Pact to open China’s market to U.S. rice

Crop inspection protocols last step in 6-year process

A child samples U.S.-grown rice during a marketing study in September at a store in Guangzhou, China. The U.S. rice industry has spent more than six years trying to win permission to export their crops to the world’s largest rice producer.
A child samples U.S.-grown rice during a marketing study in September at a store in Guangzhou, China. The U.S. rice industry has spent more than six years trying to win permission to export their crops to the world’s largest rice producer.

— An effort to open the Chinese market to U.S.-grown rice is drawing one step closer to completion as trade officials from both countries hammer out crop inspection protocols.

The inspection rules are believed to be the final piece of a trade puzzle that U.S. rice producers began trying to put together more than six years ago.

Greg Yielding, executive director of the North Little Rock-based Arkansas Rice Growers Association, said it only makes sense for Arkansas rice farmers to send their products to China — the largest consumer of rice in the world.

“We want to go where the money is,” Yielding said. But, rather than shipping rice in bulk, U.S. growers want to send pre-packaged bags of high quality milled rice overseas in a bid to command high prices after consumer surveys done in Chinese stores over the past several years revealed strong interest from both buyers and importers.

“What we found was quality over price. They’ll pay more for imported U.S. rice as long as quality is high,” Yielding said. “And they’re interested in nutrition, food security, appearance and taste.”

The possibility of shipping rice to China opened when the country joined the World Trade Organization. At the time, quota and tariff agreements were negotiated for rice and other products. However, very little was done in securing a “phytosanitary agreement” that outlined inspection rules for the U.S. to export rice there.

However, after several trade missions and industry tours, China delivered a proposed inspection protocol to the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service in mid-October. Federal officials are now drafting a response.

“At the request of APHIS, China completed a plant pest risk assessment for U.S. milled rice,” agency spokesman Richard Bell said in an e-mail statement Monday. “We’re currently working with China on the findings of the assessment.”

The agency didn’t indicate how much longer the process would take or what, if any, specific concerns were with the Chinese proposal.

China, which is projected to produce 157.6 million tons of rice in 2012/13, is also expected to import 2.9 million tons — mostly from nearby countries such as Vietnam.

While the deal has been years in the making and even though the United States produces only a fraction of the world’s rice supply, finding a new market “is important for U.S. rice farmers and the whole industry,” said Robert Cummings, chief operating officer of the U.S.A. Rice Federation, based in Washington, D.C.

The Rice Federation is one of several agencies and groups involved in the export effort.

U.S. farmers are expected to produce 9.9 million tons of rice in the 2012/13 harvest year — about 1.5 percent of the 511.8 million tons of rice produced worldwide on a milled basis, according to the Agriculture Department’s Economic Research Service. Of that, about 41.9 million tons will be traded between various countries.

Despite its relatively small crop compared to large producers such as China, India and Vietnam, the United States annually ranks fourth or fifth among exporting countries.

Arkansas produces nearly half of the nation’s rice crop. In 2012, the state’s rice crop is expected to set a new record of 4.7 million tons once the National Agricultural Statistics Service finishes its final tallies by the end of the year.

The Economic Research Service estimates that in the 2012-2013 market year, the United States will export 5.1 million tons — much of that “rough” or unmilled rice to central America, including Mexico. Other importers of U.S. rice in the western hemisphere include Haiti, Venezuela, Honduras, Nicaragua and Canada. Other major recipients include Turkey, Japan, Saudi Arabia and Iraq.

Cummings and Yielding both said the phytosanitary agreement is the last hurdle to U.S. rice gaining access to the Chinese market, with Cummings calling it “one of the legal foundations” needed for shipments to begin.

“Once the phyto-agreement is agreed to, we’ll then have to see indeed if China is going to follow through and release, essentially, what will be licenses to import U.S. rice,” Cummings said.

For years, China has been fairly self-sufficient and hadn’t regularly engaged in the import-export trade, he said, calling exporting rice to China “a very difficult nut to crack.”

Once the inspection protocol is set, Cummings said it will take time to develop the market.

“It’s something, though, that isn’t going to happen overnight. It remains a sensitive commodity. It’s going to take a continuation of very methodical work to get that market opened up.”

However, Yielding said much of the marketing legwork was done over the past few years by introducing Chinese consumers to U.S. rice and through surveys to gauge their reactions.

With help from USDA agricultural trade offices, the U.S. agricultural attaches, the Animal and Plant Health Inspection Service, various rice industry groups and even the Missouri Department of Agriculture, which has a trade office in China, consumer attitudes toward U.S. rice were studied.

“We conducted promotions and surveys at six supermarkets,” taking more than 2,000 surveys, Yielding said.

“We just went in the stores, we had a little booth, we had a rice cooker and we had questions” to gauge their response, he said. “We were swamped the whole time. We didn’t have any trouble getting people to do this.”

The booths described U.S.-grown rice as a healthy product with “vitamin-enriched” nutrition. Yielding said those who stopped at the booth carefully inspected bowls of uncooked rice, feeling the grains and sniffing them.

“These are the rice connosseiurs of the world,” he said. Overall, the surveys showed that 79 percent of respondents said they liked the flavor of U.S. rice while 78 percent said they’d likely pay more for it than for domestic rice.

Survey respondents purchased large amounts of rice every month, with 35 percent saying they bought about 22 pounds and 17 percent saying they bought about 33 pounds.

After the trade missions to China, another grant paid for a group of Chinese trade representatives to travel to Arkansas, California and Louisiana in September 2011, for on-site inspections of farms and rice mills and a meeting with federal inspection officials in Washington, D.C.

Yielding said that the process slowed a bit after that visit, but got back on track when the Chinese sent the proposed inspection protocols that are now pending.

Once the protocols are worked out, Yielding expects fast action to send U.S. rice to China.

One buyer with China-Vanguard Group, a large Chinese retail chain, made clear his interest during Yielding’s last trip to China.

“He said that within 60 days of protocols being worked out he’s going to be making an order to get U.S. rice,” Yielding said. “They want to be the first ones to get it in their stores.”

Business, Pages 67 on 11/25/2012

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