Rice: Global Competitiveness of the U.S. Rice Industry October 7, 2015 Disclaimer: The views expressed here are those of the presenters, and do not necessarily represent those of any individual Commissioner or of the Commission as a whole. 1
Agenda Overview of the Global Rice Market Competitiveness: Cross country Comparison Competitiveness: Country specific Findings Competition in Export Markets Assessment of the Impact of Government Programs 3 Overview: Global Rice Market 2
Global White Rice Production Asia 90% North America 1.5% All other 10% Africa 3.5% RoW 1.6% South America 3.6% Asia: 409 million mt All other: 46 million mt Source: USDA, PSD Online (average for 2007/08 13/14) Most Rice is Consumed Locally Annual addition to Stocks 1% Exports 7% Domestic Consumption and Residual 92% Source: USDA, PSD Online (average for 2007/08 13/14) 6 3
Major Global Trade Flows: 2011 13 Source: GTIS, Global Trade Atlas database (1,000 mt product weight) 7 Competitiveness: Cross country Comparison 4
Highlighted Countries Country Export Import Consumption Production Global ranking India 1 2 2 Thailand 2 17 7 6 Vietnam 3 50 5 5 Pakistan* 4 22 11 USA 5 16 14 12 Burma* 6 8 7 Cambodia* 7 104 15 13 Brazil 8 14 10 9 Uruguay 9 96 32 China 14 1 1 1 Indonesia 5 3 3 Philippines* 3 6 8 * Additions to the countries listed in request letter Source: USDA, PSD Online (rankings based on 2013/14 data). Highlighted Country Groupings Country Export Import Consumption Production Global ranking China 14 1 1 1 Indonesia 5 3 3 Philippines* 3 6 8 India 1 2 2 Thailand 2 17 7 6 Vietnam 3 50 5 5 Burma* 6 8 7 Cambodia* 7 104 15 13 Brazil 8 14 10 9 Uruguay 9 96 32 Pakistan* 4 22 11 USA 5 16 14 12 * Additions to the countries listed in request letter Source: USDA, PSD Online (based on 2013/14 data). 10 5
Comparison of Factors of Competitiveness Country Delivered cost Product differentiation (quality) Reliability of supply Domestic Export Domestic Export Brazil High Medium Medium Medium Low Burma Low Low Low High Low Cambodia Low Low Low High Low China High Low N/A Medium N/A India Low Medium Low High Low Indonesia High Low N/A Low N/A Pakistan Low Medium Low High Medium Philippines Medium Low N/A Low N/A Thailand Medium Medium High High Medium Uruguay Low High High High High United States Medium High High High High Vietnam Low Low Low High Medium Competitiveness: Country specific Findings Rice Exporting Countries 6
10/7/2015 Factors Affecting Competitiveness: India Low cost of production Supportive government policies Innovation benefits Indian rice farmers Poor storage and milling infrastructure 13 Factors Affecting Competitiveness: Pakistan Government assistance for inputs lowers production costs Investment in processing facilities improves quality Lack of innovation keeps crop yields low Water Extensive resources create favorable growing conditions... but poor water management raises delivered costs and reduces supply Road infrastructure also hinders competiveness 14 7
Factors Affecting Competitiveness: Thailand Regionally high cost of production Reputation for premium quality Reliability of supply Historically highly reliable but recent problems with reliability 15 Factors Affecting Competitiveness: Vietnam Low cost of production Natural resource endowments Better seed varieties and crop management increase yields and quality Poor government data & lack of market information 16 8
Factors Affecting Competitiveness: Burma Low cost of production Abundant natural resources favor rice production Inefficient milling infrastructure and poor quality Poor road and port infrastructure 17 Factors Affecting Competitiveness: Cambodia Low cost of production Poor irrigation, utility, and transportation infrastructure The inefficient milling sector reduces quality and reliability of supply Efforts to improve quality and reliability Tariff preferences benefit the export sector 18 9
Factors Affecting Competitiveness: Brazil High cost of production Improved yields Participation in paddy rice market Competition from other crops 19 Factors Affecting Competitiveness: Uruguay Cost competitive producer High quality Product well suited to certain export markets Constraints on expanding capacity 20 10
Factors Affecting Competitiveness: USA Production costs limit U.S. exports in pricesensitive markets Ability to supply various rice types and forms Developments in long grain rice breeding research Reputation for high quality Inability to meet certain customer specifications 21 Competition in Export Markets 11
U.S. Competition in Long Grain Exports Traditional U.S. markets Nontraditional U.S. markets Declining U.S. competitiveness Box A Mexico Central America European Union Haiti Ghana Box B China Nigeria U.S. potentially competitive U.S. competitive, open trade Box C Canada Jordan Saudi Arabia Box D Iran Iraq Venezuela U.S. occasionally competitive U.S. competitive, restricted trade Box E Japan South Korea Taiwan Box F Senegal Philippines Malaysia South Africa U.S. limited competitiveness 23 Mexico U.S. market share: 98% (2007) 55% (2013) Main competitors: Vietnam, Pakistan*, Uruguay Loss of market share owing to: extension of (temporary) tariff preferences quality problems in the U.S. starting in 2011 lower cost, reasonable quality, alternative supplies 12
U.S. Market Share in Mexico 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 01/2012 07/2012 01/2013 07/2013 01/2014 07/2014 01/2015 United States Uruguay India/Pakistan Thailand Vietnam All other U.S. market share: Central America Paddy: >99% (2007) 72% (2013) White: 75% (2007) 30% (2013) Main competitors: Brazil & Uruguay Loss of market share owing to: quality problems in the U.S. starting in 2011 Brazil shipping paddy rice 13
European Union U.S. market share: 24% (2005) 4% (2013) Main competitors: India, Cambodia, Thailand, and Pakistan Owing to: Discovery of GE traits in U.S. rice in 2006 EU tariff rate quotas EBA preferences for Cambodia Haiti U.S. market share: near 100% Main competitor: Vietnam (2013) Loss of market share owing to: shipping delays US price and delivery mes, 2012 G2G contract with Vietnam 2012/13 14
10/7/2015 Ghana U.S. market share: peaked in 2012 at 23% Fell to 16.5% in 2013 Main competitors: Vietnam, Thailand Loss of market share owing to: lower priced aromatic rice from Vietnam U.S. Competition in Long Grain Exports Declining U.S. competitiveness U.S. competitive, open trade Japan South Korea Taiwan China Nigeria Box D Iran Iraq Venezuela Box F Senegal Philippines Malaysia South Africa U.S. limited competitiveness Box E Canada Jordan Saudi Arabia Box B U.S. occasionally competitive Box C Nontraditional U.S. markets U.S. potentially competitive Box A Mexico Central America European Union Haiti Ghana U.S. competitive, restricted trade Traditional U.S. markets 30 15
10/7/2015 Impact of Government Programs: Modeling Results Measurable Policies & Programs Affecting Rice Price Support Production Support Consumer Support Tariffs/Export Taxes 16
10/7/2015 Other Policies &Programs Affecting Rice Seed Research Infrastructure Projects Extension Services Export Market Development 33 Global Simulations Modeling Results Policy Instrument Removal of United States Global total Production Consumption Exports Imports Production Consumption 1,000 mt 105 <0.5 107 1 329 329 Factor input support 44 <0.5 46 1 523 523 Intermediate input support 51 <0.5 47 4 3,098 3,098 <0.5 12 7 1,349 <0.5 2 2 75 <0.5 6,066 2,190 14 6,066 2,189 14 182 1 9,950 9,950 7 1,435 69 7,650 7,651 Producer price support Consumption support Tariffs Export tax All except tariffs All including tariffs 14 1,269 2 182 1,359 1 17
Average Marginal ad Valorem Equivalent Tariffs on Rice Country/region Average Average Country/region % % China 33.9 Malaysia 23.5 Colombia 34.0 Nigeria 110.0 Costa Rica 25.8 Panama 90.0 Cuba 15.0 Philippines 41.6 Ecuador 68.0 South Korea 218.0 Ghana 20.0 Sri Lanka 27.2 India 73.9 Tanzania 75.0 Indonesia 33.9 Turkey 40.9 Iran 18.6 Venezuela 15.3 Japan 322.4 Vietnam 16.6 Tariffs rates for 2013 Link to report: http://www.usitc.gov/publications/industry_econ_analysis_332/2015/rice_global_competitiveness_us_industry.htm Contact Information: John: john.giamalva@usitc.gov Lesley: lesley.ahmed@usitc.gov Marin: marin.weaver@usitc.gov 18