China grows a lot of rice – about 144.5 million metric tons on a milled basis in 2014, which is up about 2 percent from the 142 million metric tons it produced in 2013, according to analysts at USDA’s Economics Research Service.
So why is China expected to import a record 4.5 million metric tons of rice in the 2014-15 marketing year or 8 percent more than it purchased in 2013-14, making it the world’s largest rice importing country?
The answer is simple, according to Robert Cummings, the chief operating officer at the USA Rice Federation: China’s support program for its rice farmers means prices are much lower for imported rice than for rice grown domestically. That and China’s rice consumption continues to outpace its modest production increases.
“There are two ways to value those supports,” says Cummings. “We looked at two different ways of doing it and came up with value of supports for the rice sector of either $12 billion or $37 billion. That’s a big range, but, in either case, both of those figures are well above the $8 billion WTO ceiling for China’s domestic subsidies for any one crop in 2013-14.”
Speaking at the USA Rice Outlook Conference, Cummings displayed a chart that illustrates the impact of China’s support program for rice. China’s imports of milled rice, particularly from Thailand and from cheaper sources in Southeast Asia, have surged since 2012.
India’s government has also been increasing support for its rice farmers. Since it began in 2005-06, rice prices have risen 130 percent, production is up 16 percent and India’s rice exports have risen 100 percent. India, in fact, became the world’s largest rice exporter in 2013. It’s since fallen behind Thailand.
“It’s part of India’s food security policy,” said Cummings. “They want to be very secure in their production of staple crops like rice and wheat and other bulk commodities. As you can see prices are up, production is up and exports are up because of these supports.”
USDA is projecting a decline in India’s production and exports in the coming year, primarily because of problems relating to the monsoons that typically provide irrigation water for a large part of the country’s rice crops.
“Nevertheless India remains a tremendous force in the world-export market, and we believe a big part of that is because of the support program,” Cumming said.
USA Rice estimates India’s aggregate measures of support or AMS for rice at $12 billion, which far exceeds India’s de minimis level or the minimal level of support a country can provide under its WTO agreement.
For more information on the rice situation in China and India, visit http://ageconsearch.umn.edu/bitstream/103665/2/Yang_and_Blandford.pdf.