Rice – change remains constant
Nov 30, 2009 9:23 AM, By Jim Guinn, USA Rice Federation
In Central America, U.S. rice imports dropped by 25 percent — a consequence of the global recession. What some may consider a potential bright spot is Venezuela, which increased imports from the United States from zero two years ago to 227,000 metric tons last marketing year. This trend may not continue, as Venezuela’s imports are a reflection of anomalous factors, including lack of supply from traditional suppliers, government and political control of the agency responsible for all imports, price controls enacted by the country, and the nationalization of some rice mills.
While Cuba represents a significant potential market for U.S. rice, its total rice imports have declined from more than 700,000 metric tons in 2004-05 to 425,000 metric tons in 2008-09. The U.S. portion of imports has fallen from a high of 177,000 metric tons in 2004 to a low of 12,000 metric tons last year.
The drop in U.S. rice sales is the result of the U.S. policy requiring pre-payment for agricultural commodities purchased by Cuba. The poor economic situation in Cuba is the reason for the decline in total rice imports.
Political changes on both sides of the 90-mile Gulf divide are needed for the U.S. to become the supplier of choice to this market, which could replace Mexico as the number one market for United States rice. U.S. exports made up less than 3 percent of Cuba’s dwindling imports.
The Middle East
In the Middle East, in some markets price again seems to trump all other factors. While the United States continues to make some rice sales to Iraq, that country has shifted to a primarily price-driven market with most rice supplies in the country distributed through a ration card system.
Thailand and Vietnam have captured a greater share of this business in recent years. For example, in the recently announced results of an Iraq tender, the country purchased 50,000 metric tons of rice from Vietnam, 30,000 metric tons from Thailand and surprisingly, and 60,000 metric tons from South America (Argentina and/or Uruguay), but none from the United States.
The offered price difference between U.S. and Thailand was $115 per ton, and between U.S. and Vietnam, $220 per ton.
In a move perhaps driven by its desire for food security, Saudi Arabia is seeking land abroad for rice production. There have been reports circulating since early spring that Saudi Arabia-based investors including the Islamic Development Bank are interested in investing more than $1 billion to develop rice production in Africa and/or Indonesia. If executed as originally envisioned, the investment would cover 1.7 million acres of new rice production.
