Trade Market Landscape for California Rice Remains Turbulent

Brian German Field & Row Crops, Trade

With multiple tariff related concerns throughout the year, the trade market landscape for the U.S. rice industry remains uneasy.  The trade relations between China and the U.S. have taken a heavy toll on several American agricultural commodities, but increased tariffs in areas such as the European Union (EU) are causing the most concern for rice growers.

“Where we are negatively affected is a pretty major market for US medium grain rice, CaliforniaTrade Market Landscape in particular, and that’s Turkey,” said President and CEO of American Commodity Company Chris Crutchfield, “they have followed the EU’s track of raising tariffs on U.S. agricultural products.”

On a good year, Crutchfield noted that approximately 80,000 tons of U.S. medium-grain rice is exported to Turkey. “Now, we don’t expect that there will be any until there’s some mitigation of that tariff structure.  So that’s a market eliminated for the time being,” said Crutchfield.

According to a report released by the University of Arkansas System Division of Agriculture, in 2017 the U.S. exported 58,000 metric tons of rice worth $42 million to the EU.  The report also predicted a three percent decline in overall rice exports.  “We are still seeing some exports to the EU despite the additional 25 percent tariff, but they’ve slowed way down,” Crutchfield noted.

There was a significant development last year for American rice with China agreeing to begin accepting rice exports from the U.S. pending the inspection of American facilities.  The agreement was progressing until the beginning of June when trade relations soured between the two countries.  “There’s been no movement since the first round of tariffs came out,” Crutchfield stated, “there is not really a negative effect other than potential loss of opportunity there that we really thought we were going to have.”

The trade market landscape does appear to be a bit brighter due to the recent US-Mexico-Canada Agreement.  “I think that’s a very positive development.  Mexico is the largest market for U.S. rice and Canada is about third or fourth on the list depending on the year.  So, the conclusion of an agreement is very positive news,” Crutchfield said.

Looking ahead at the 2018 crop, a shift toward a more average sized harvest is expected after last year’s weather complications caused a decline in plantings.  The expectation is still slightly below the average due to water issues, but overall planted acreage has increased from 2017.  “I think the whole industry is looking forward to returning to the markets that we weren’t able to supply last year and getting California Calrose rice back into those markets,” said Crutchfield.

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Brian German

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Ag News Director, AgNet West