Rice exporters see unfair overseas competition
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WASHINGTON, Sept. 10, 2014 - Two separate perspectives saying much the same are coming soon to federal trade officials, warning that U.S. rice exporters face a near-crisis level of unfair and ever-stiffening competition from the Far East.
USA Rice Federation and Firstgrain Inc., a Texas-based rice market consulting and analysis firm, are finalizing presentations to the U.S. International Trade Commission (ITC) that will specify how U.S. rice exports are being squeezed by multiple factors. They include everything from the trade policies of foreign governments to surplus production patterns in Asian countries such as India, Thailand and Vietnam that continue to shrink the U.S. share in the always competitive global rice market.
A hearing scheduled for today at the ITC, at which both USA Rice and Firstgrain were going to testify, was cancelled. USA Rice Federation Chief Operating Officer Bob Cummings said the group is in regular touch with ITC investigators and is finalizing its report, while FirstGrain founder and senior economist Milo Hamilton said he plans an informal visit to the commission today instead.
“The broad argument we're going to be making is that when you're looking at factors that impact the competitiveness of the rice industry, on one hand on the domestic side you've got a clear pattern of declining support from the U.S. government for the rice sector,” Cummings told Agri-Pulse.
“At the same time, if you look at some key foreign rice producers who also happen to be very large exporters and therefore competitors of ours - India, Thailand, Brazil - there's a steady increase in support provided by those governments for their exports. And particularly with India, Thailand and Vietnam, when those countries produce more rice than they consume, there's a surplus and downward price pressure.”
Similarly, Hamilton also said rice prices in Asian countries have been kept below market rates, hurting U.S. export efforts. He blamed government subsidies, which are far more pronounced in the Far East than in America. What is saving U.S. rice producers, Hamilton said, is that most of their exports are going to countries in the Western Hemisphere such as Uruguay, Argentina and Brazil, which have lighter subsidies.
Hamilton plans to present his book, “When Rice Shakes the World,” to the commission. The book examines the social, economic and political history of the grain, focusing on its effect on financial markets and governmental stability. He said he hopes the commission can learn from the history he unearthed and how it has affected Asian countries' trade policies.
“The Great Wall of China is held together with a mixture of sticky rice,” he said. “But it's not just the cement of the Great Wall, used for military protection against the Mongol hordes. It is a cultural cement throughout Asia in the minds of the older generation - something to be protected and specially guarded. It's a very closely held commodity in these countries. Almost an obsession.”
The worsening trade outlook is not quite new. Cummings pointed to a Rice Federation study in 2011 that examined rice support programs by the governments of Thailand, India, Turkey and Brazil to see if they were compliant with the Uruguay Round agreement under the World Trade Organization.
“We focused on whether the support provided by those governments to their rice producers was consistent with the obligations of those countries,” he said. “We found, in all cases, rice was being supported by those countries in excess of what was allowed. So this is not a story that has just come out this year, but we're educating people about it.”
Both Cummings and Hamilton said one bright spot for U.S. rice producers is the possibility of opening up markets in China, although several hurdles remain. Trade talks with China over the issue have languished for seven years because of difficult Chinese demands, Cummings said. But Hamilton said he is optimistic because the Chinese will eventually start diversifying the countries from which they purchase rice, potentially including the U.S. sometime soon.
The House Ways and Means Committee in May tasked the ITC with investigating the openness and competitiveness of global rice markets, a review which the commission launched in mid-June. There is a Dec. 9 deadline for written submissions to the commission, and ITC's report to the panel is expected April 14, 2015.
The report is supposed to be a fact-finding document only, although some legislation or changes in trade policy could result. ITC Public Affairs Officer Peg O'Laughlin said the report will be made public when it is available.
Cummings said USA Rice's report should be submitted within a week and will be posted on the federation's Web site.
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