China agrees to allow US rice imports for first time

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22 July 2017

The world's largest rice market is about to open up for American farmers, as Chinese officials have agreed to allow imports of US rice for the first time ever.

The move would give US farmers access to the world's biggest rice consumer, US Department of Agriculture Secretary Sonny Perdue said on Thursday.

The move comes after years of negotiations, acknowledging China's 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,'' Perdue said.

China is the world's largest producer and consumer as well as importer of rice. In recent years, it has increasingly turned to imports 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.

China opened its rice market when it joined the World Trade Organization in 2001 but a lack of phytosanitary protocol between China and the United States effectively banned imports, according to trade group USA Rice.

"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 US rice," President Betsy Ward of USA Rice said in a statement, adding that China consumes the equivalent of the entire US rice crop every 13 days.

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.

The announcement was another sign of strengthening relations on agriculture trade between the United States and China under US President Donald Trump, despite disagreements in other areas such as steel.

China last month resumed imports of US beef for the first time since 2003. Last week, Chinese buyers inked deals valued at about $5 billion during a ceremony in Iowa to buy 12.53 million tonnes of US soybeans and 371 tonnes of beef and pork.

The Chinese rice market opening is contingent upon inspection and approval of US facilities by Chinese inspection and quarantine officials. 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 US 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 US 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 US rice,'' said USA Rice chief executive 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 willing 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 US 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 US runs against China.





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