US and China Agree to a Deal on US Rice

Spend Matters welcomes this guest post from Loraine Hudson, of Mintec.

After roughly 10 years of discussions, an agreement has been reached that will allow U.S. rice to be exported to China, the largest rice producer, importer and consumer. Demand for U.S. rice in China has been identified and the country could, in time, become the largest market for U.S. rice exports.

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In comparison with China, the U.S. rice market is tiny. The U.S. produces 6 million to 7 million tonnes of rice per year, compared to around 140 million tonnes per year for China. U.S. consumption is around 4 million tonnes, whereas China’s is more than 142 million tonnes. China’s huge demand for rice is not completely covered by its domestic production and so in the past few years China has become the world’s largest rice importer too.

In 2014/2015, China imported 4.3 million tonnes of rice, and none of that was American. A lengthy discussion on the phytosanitary aspects of the rice that China will allow into the country has been ongoing for the best part of a decade and, until this was decided, no U.S. rice could be exported to China. On Jan. 21, 2016, a representative from USA Rice announced that an agreement had been reached with hopes that U.S. rice could be exported to China as early as spring 2016.

The phytosanitary protocol agreement requires U.S. rice mills and storage facilities to comply with a range of phytosanitary standards, which will be inspected by both U.S. and Chinese authorities, and a certification issued by China before exports can be made. Even then exports will only be allowed into eligible Chinese ports. Part of the requirements is for traps to be laid to capture certain insects, especially the Khapra beetle. The Khapra beetle is notoriously hard to kill but very rare in the U.S., and exporters will need to prove traps are in place and record anything found in them.

Although the prospect of exporting to China is seen as having huge potential for the U.S. rice industry, U.S. exporters are aiming for the high-quality market rather than the mass-market. Consequently, it is thought that exports will grow slowly, with China becoming the largest importer of U.S. rice only after a few years.

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