123Although 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 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 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.