Most of the world’s rice-producing and consuming countries have tariff regimes to encourage domestic production and protect their milling sectors. The tariffs range from a relatively benign 15.2 percent on average for Venezuela to 322.4 percent for Japan.
So what would happen if all of those countries eliminated their tariffs and allowed rice to flow freely into their countries? Would it make any difference for U.S. rice producers, millers and exporters?
Analysts with the U.S. International Trade Commission in Washington conducted a study of the competitiveness of the U.S. rice industry and of other factors impacting global rice trade. Three members of their team reported on those findings during the latest in the University of Arkansas’ Division of Agriculture’s Food and Agribusiness Webinar series.
“What we found is that the policies that have the greatest impact on U.S. production and exports are tariffs,” said John Giamalva, one of the analysts. “If global tariffs had been eliminated on rice in 2013, both U.S. production and exports would have increased by about 1.3 million metric tons that year.”
A number of foreign governments have accused the United States of subsidizing its farmers, in recent years. Brazil brought such a case against the U.S. cotton program to the World Trade Organization in 2004 and won. But the facts are the U.S. provides far less in subsidies and much lower tariffs on agricultural imports than its competitors.
Analysts for the International Trade Commission looked at six types of government policies to assess the impacts of these Government policies on both U.S. and global rice production, consumption and trade. “Actually what we considered was the removal of these six types of Government policies by category,” says Giamalva.
“And although most of the report focused on long grain white rice, the model that we used here, which is the rice flow modeled developed at the University of Arkansas, considers long grain, medium grain and aromatic rice at paddy rice stage, at brown rice, and also at the mill rice stage
The increase of 1.3 million metric tons if tariffs had been removed in 2013 is out of a base production of about 6 million metric tons and exports of 3 million metric tons for the U.S. rice sector. Internationally, with 450 million metric tons of rice produced annually, the impact would have been minimal.
“The reason the tariff elimination would have had the greatest impact on U.S. production and exports is because many countries in the world have very high marginal tariff rates on rice,” said Giamalva, noting the countries highlighted in the study have marginal tariff rates on rice of 15 percent and more, including China, India, Indonesia, Philippines and Vietnam.
“Most of the impact would have been on medium grain rice because those countries that predominantly consume medium grain rice, Japan and South Korea, have the highest marginal tariff rates on rice. Now this is not their maximum tariff rate on rice; this is the average marginal tariff rate on rice. So therefore if those were eliminated, most of the increase in production and consumption – production and trade would have been in medium grain rice.
To watch the International Trade Commission analysts presentation, visit http://www.uaex.edu/farm-ranch/economics-marketing/food-agribusiness-webinars/posts/10-07-10-usitc-rice-study.aspx
For more information on the University of Arkansas’ Food and Agribusiness Webinar Page, visit http://www.uaex.edu/farm-ranch/economics-marketing/food-agribusiness-webinars/