Rice Market Opens

US, China Strike Deal; Phytosanitary Rules Completed

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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U.S. rice producers may soon be exporting rice to China for the first time, based on a new agreement with the Chinese. (DTN file photo)

OMAHA (DTN) -- USDA laid the groundwork on Thursday for rice farmers in the United States to begin exporting rice to China for the first time ever, as the agency announced in a news release it had struck a deal with Chinese officials on the final details on final phytosanitary protocol.

China is the largest rice producer and consumer in the world. China has been the largest importer since 2013, taking in nearly 5 million tons last year.

When the protocol is fully implemented, the U.S. rice industry is expected to have access to the Chinese market. That protocol includes a work plan that outlines how exporters will be required to prevent the introduction of certain pests into China.

"This is another great day for U.S. agriculture and, in particular, for our rice growers and millers, who can now look forward to gaining access to the Chinese market," U.S. Secretary of Agriculture Sonny Perdue said in a statement.

"This market represents an exceptional opportunity today, with enormous potential for growth in the future. The agreement with China has been in the works for more than a decade and I'm pleased to see it finally come to fruition, especially knowing how greatly it will benefit our growers and industry."

The U.S. rice industry is preparing to host Chinese inspectors at mills across the country ahead of opening the export market.

Carl Brothers, chairman of the USA Rice international trade policy committee, said in a statement the industry will do what it takes.

"The president and Secretary Perdue have opened the door, now it's time to move to our technical to-do list so that rice shipments can occur," Brothers said.

"We know China wants to send a team here to inspect mills and facilities certified to ship to China, and we are working with USDA to make that happen in the quickest and most efficient way."

USA Rice President and Chief Executive Officer Betsy Ward said China consumes the equivalent of the entire U.S. rice crop every 13 days. USDA expects China to import 4.8 million metric tons of milled rice in 2017-2018, making it the world's largest import market.

China rice imports have surged since 2007 to between 4.5 million and 5 million metric tons annually.

China opened its rice market when the nation joined the World Trade Organization in 2001. U.S. rice was prohibited from entering the market, however, because of the lack of a phytosanitary protocol.

According to USA Rice, initial demand for U.S. milled rice in China is expected to be strongest in coastal areas among higher income consumers, and in the hotel and restaurant trade.

Chris Crutchfield, chairman of the USA Rice Asia/Turkey promotion subcommittee, said the group already is promoting U.S. rice in China.

"We'll tailor our promotion activities going forward to include large trade seminars here and in China to educate Chinese consumers about the types and qualities of U.S. rice," Crutchfield said in a statement.

In December 2016, President Barack Obama pushed a trade case with China regarding corn, wheat and rice exports. The administration claimed China was not upholding its import obligations under the World Trade Organization for those three commodities.

China's tariff-rate quotas for corn, wheat and rice combined were estimated worth more than $7 billion. If China had fully used those import quotas in 2015, the U.S. Trade Representative's Office said China would have imported as much as $3.5 billion more of those commodities.

That case came as the U.S. separately asked the WTO to create a dispute settlement panel to explore the U.S. contention that China has paid nearly $100 billion in domestic support for Chinese producers of corn, wheat and rice.

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley