U.S. rice industry: Speed China pact

U.S. rice farmers, processors and merchants are calling on federal trade negotiators to cut the final deal needed to allow U.S.-grown rice to be sold in China.

The USA Rice Producers' Group unanimously passed a motion at a meeting in Dallas on July 9 urging that negotiations that began several years ago be resolved in a way that doesn't impose hardships and added costs on the U.S. rice industry.

The producers group, which represents rice farmers from the six major rice-producing states, including Arkansas, offered to help finalize a deal that would be "acceptable and manageable."

It joined with two other industry groups, the USA Rice Millers Association and the USA Rice Merchants Association, in calling for the talks to draw to a close.

Dow Brantley, a rice farmer from Lonoke, is chairman of both the USA Rice and Arkansas Rice federations, two industry trade groups.

Brantley, in a statement after the meeting, said the USA Rice Producers' Group is willing to do what it can to reach a deal but that a deal can't be based on "unreasonable, unscientific demands."

"There's no question that we'd like to participate in the Chinese market, but these ever-evolving demands being made by the Chinese government were making it ever less likely that we were going to actually gain access to the market," Brantley said.

Outstanding issues identified by the producers group include the nature and number of insect traps that need to be set around storage and processing facilities, as well as package labeling requirements that the group believes are inappropriate for phytosanitary protocols, which set the standards U.S. producers must follow on matters such as insects, storage and handling.

On Wednesday, Ben Noble, executive director of the Arkansas Rice Federation, said the USA Rice Producers' Group represents farmers who want a phytosanitary agreement in place so they can gain access to China, the world's largest consumer and producer of rice.

"It appears China has thrown up serious roadblocks, so [producers] don't know how serious they are about coming to terms," Noble said.

Farmers, millers and merchants are saying that they "want the government to keep pressing them hard and get a fair deal that is allowing us access to that market, but also not inconsistent with scientific methods that are applied in the numerous trade deals we've got around the world," Noble said.

The United States Department of Agriculture's Animal and Plant Health Inspection Service is negotiating with its Chinese counterpart on the phytosanitary agreement.

While discussions about U.S. rice exports have been going on for a number of years, they became serious in the fall of 2011 when Chinese technical teams arrived in the U.S. to perform a pest-risk assessment. That resulted in China presenting a draft phytosanitary standard in November 2012, according to Michael Klein, a spokesman for the USA Rice Federation.

In an emailed statement Tuesday, a spokesman for the Animal and Plant Health Inspection Service wrote that it "is working closely with the People's Republic of China's Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and the U.S. rice industry to come to a bilateral agreement on the final set of protocols for exporting U.S. milled rice to China."

The statement confirmed that talks are addressing matters such as insect trapping and package labeling. Once a draft protocol is finished, the plan will be presented to the U.S. rice industry for review, and that will be submitted to the Chinese. The statement gave no time frame for that to happen.

Greg Yielding, executive director of the Arkansas Rice Growers Association, part of the U.S. Rice Producers Association, has been working to develop the market for U.S. rice in China since the mid-2000s.

Yielding, who met with representatives of the U.S. Department of Agriculture's Animal and Plant Health Inspection Service on Wednesday for an update, said he doesn't believe that the outstanding issues are insurmountable.

In his view, there is strong demand for U.S.-grown rice in China on the basis of market and consumer surveys as well as interest at trade shows and among grocery chains. Yielding said the discussions involve prepackaged rice sent to China, not bulk commodity sales.

"This is prepackaged rice, packaged in the U.S. and shipped over to China," Yielding said. "The protocols call for packaging, not for bulk sales." That allows Chinese officials to looking at the rice and see who processed it, as well as the name of the U.S. exporter and the name of the Chinese importer, making it easier for them to sign off on shipments, he said, adding that U.S. rice producers and mills are already meeting similar standards for U.S. food processors, such as including the rice variety on the label.

After more than two years of talks by government agencies, the U.S. rice industry is starting to push harder to enter the Chinese market, Yielding said.

The U.S. Department of Agriculture is projecting that world production of milled rice will total 529.4 million tons in the 2015-16 production period, according to its July "Rice Outlook" report issued Tuesday.

This year, the U.S. is expected to produce about 10.3 million tons of rough, or unmilled, rice, or about about 7.3 million tons when converted to a milled basis. In its July report, the USDA said low prices combined with a cool, wet spring in Arkansas and drought conditions in California reduced rice acreage this year, compared with 2014.

In Arkansas, where more than 1.4 million acres of rice was harvested in 2014, farmers produced 5.6 million tons of rough rice. Arkansas produces slightly more than half of the nation's rice crop.

At the same time, China, as the world's largest producer and consumer of rice, is expected to increase its milled rice production from 159.3 million tons to 160.9 million tons. It is also expected to increase imports by 7.1 percent, from 4.6 million tons to nearly 5 million tons.

The USDA is expecting that in 2015, 48.2 million tons of milled rice will trade hands worldwide, up slightly compared with 2014.

The United States will remain one of the world's top rice exporters, according to the USDA, sending about 3.9 million tons of milled rice to overseas markets in 2015-16, compared with 3.4 million tons in the previous production year.

Most U.S. rice is exported to Mexico as well as many Central American and Caribbean countries.

Business on 07/16/2015

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