WASHINGTON, May 7, 2014 - The organization representing U.S. rice growers and millers is going on the offensive in its bid to maintain market share in exports to Mexico – by far, the biggest buyer of American rice -- after a dramatic decline over the past four years.

USA Rice Federation points to three factors for the drop in exports: Mexico’s suspension of import duties on rice from all origins in 2008, eroding an advantage U.S. rice had enjoyed under NAFTA; unfair government subsidies for producers in countries including Thailand, Vietnam and Brazil; and competition from high quality rice especially from Uruguay.

“It's important for us to realize there is no silver bullet that will magically return the U.S. to its previous market dominance in the Mexican market, but addressing the quality issues head-on, building brand loyalty, and tackling unfair trade practices are three ways that the U.S. may be able to stem the tide,” Betsy Ward, USA Rice's president and CEO, said in the organization’s newsletter.

The share of U.S. rice in Mexico's total imports of the grain has fallen from nearly 100 percent in 2010 to the present 89 percent, USA Rice says. According to Mexican import data, U.S. rice exports to Mexico totaled 183,952 metric tons in the first quarter of 2014, down 27 percent by volume from the same period a year earlier.

Jim Guinn, USA Rice's vice president of international promotion, said the organization has identified production subsidies in Vietnam, Thailand, and India that appear to be well in excess of World Trade Organization commitments, as well as export subsidies that simply violate WTO rules. Marvin Lehrer, USA Rice’s Mexico representative, said rice from Vietnam and Thailand is being delivered to Mexican wholesale markets at a 17 percent discount to U.S. rice.

“It’s an open market, and buyers are making capitalist decisions based on price,” Lehrer said last week in a telephone interview. “From a price point of view, they know Asian rice is cheaper and that’s what they’ve been buying.

While corrective action by the WTO can take years, Guinn said USA Rice is vigorously pursuing remedies that the group calls “these market distortion policies” with U.S. policy makers.

“Importers tell me they strongly prefer to buy from the United States,” said Lehrer. “It's easier to deal with the U.S., there's less transport time, they really know the people, and they are extended credit, but the numbers just don't work for many against lower priced Asian rice.”

Guinn also said progress is being made in efforts to breed higher quality rice that can compete better with grain from Uruguay. According to Lehrer, milled rice from the South American country is clearly seen as the quality leader in Mexico and has gained significant market share in recent years, replacing the U.S.'s long-held position. USA Rice is also in regular direct contact with Mexican importers and relays concerns to major American exporters, Guinn said.

On the promotion side, Guinn says USA Rice is working closely with USDA's Foreign Agriculture Service and their partners in Mexico in devising market strategy. And this year, in the hopes of building brand loyalty, USA Rice is registering a trademark that can be used on packages of U.S. rice.

“This logo was developed in consultation with the two largest millers and importers of U.S. rice in Mexico, who informed USA Rice that Mexican consumers have a high opinion of U.S.-grown rice, especially with regard to food safety,” USA Rice said.


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