- In 1998, the U.S. rice industry established an export trading company to manage rice export quota to the European Union granted to the United States under WTO Article XXVIII proceedings.
- That export trading company had many shortcomings.
Ideas have power. That truth is the ongoing and growing legacy of the US Rice Producers Association.
In 1998, the U.S. rice industry established an export trading company to manage rice export quota to the European Union granted to the United States under WTO Article XXVIII proceedings. That export trading company had many shortcomings.
The negotiation and formation of the export trading company — the Association for the Allocation of Rice Quotas — dragged on for years, due largely to legal bickering among rice exporters and millers. Before rice producers got a nickel, AARQ paid out almost a million dollars in fees to the millers and exporters who had delayed the establishment of AARQ. Rice producers fought to make AARQ funds available for rice research in each rice-producing state. They were denied reimbursement for their minimal costs in the fight.
The board of AARQ was composed entirely of exporters and millers. No provision was made for even a single producer representative.
The vast majority of the funds from AARQ quota auctions (78 percent) went to exporters and millers. Only 22 percent of the funds were set aside for producers. Producers who wanted to use those funds for rice research in their own states had to pay an additional 10 percent administrative expense to receive their own money. In the end, these producers received less than 20 percent of the AARQ quota proceeds.
USRPA spent its own funds, without any reimbursement, successfully fighting for the idea that producers should benefit directly from the AARQ quota proceeds. We are proud of what we achieved in 1997 and 1998. But we did not stop there.
Since 1998, USRPA leaders have continued to educate rice producers, government leaders, and others of the shortcomings of AARQ. Recently, many rice industry leaders advocated that quota auctions related to the U.S.-Colombia Free Trade Agreement should be administered by AARQ. They said: producers should be content with 20 percent of the funds; producers should be excluded from the board; producers should trust others to take care of the producers’ business.
Producers fought again. And with the benefit of 15 years of educational perseverance, this time the producers won.
Producers, millers, and exporters in both the United States and Colombia engaged in spirited negotiations about the formation of an export trading company to manage the quota for rice exports to Colombia. As a result, the COL-RICE export trading company was chartered a few weeks after the US-Colombia FTA entered into force.
COL-RICE is required to reimburse producer organizations in the United States and Colombia for their COL-RICE establishment expenses. Even with the active involvement of millers, exporters, and producers in two countries, the total costs to be reimbursed should be a small fraction of those paid in 1998 to form AARQ.
The COL-RICE board includes a majority of rice producer representatives, but seats are also reserved for rice millers and exporters. Producers control the board, but they benefit from the experience and wisdom of U.S. rice millers and exporters, and Colombian importers.
After expenses, the funds raised by COL-RICE quota auctions will be divided 50-50 between producers in the United States and Colombia. In the United States, 100 percent of these funds will go to state rice producer boards.
The ideas of USRPA leaders largely shaped the COL-RICE model. Ideas were framed in the fight over AARQ. Ideas were successfully advocated for 15 years by producer leaders in grower meetings at home and industry meetings and with U.S. trade officials.
Ideas have power. And when the power of those ideas prevails, they can benefit every rice producer in the United States.
Fred Clark is Vice President and General Counsel at Cornerstone Government Affairs. He is Washington counsel for the USRPA.