The world’s largest rice market is about to open up for American farmers.
After years of negotiations, China has agreed to open its domestic market for U.S. rice exports for the first time ever, acknowledging its need for foreign shipments to meet the growing demands of its vast middle class.
“This market represents an exceptional opportunity today, with enormous potential for growth in the future,” said U.S. Secretary of Agriculture Sonny Perdue in a statement Thursday announcing the agreement.
China is the world’s largest producer and consumer of rice, but has increasingly turned to imports in recent years to meet domestic demand. With about 5 million tons of rice bought from other nations last year, China was the world’s largest importer.
American farmers have wanted to crack the Chinese market open for years, but a variety of political, cultural, bureaucratic and economic obstacles stood in the way.
The market’s opening could be a boon for many struggling American rice farmers, who have had to face sluggish prices and oversupply for years. American rice farmers produce about 9 million tons a year, and Chinese consumers can eat that much supply in about two weeks, according to USA Rice, a trade group for rice producers.
The Chinese market opening is contingent upon inspection and approval of U.S. facilities by Chinese inspection and quarantine officials. And if all goes well, shipments to China could start later this year or early next year, said Michael Klein, USA Rice’s vice president of marketing, communications and domestic promotion.
A breakthrough came early last year when the U.S. and China agreed on a so-called “phytosanitary protocol,” which spells out the terms of sanitary conditions for American milled rice. Chinese officials are concerned about the possibility of certain pests being introduced by rice imports in China. And American mills and storage facility operators interested in selling there were told to focus particularly on insect trapping and record-keeping requirements.
“It’s the most complex phytosanitary agreement that the the U.S. rice industry has ever entered into,” Klein said. “But the potential size of the market makes it worthwhile.”
While the protocol’s terms were agreed upon, China didn’t sign and formalize it until this week.
“We waited a decade for the protocol to be signed and our members are anxious to meet the demand of China’s consumers for safe, high-quality U.S. rice,” said USA Rice CEO Betsy Ward.
American farmers will face plenty of domestic and foreign competition in China. Vietnam and Thailand are major rice exporters to China and can ship smaller amounts more quickly. With their crops heavily subsidized by their governments, their rice also will likely be sold at cheaper prices.
But American farmers are hoping to sell on quality and higher food safety standards. “Our rice is higher quality. Is that a trade-off Chinese consumers are wiling to make? The rising middle-class in China is very interested in quality. This gives us a leg-up,” Klein said.
President Trump has made reducing the U.S. trade deficit a central issue in his campaign and his presidency, and has been pressing other nations for what he deems to be unfair trade arrangements and subsidies. Meanwhile, American trade officials also have been negotiating with China on a variety of trade issues, including steel production and agricultural product barriers, in hopes of reducing a large trade deficit the U.S. runs against China.
In May, the Trump administration announced American cattle ranchers will be able to sell their beef in China starting later this year. China has refused American imports since the mad cow disease breakout in 2003.
The agreement to lift the ban was accelerated by the U.S. approval to allow fully-cooked Chinese chicken to enter the U.S. Chinese chicken has been banned in the U.S. due to sanitary and health concerns.
Read or Share this story: https://usat.ly/2uQrDmY