I’m pleased to see the deal come to fruition, said US Secretary of Agriculture Sonny Perdue in a statement announcing the agreement, as the Chinese market represents an exceptional opportunity with enormous potential for growth.
China produces 20 times more rice than the US, but it's also the world's biggest consumer of the grain. Over recent years it has been importing increasing amounts of rice, spending more than US$1 billion in some years.
Last year, China imported about 5 million tons in total from all countries combined, according to the US Department of Agriculture. The US alone can satisfy 3-4 million tons of that demand.
Rising food imports partly reflect challenges in Chinese agriculture. The rural population is aging, crop yields are low and there are elevated levels of soil depletion. Pollution and climate change also threaten production.
The opening of the market could be a boon for many struggling American rice farmers, who have had to face sluggish prices and oversupply for years, said USA Rice, a trade group for rice producers.
The Chinese market opening remains contingent upon inspection and approval of US facilities by Chinese inspection and quarantine officials. And if all goes well, shipments to China could start later in 2017 or early 2018, said Michael Klein, vice president of USA Rice marketing, communications and domestic promotion.
A breakthrough came early last year when the US and China agreed on a so-called ‘phytosanitary protocol,’ which delineates the terms of sanitary conditions for American milled rice.
Chinese officials are concerned about the possibility of certain pests being introduced by rice imports in China. And American mills and storage facility operators interested in selling there were told to particularly focus on insect trapping and record-keeping requirements.
It's the most complex phytosanitary agreement that the US rice industry has ever been a signatory to, Klein said. But the potential size of the market makes it a worthwhile endeavour.
While the terms of the protocol were agreed upon in 2016, China didn't sign and formalize the trade agreement until July this year.
We waited years for the protocol to be signed and our members are anxious to meet the demand of Chinese consumers for safe, high-quality rice, said USA Rice CEO Betsy Ward.
However, she noted that American farmers will face plenty of domestic and foreign competition in China. Vietnam and Thailand are major rice exporters to the Chinese market and can ship smaller amounts more quickly and most likely at cheaper prices.
But American farmers are hoping to sell on quality and higher food safety standards, said Klein. Our rice is higher quality. The rising middle-class in China is very interested in quality. This gives us a leg-up.
Rob Bailey, an expert in food security at Chatham House, a policy institute in London, said China was being smart in finding new sources of rice outside Asia, because temporary bans due to quality issues have created problems in the past.