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High Quality U.S. Rice Impresses China’s Consumers
In China, Average Consumers Don’t Trust Products Made In China
REGINA LAROSE
MidAmerica Farmer Grower
SAN JOSE, COSTA RICA
U.S. Rice Producers Association staff consultant, Bob Papanos has worked in the international grain trade for over 40 years. Papanos has devoted most of his time to rice. He has traveled to over 80 countries surveying markets, meeting with agents and distributors, negotiating sales, developing marketing efforts and meeting with foreign governments.
Papanos was asked about the potential of rice imports to China. He explained that since 2004 China has decided they need to be self-sufficient in rice. “Rice is a symbol of security, the government taking care of people, that there is enough rice to eat.”
To encourage domestic rice, the ag policy in China since 2004 has resulted in increased support prices for rough rice. “I know some people working in Northeast China who are paying $514 a ton for rough rice. That is the price that the government will buy rice from you as a farmer if you cannot sell it at a higher price in the market. That is the base price, and they keep raising that every single year, trying to keep production up, trying to keep people on the farm,” explained Papanos.
When China became a World Trade Organization (WTO) member, they agreed to allow imports. Papanos said the quota for imports increases every year. Currently, the quota is 5.5 million tons. Three years ago China started buying rice from Vietnam. “It is logical. It’s their next door neighbor. The buying was limited mainly to industrial users; making rice noodles, rice cakes or rice crackers, making products out of rice. The quality did not have to be as good as table quality rice. Now, there is kind of a free for all going on. Rice is going across the border from Vietnam more or less illegally. It is going across the border from Laos, Burma; Thai rice is showing up in China, all more or less undocumented. This year China will easily surpass four million tons of imports making them the biggest rice importer in the world,” said Papanos.
This is a big change from the past three decades. Historically, China imported a little bit of rice and exported a little bit of rice. Typically a little more exports than imports, mainly for political reasons and to rotate stocks that were in the government reserves.
Bob Papanos, U.S. Rice Producers Association staff consultant,
who has traveled extensively and worked in the international grain
trade for over 40 years, gives his views on the exporting of rice to China.
Photo by John LaRose
Another factor going on in China is that the average consumer doesn’t trust products made in China, especially food.
“When the U.S. Rice Producers Association started taste testing U.S. rice in Chinese supermarkets a few years ago, the response was overwhelming. We like it. Yes we’ll buy it but if the price is higher we’ll buy it. The U.S. flag on the bag meant it wasn’t adulterated, it was high quality and the retailers confirmed that,” said Papanos.
Phytosanitary protocols will determine what is required in order to permit the import of U.S. rice, a decision that could come at any time.
Papanos believes it could be a slow start. “We think the Chinese will insist on inspecting mills. They will make a list of eligible suppliers. There are some mills in the U.S. already in the south and California that say fine bring the Chinese inspectors on, we’re ready. There are mills that already have buyers, generally industrial buyers in the U.S. that require them to have insect traps and record data and are pesticide free. Some mills are already doing this for other customers; they will fit perfectly with the Chinese. Other mills may have a lot more trouble getting passed by the Chinese as suppliers. That is why I say the initial sales to China are likely to be fairly small until more mills get approved.”
Papanos believes China’s importation of U.S. rice will mark a fundamental change in the rice business in the U.S. “I like to talk about how, courtesy of the U.S. government, the rice industry has lost all of its big markets. Starting in 1960, every big market we’ve had the government has taken away. Cuba, Nigeria, Iran, Iraq, huge markets, so if the Chinese market opens up and it’s private and it’s not government controlled in any way, and that’s what it appears now, then it has a good chance of surviving. Farmers will be encouraged to grow for quality, to put that extra insect application on, make sure the weed seeds are out. The interesting thing is, that anybody that goes to China and goes to the market and looks at rice, is that it’s all high quality rice, even the cheap stuff, there are no seeds, there are no defects, there’s no foreign material. It is amazing how high quality the entire market is in China.”
“There are a number of sellers, in the U.S. mills in particular that aren’t used to that and are going to have to get used to it if they want to benefit. But, I’m convinced that it will be a major benefit, it will be a major shift in the focus of the U.S. rice industry,” concluded Papanos. ∆
REGINA LAROSE: Associate Editor, MidAmerica Farmer Grower
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