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Serving: Central

Farmers looking to Western Hemisphere

Case in point. USDA is reporting U.S. rice export sales of 4.132 million metric tons for 2002/03, up from 2.6 million in 2000/01. Of that, an astonishing 2.370 million metric tons will go to the Western Hemisphere. That’s 57 percent of total U.S. rice exports.

Mexico continues to grow as the U.S. rice producer’s biggest customer, thus far importing 691,000 tons of U.S. rice this year, or 17 percent of all U.S. rice exports. Central America is expected to import 516,000 tons of U.S. rice, including 141,000 tons by Nicaragua and 134,000 tons by Costa Rica.

Other Western Hemisphere markets include Brazil at 389,000 tons, Haiti, 277,000 tons, Canada, 180,000 tons, Cuba, 128,000 tons, and Venezuela, 46,000 tons.

Bell added that the figures are somewhat distorted because they’re based on product weight with milled and rough rice lumped together. Nonetheless, “it’s been an outstanding year.”

Bell says much of the credit for the growth in the market should go to the North American Free Trade Agreement, signed 10 years ago, but just now starting to assert its influence.

“I think it’s one of the most significant developments in the last 25 years in American agriculture,” he notes. “It’s changed everything. Today, we have 20 percent of our rice exports going to NAFTA partners, Canada and Mexico.”

Another factor is that rice production in the Western Hemisphere has shrunk from a high of 21.5 million metric tons in 2000 to around 20.3 million tons (projected) for 2003. The figures include production declines in the United States.

Meanwhile, rice consumption in the region has risen from 19.3 million metric tons in 2000 to 20.4 million tons in 2003. Basically, less exportable supplies in the region coupled with more competitive rice prices, is helping move U.S. rice, according to Bell.

“It didn’t take the Cubans long to discover that they could buy long-grain, rough rice from us, much cheaper than they could bring in milled rice from Asia.”

Nice hand

In January, Bell called Brazil “a wild card” for U.S. exports to the region. Today, he says the wild card “has been played” to the tune of 389,000 metric tons. “And we think there will be more. Some of the additional purchases will come after we get our new crop.

And then there’s Central America, home to 35 million people. “There is discussion there about the formation of a free trade agreement with the United States. If that could be put together, it would be another boon for rice trade.”

On the other hand, such an arrangement would be more difficult to pull off than NAFTA. “These countries are relatively small and they have a lot of fiefdoms. But they’re very well educated and have been a good market.”

Bell says the growth in the Western Hemisphere market has been nothing short of amazing. “We had been discussing it among ourselves for 18 to 24 months, wondering if it was just a fluke or if something is really happening,” Bell said. “I tend to think now that something is really happening. And it’s spread all the way down to the Panama Canal.”

Bell stressed that there is still a strong case for strengthening rice markets in the Middle East and Asia. “Iraq is going to be stymied for a while by the United Nation's Food-For-Oil program, but after that I think we’ll have a chance to be competitive. We’ve also been working on shipments by bulk rather than by bag. That could mean tremendous savings.”

Meanwhile, “Domestic demand for rice seems to be steady,” Bell noted. “We’ve had two very large rice crops, one of them a record, for two years in a row, and we’ve sold it all. And our mill in Louisiana is about to run out of rice. They won’t have any more rice until late July.”

Higher prices?

With such strong demand, rice prices have room to move higher, Bell noted. “I’m not sure we will get back to the level of five or six years ago. But we’ve been able to put down a very solid demand base in the United States and in export countries.”

Bell stressed that maintaining farm programs and solidifying trade policy is crucial in the years ahead. At the farm level, the challenge to the U.S. rice industry to keep increasing yields. “We also need to grow varieties with marketability and work with the research stations to better define what the market needs. We can’t just say we want better rice. We need to bring in end-users like Kellogg to help us define it, as well as Anheuser-Busch and others.”

Bell recalled with a smile one instance last year when a consumer run on Kellogg's Special K with Red Berries cereal at grocery stores put a lot of pressure on Riceland to ship more medium grain rice. It underscores the importance of raising rice with marketable characteristics, he noted.

In addition, U.S. rice acreage must hold steady, “and certainly doesn’t need to go backwards.”

NAFTA’s benefits are not just in rice, noted Bell. It’s showing up all across U.S. agricultural sectors. For example, USDA is projecting a total value of $56 billion in U.S. agricultural exports for the 2003 fiscal year ending Sept. 30. Of that, 30 percent is going to the NAFTA partners and 49 percent to Western Hemisphere countries.

“Canada at $9 billion has moved ahead of Japan as a top export market,” Bell said. “Mexico has moved up to No. 3. The Western Hemisphere has evolved into a very important market for the United States.”

Meanwhile the European Union, once a significant trading partner, now purchases around 12 percent of U.S. agricultural exports. “I’m not sure they’re worth fighting with anymore,” he said.

According to USDA, 70 percent of U.S. long grain exports go to the Western Hemisphere, while only 9 percent of medium grain is shipped there. “Long grain rice is what we grow here in the South,” Bell noted. “California, where medium grain rice is predominant, is going to Japan, Korea and Taiwan.”

Ninety-three percent of U.S. exports of rough, long-grain rice is shipped to the Western Hemisphere, while half of U.S. milled, long-grain rice for export is shipped there.

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