Government subsidies distort rice exports overseas?

Five countries - Thailand, India, Vietnam, Pakistan and the United States - account for 80 percent of all the rice traded in the world.

That means  market distorting subsidy programs by any of those countries can have a major impact on the rice exports of the others, says Carl Brothers, senior vice president and chief operating officer at Riceland Foods in Stuttgart, Ark.

Speaking at the annual Ag Update Meeting at the opening of the Mid-South Farm and Gin Show in Memphis, Tenn., Brothers said Riceland Foods has lessened the impact of the competition for exports by helping increase U.S. consumption of its products from 50 percent some years ago to 75 percent to 80 percent today.

But exports continue to be important for the U.S. rice industry and for producers. That's why the USA Rice Federation has asked the U.S. International Trade Commission to begin an investigation of subsidy programs operated in rice-exporting countries, including the United States.

"Thailand has been the No. 1 rice exporting country for most of my career at Riceland Foods," said Brothers. "But Thailand began a new subsidy program two years ago that paid producers the equivalent of about $10 per bushel to grow rice.

"As a result of the way they operated the program, their exports dropped from around 11 million metric tons to 7.8 million metric tons in 2013/14, dropping them to No. 3 among exporters. The program cost the country more than $21 billion. It nearly broke the country. The prime minister who initiated the program is under indictment and the military has taken over the country."

India has also been subsidizing its rice production with the result that its exports jumped from 2.8 million metric tons to 10 million metric tons at the same time Thailand's exports were declining, he said. India's exports are expected to decline in 2015/16, however, due to shortages of water for irrigation.

For more on the World rice outlook, visit http://www.ers.usda.gov/topics/crops/rice.aspx

 

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