice Exports Critical to U.S. Rice Producers
Nathan
Childs
U.S. rough (unmilled) rice exports have grown
sharply since the mid-1990s, and account for about
a third of annual U.S. rice exports, double the
share of a decade ago. Growth in U.S. rough rice
exports has partially offset a loss of market share
in the global milled rice trade to lower cost Asian
exporters, primarily Thailand, the world’s
largest rice-exporting country. While the U.S. is
the fourth largest rice exporter, behind Thailand,
Vietnam, and India, the U.S. share of global trade
of all rice dropped from 20 percent two decades
ago to 13 percent in 2006. About half of the U.S.
crop is exported annually, making exports critical
to the economic well-being of the U.S. rice sector.
The U.S. is the only major rice
exporter that ships rough rice. None of the Asian
exporters allow rough rice to be exported, preferring
to keep the value added from milling. Rough rice
accounts for just 4 percent of global rice trade,
with the United States accounting for nearly all
shipments.
Mexico and Central America, the
largest markets for U.S. rough rice, purchase long
grain, the dominant class of rice grown in the United
States. These countries typically account for more
than 90 percent of U.S. rough rice exports, with
the United States supplying nearly all of their
imports. Shipments to these markets have substantially
increased since the mid-1990s. Importers in these
countries prefer rough rice to milled rice because
tariff rates are much lower on rough rice. None
of these countries has the ability to significantly
boost production. Mexico’s rice production
is less than half the level harvested 20 years ago,
and production has declined in much of Central America
as well, primarily due to policy changes that have
reduced import protection and lowered domestic support
and to more profitable cropping options. Mexico
and Central America have substantial excess milling
capacity as well, further boosting the incentive
to import rough over milled rice.
Energy costs and global trade
policy are two sources of uncertainty facing the
U.S. rice sector. First, the U.S. may not remain
competitive in the global rice market if energy
prices do not fall. Rice is a high-cost crop to
grow in the U.S., primarily due to much higher expenses
for fuel—to operate irrigation facilities—and
more fertilizer than is required for other field
crops. Second, a more open global trading environment
would increase market access for U.S. producers
because rice is a highly protected commodity, especially
in Northeast Asia. However, any trade agreement
that results in reduced producer support would have
negative impacts on U.S. rice producers because
government payments account for a much larger share
of rice producers’ income than for most other
U.S. program crops.
This
finding is drawn from . . . |
| Rice
Backgrounder, by Nathan Childs and
Janet Livezey, RCS-2006-01, USDA, Economic
Research Service, November 2006. |
|
Download PDF version