Rice Yearbook. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, November 2001, RCS-2001. Contents Summary U.S. Outlook for 2001/02 Bumper Crop Pushes U.S. Supplies to Record Domestic Use, Exports Projected Higher in 2001/02 U.S. Season-Average Farm Price Projected Lowest Since 1986/87 Recap of 2000/01 U.S. Rice Market U.S. Rice Prices Decline Despite Smaller Supplies International Outlook for 2001/02 Global Trade Stagnant; Prices Near 15-Year Low Vietnam and China Projected To Ship More Rice in 2002 Global Import Demand Flat Since 2000 Special Article: Taiwan’s Rice Import Market To Open with WTO Accession By Sophia Huang Report Coordinator Nathan Childs (202) 694-5292 Economic Contributors Nathan Childs (202) 694-5292 Sophia Huang (202) 694-5225 Managing Editor Martha R. Evans (202) 694-5118 Layout, Text Design, and Graphics Wynnice Pointer-Napper (202) 694-5130 Approved by the World Agricultural Outlook Board. Summary released November 29, 2001. The Rice Outlook and the text of the Rice Yearbook may be accessed electronically. For details, call ERS Customer Service (202) 694-5050. Rice Conversions 1 cwt = 100 pounds = 2.22 bushels = .0453 metric ton 1 metric ton = 2,204.6 pounds = 22.046 cwt = 48.992 bushels 1 cwt rough rice = .032 metric ton milled 1 metric ton milled = 31 cwt rough Summary Total U.S. rice supplies for 2001/02 (August-July) are projected at 249.2 million hundredweight (cwt) (rough basis), up almost 9 percent from a year earlier and the largest on record. A 10-percent increase in production to a record 209.7 million cwt and an almost 4-percent increase in beginning stocks to 28.5 million cwt account for the bulk of the supply increase. In addition, imports are projected up 1 percent to a record 11 million cwt. U.S. rice plantings for 2001/02 are estimated at more than 3.3 million acres, up more than 8 percent from a year earlier. Higher total returns to rice than alternative crops--primarily soybeans in the South--were behind the rice acreage expansion. The average yield is projected to be a record 6,374 pounds per acre, up 93 pounds from a year earlier. Extremely good weather during the growing season across much of the South--where the bulk of the U.S. crop is grown--and increased plantings of new, higher yielding southern long grain varieties are behind this year’s second consecutive record yield. Long grain accounts for all of the increase in production. Long grain production in 2001/02 is projected at a record 162.3 million cwt, up 26 percent from a year earlier. At planting, long grain prices were slightly higher than a year earlier and stronger than prices for medium grain, major factors behind increased long grain acreage this year. Nearly all U.S. long grain rice is produced in the South. In contrast, combined medium/short grain production is projected to decline nearly 24 percent to 47.5 million cwt, a result of a 26-percent drop in plantings. Extremely low prices at planting--the result of a record 2000 California crop--were behind the decline in medium/short grain acreage plantings. California accounts for more than two-thirds of the U.S. medium/short grain crop. In the South, acreage is typically shifted among classes of rice--i.e., long, medium, and short--based on expected returns. Total use is projected at 207 million cwt in 2001/02, up 3 percent from a year earlier but almost 2 percent below the 1999/2000 record. Both domestic use and exports are projected higher in 2001/02. Total domestic use is projected at 121 million cwt, up 3 percent from a year earlier but fractionally below the 1999/2000 record. U.S. rice exports are projected to increase 3 percent to 86 million cwt, primarily due to more competitive U.S. prices. Milled and brown rice exports (on a rough basis) account for nearly all of the increase. Combined U.S. milled and brown rice exports are projected at 63 million cwt, up almost 4 percent from a year earlier. Rough rice exports are projected to increase fractionally to 23 million cwt, nearly 12 percent below the 1997/98 record. By class, long grain rice is projected to increase 7 percent, accounting for all of the export expansion. Combined medium/short grain exports are projected to decline 11 percent. Total ending stocks are projected at 42.2 million cwt, up more than 48 percent from a year earlier and the largest since 1986/87. The higher stocks are the result of a 9-percent increase in total supplies more than offsetting a 3-percent increase in total use. The stocks-to-use ratio is projected at 20.4 percent, well above a year earlier’s 14.2 percent and the largest since 1992/93. Long grain accounts for all of the expected increase in ending stocks. Medium/short grain stocks are projected to decline. U.S. Long Grain Supplies Projected To Rise 19 Percent to Record U.S. long grain supplies are projected at nearly 183 million cwt, a record and up more than 19 percent from a year earlier. A 26- percent increase in production and slightly higher imports account for the record U.S. supplies. In contrast, long grain beginning stocks are almost 26 percent below a year earlier. Total long grain use is projected to increase more than 10 percent to more than 156 million cwt, just 1 percent below the 1999/2000 record. Both domestic use and exports of long grain rice are projected to be higher than a year earlier, a result of lower prices and record supplies. Long grain ending stocks are projected to increase 130 percent to 26.8 million cwt in 2001/02, the largest since 1986/87. The resulting stocks-to-use ratio is 17.2 percent, more than double a year earlier and the highest since 1992/93. U.S. long grain prices will be under substantial price pressure throughout the 2001/02 market year. The medium/short grain market faces a somewhat different outlook in 2001/02. Total medium/short grain supplies are projected to drop almost 14 percent to 65 million cwt. A 24-percent drop in production to 47.5 million cwt more than offset an almost 50- percent increase in beginning stocks to 15.6 million cwt. Imports, projected at 2 million cwt, are virtually unchanged from a year earlier. Total medium/short grain use is projected to drop 14 percent to 50.9 million cwt, the smallest since 1992/93. Both domestic use and exports are projected to decline in 2001/02. Medium/short grain domestic use is projected to drop more than 15 percent to 34.9 million cwt. Exports are projected to decline nearly 11 percent to 16 million cwt. The net result is a 9-percent drop in ending stocks to 14.1 million cwt. The stocks-to-use ratio is projected to rise slightly to 27.8 percent, the largest since 1992/93. The 2001/02 season-average farm price (SAFP) is projected at $4.00 to $4.50 per cwt, down from a year earlier’s $5.56 and the lowest since 1986/87. This is the fifth consecutive year of declining SAFP in the United States. The price situation by grain type is expected to be different. Long grain prices have already declined from prices quoted at the start of the 2001/02 market year and are currently the lowest since 1986/87. For medium/short grain rice, U.S. prices began to strengthen late last spring in anticipation of a substantial drop in U.S. supplies this year. However, despite the recent strengthening, U.S. medium/short grain prices are only slightly higher than a year earlier and are quite low by historic comparison. U.S. prices for long grain milled rice are well below a year earlier. In late-November, prices for high quality southern long grain (U.S. No. 2, 4-percent brokens, fob mill in Houston) were quoted at $220 per ton, down $56 from August and the lowest since 1987. Prices for California medium grain milled rice (U.S. No. 1, 4-percent brokens, f.o.b. Sacramento) were quoted at $287 per ton in late-November, up $67 from mid-September. Global Trade Projected Flat in 2002; Prices Remain Near 15-Year Low From late March through the first half of November, global trading prices had been the lowest in 15 years, a result of bumper crops in most major exporting countries, and except for parts of the Middle East, no significant production problems in a major importing country. After mid-November prices increased slightly, primarily due to a temporary tight supply situation in Vietnam. For 2002, global rice trade is projected at 23 million tons (milled basis), virtually the same as a year earlier and 17 percent below the 1998 record. Global rice production in 2001/02 is projected at 393.3 million tons (milled basis) down fractionally from a year earlier and almost 4 percent below the 1999/2000 record of 408.5 million tons. Despite the smaller crop there is little expectation of any price strengthening in 2001/02. This forecast assumes normal weather for the remainder of the 2001/02 market year. A major weather problem could alter this projection. Global rice prices remained relatively flat from late March through early November, with quoted prices for Thai 100-percent Grade B averaging $175 per ton. This is the longest period of time that prices remained at this low of a level since the early 1970s. Since mid-November international prices have risen slightly, primarily due to higher prices for Vietnam’s rice. Prices for Vietnam’s 5- percent brokens averaged $193 per ton during the last 2 weeks of November, up more than $40 since early July due to a tight supply situation. China accounts for the bulk of this year’s expected reduction in global rice production. However, China is expected to have plenty of supplies for both its domestic market and to expand exports next year. Other major exporters--Thailand, Vietnam, India, and the United States--are expected to produce record- or near-record crops in 2001/02. Drought reduced Pakistan’s crop in 2001/02. With the exception of a severe drought in parts of the Middle East that has significantly reduced crops in Iran and Iraq, most major importers are expecting to harvest bumper crops in 2001/02. Global rice trade has essentially been flat at 23 million tons annually since 2000. For 2002, higher imports by Indonesia, Iran, Turkey, and Bangladesh are offset by weaker imports by Nigeria, the Philippines, and Saudi Arabia. For other major importers, such as Iraq, Japan, Brazil, and South Africa, trade is projected flat in 2002. For many importers, especially Indonesia, the Philippines, and Brazil, trade remains well below the 1998 record, a result of strong production recovery from the 1997/98 El Nino and large stocks accumulated in the late 1990s. On the export side, Vietnam, China, Australia, Egypt, and the United States are expected to ship more rice in 2002 than this year. In contrast, India, Argentina, Guyana, and Uruguay are expected to export less rice. For Pakistan and Thailand, exports are projected flat. With Australia and Egypt--top japonica exporters--projected to ship record or near-record levels of rice in 2002, the United States will likely face intense competition in the Eastern Mediterranean. U.S. Outlook for 2001/02 Bumper Crop Pushes U.S. Supplies to Record U.S. rice supplies are projected to increase almost 9 percent to a record 249.2 million hundredweight (cwt) in 2001/02, the result of a record crop, a larger carry-in, and slightly higher imports. The record crop--up 10 percent from a year earlier--is the result of an 8-percent increase in plantings and a record yield. Long grain supplies, projected at a record 182.9 million cwt, account for all of the increase. Combined medium/short grain supplies are projected to drop 13 percent to 65 million cwt. U.S. Rice Crop Up 10 Percent On Larger Plantings, Record Yield Based on estimates by the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) in early November, the 2001/02 U.S. rice crop is forecast at a record 209.7 million hundredweight (cwt) (rough basis), up 10 percent from a year earlier. The record crop is the result of a more than 8-percent increase in plantings to almost 3.32 million acres and a record yield. The average yield, projected at 6,374 pounds per acre, is up 93 pounds from a year earlier. This is the second consecutive year of a record U.S. average yield. NASS reports annual rice production grown in six States: Arkansas, California, Louisiana, Mississippi, Missouri, and Texas. These six States account for about 99 percent of total U.S. rice production. Rice production in other States is neither reported by USDA’s NASS nor included in the U.S. total. Florida accounts for the bulk of unreported production, with Oklahoma, Tennessee, Illinois, South Carolina, and Kentucky typically producing smaller amounts. Long grain accounts for all of this year’s increase in rice production. U.S. long grain production is projected at a record 162.3 million cwt, up 26 percent from a year earlier. In contrast, medium grain production is projected at 45.6 million cwt, down more than 23 percent from a year earlier. Short grain production, accounting for less than 1 percent of the total U.S. crop, is projected at almost 1.9 million cwt, down 28 percent from 2000/01. California accounts for nearly all of the reduction. The bulk of California’s short grain crop is exported to Japan. Expectations of tight supplies of long grain rice by season-end boosted prices at planting, a major factor behind expanding long grain acreage this year. In 2000/01 U.S. long grain supplies declined almost 12 percent, a result of a much smaller crop. In contrast, at planting medium grain prices were the lowest in nearly 15 years, a major reason for both smaller plantings in California--which grows mostly medium grain--and shifts to long grain acreage from medium grain in the South. U.S. Average Yield Estimated At Record 6,374 Pounds Per Acre In early November, NASS forecasted average field yields for 2001/02 at a record 6,374 pounds per acre, up more than 1 percent from a year earlier. Generally favorable weather across most of the South and greater plantings of newer, higher yielding long grain varieties are behind the record yield. The 2001 yield is projected to be the highest on record despite a significant shift in acreage to the lower yielding southern long grain rice from the higher yielding California medium grain. This is the second consecutive year of a record average yield and only the third time the U.S. average yield exceeded 6,000 pounds per acre. Field yields are reported higher this year in all rice growing States except Texas, with record yields projected for Arkansas, Louisiana, Mississippi, and Missouri. The Arkansas yield is projected at 6,200 pounds per acre, up 90 pounds from last year; California at 8,200 pounds, up 260; Louisiana, at 5,400 pounds, up 320; Mississippi at 6,500 pounds, up 600; and Missouri at 5,850 pounds, up 150. In contrast, average yields in Texas are projected at 6,500 pounds, down 200 from a year earlier’s record but the second largest on record. Despite an increase of more than 3 percent this year, rice yields in California remain well below the 8,500 pounds per acre record achieved in 1991, 1992, and 1994. In fact, except for 1997 and 2001, average rice yields in California have been less than 8,000 pounds since 1995. Environmental regulations, adverse weather, and varieties grown are likely factors behind California’s lower yields. South Accounts for This Year’s Expanded Rice Acreage In November, NASS reported total harvested area at 3.29 million acres, up 251,000 acres from a year earlier. Rice acreage is higher this year in all States except Texas, where rice acreage is unchanged from 2000 and in California where plantings are down. Arkansas, the largest rice producing State, accounted for the bulk of the acreage increase. Harvested area rose 197,000 acres to 1.61 million, just fractionally below the 1999 record. Louisiana’s rice acreage is estimated at 545,000 acres, a 65,000- acre increase from a year earlier. Rice acreage in Louisiana remains well below the record 679,000 acres harvested in 1969. Missouri’s rice plantings rose 36,000 acres to a record 205,000. Missouri has substantially increased rice acreage over the past decade. Mississippi’s rice acreage is estimated at 248,000 acres, up 30,000 from a year earlier but well below the 1981 record of 337,000 harvested acres. In Texas, rice area is estimated at 214,000 acres, unchanged from a year earlier but well below the 1968 record of 597,000 harvested acres. This is the smallest rice acreage since the mid- 1930s. Rice acreage in Texas has declined sharply since the early 1980s. Higher production costs, lack of an economically viable rotation crop for many producers, and weather problems such as hurricanes and flooding account for the long-term decline in rice plantings in Texas. Harvested area in California is estimated at 471,000 acres, a drop of more than 14 percent from a year earlier, and well below the 1981 record of 593,000 acres. This year at planting, prices for California rice were the lowest since 1986/87, a major factor behind the area decline. Record Crops Projected for Arkansas and Missouri in 2001 Rice production in 2001 is projected higher than a year earlier in every State except California and Texas, with record crops projected for Arkansas and Missouri. Arkansas is expected to account for the bulk of the 18.8-million-cwt increase in total U.S. rice production in 2001. Rice production in Arkansas this year is estimated at 99.6 million cwt, up almost 16 percent from a year earlier, a result of greater plantings and a slightly higher yield. Several States are projected to increase rice production more than 20 percent this year. Louisiana’s crop is projected at 29.4 million cwt, an increase of more than 20 percent from a year earlier, with greater plantings accounting for the bulk of the larger crop. Drought and salt water intrusion were major factors behind a 21-percent reduction in Louisiana’s 2000 rice crop. In Mississippi, rice production is estimated at 16.1 million cwt, up more than 25 percent from 2000, a result of both greater plantings and a higher yield. Missouri’s record crop of 12 million cwt is up almost 25 percent from a year earlier, primarily due to a more than 21-percent increase in area. In contrast, California’s 2001 rice crop is estimated at 38.6- million cwt, a drop of more than 11 percent from a year earlier. Weaker plantings accounted for all of the decline; the average yield is up slightly. Texas rice production is estimated at 13.9 million cwt, a decline of 3 percent from 2000 and the smallest since 1983. The smaller crop is the result of a slight decline in average yield; area is unchanged. Total U.S. Supplies Projected At Record 249.2 Million Cwt Total U.S. rice supplies in 2001/02 are projected at a record 249.2 million cwt, up almost 9 percent from a year earlier. Beginning stocks, production, and imports are all larger than in 2000/01. Based on data from the NASS August Rice Stocks report, beginning stocks for 2001/02 are estimated at 28.5 million cwt, up 1 million cwt from a year earlier and the largest since 1995/96. U.S. rice imports are projected at a record 11 million cwt, up fractionally from a year earlier. Nearly all U.S. rice imports are aromatic varieties not currently grown in the United States. Most are long grain varieties. U.S. rice imports have increased sharply over the past two decades. However, the rate of growth has slowed slightly since 1995/96. About 80 percent of U.S. rice imports come from Thailand--mostly jasmine rice--and the bulk of the remainder is basmati from India and Pakistan. Italy also exports small quantities of arborio rice to the United States, and smaller quantities of rice are imported from Vietnam, China, and Egypt. The supply situation is very different when examined by grain type. For long grain rice, total supplies are projected at a record 182.9 million cwt, up more than 19 percent from a year earlier. The larger supplies are the result of a 26-percent increase in production and a 3-percent increase in imports to a near-record 9 million cwt. In contrast, data from the August 2001 Rice Stocks report indicate long grain stocks at the beginning of the 2001/02 market year at 11.6 million cwt, an almost 26-percent drop from a year earlier and the lowest since 1996/97. The supply situation in the medium/short grain market is quite different. Total medium/short grain supplies are projected at 65 million cwt, down 13 percent from a year earlier. Despite this year’s reduction, medium/short grain supplies are still almost 3 percent larger than 1998/99 and more than 9 percent higher than 1997/98. This year, a 24-percent drop in production and weaker imports more than offset an almost 50-percent increase in beginning stocks. This year’s combined medium/short grain crop is almost 15 million below a year earlier. And imports, projected at 2 million cwt, are down almost 5 percent from a year earlier. In contrast, data from the August Rice Stocks report indicate beginning stocks of medium/short grain rice at 15.6 million cwt, nearly double a year earlier’s level and the largest since 1995/96. A record California crop in 2000/01 was a main factor behind the huge increase in medium/short grain stocks. Domestic Use, Exports Projected Higher in 2001/02 Total rice use in 2001/02 is projected to increase more than 3 percent from a year earlier, with both domestic use and exports higher. Total domestic use is projected to increase more than 3 percent to 121 million cwt, while U.S. exports are expected to increase 3 percent to 86 million. Total long grain use, projected at a record 182.9 million cwt, accounts for all of the expected increase in both domestic use and exports. In contrast, combined medium/short grain total use is projected to decline in 2001/02. Ending stocks of total rice are projected to increase 48 percent to 42.2 million cwt, the largest since 1986/87. Stronger Exports and Domestic Use Push Total Rice Use to Near-Record Total rice use--domestic and residual plus exports--in 2001/02 is projected at 207 million cwt, up more than 3 percent from a year earlier but nearly 2 percent below the 1999/2000 record. Both domestic use--including residual, or unreported losses in transporting and marketing--and exports are projected higher in 2001/02. Total domestic utilization (food, industrial, and residual plus seed use) is projected at 121 million cwt, up more than 3 percent from 2000/01 and just fractionally below the 1999/2000 record. Food, industrial, and residual--projected to increase more than 3 percent to 117 million cwt--accounts for all of the expected growth in domestic use in 2001/02. Seed use is projected to drop fractionally to 4.0 million cwt. While rice consumption in the United States has increased steadily since the late 1970s, the rate of growth has slowed since the mid-1990s. During the 1980s and early 1990s growth in total U.S. rice consumption averaged 5 percent a year. This year, USDA’s long-term baseline projection forecasts a growth rate of more than 2 percent a year for the next decade. While only about half the rate achieved a decade ago, growth is still more than double the rate of population growth. Fewer meals fixed at home and a premium on meal preparation time have contributed to a slowing of the growth in U.S. rice consumption. Despite the slower expansion in total food use of rice, per capita U.S. rice consumption--including brewers’ use and pet food--continues to rise every year. Food use accounts for most of the expansion in U.S. rice consumption over the past two decades. Strong growth in U.S. food use has been largely due to a big increase in immigration from Asia, Latin America, and Africa since the late 1970s. These ethnic groups typically have much higher per capita rice consumption than the United States as a whole. In addition, greater emphasis on healthy lifestyles, convenience, and versatility have encouraged greater U.S. rice consumption. Processed foods have increased at a faster rate than direct food use (or table rice) and now account for 23 percent of total domestic rice consumption, not counting seed and residual. Pet food is the fastest growing processed food use of rice. Pet food accounted for almost 41 percent of reported use of rice in processed foods in 1999/2000, the last year in which survey data have been reported. Data on rice use in the United States by category and product are derived from an annual milled rice distribution survey funded by the USA Rice Federation. In contrast, beer use has essentially been flat since the late 1980s. Greater popularity of ‘lite’ beers which use less rice than regular beers, increased beer imports, and fractional growth in per capita consumption account for the lack of growth in rice use in beer. Per capita rice consumption--including direct food use, processed foods, pet foods, and beer--has nearly doubled since the mid- 1980s and currently exceeds 27 pounds. Since the mid-1990s, per capita consumption has grown about a half-pound a year, down from a pound a year in the 1980s and early 1990s. Per capita rice consumption is projected to continue rising over the next decade. U.S. Rice Exports Projected To Reach 86 Million Cwt U.S. rice exports in 2001/02 are projected to increase 3 percent to 86 million cwt (rough basis). A smaller price difference over major Asian competitors--primarily Thailand--and record domestic supplies are behind the expected expansion in U.S. exports. Milled rice, including brown rice, is expected to account for the bulk of the export expansion. By class, long grain rice is projected to account for all of the export expansion this year. In contrast, combined medium/short grain exports are projected to decline in 2001/02. Combined milled and brown rice exports are projected at 63 million cwt in 2000/01, up nearly 4 percent from a year earlier. A decline in the price difference over similar grades of Thai rice is behind the expected expansion. Since last spring this difference has declined from more than $100 per ton to less than $40 by late November. However, despite the smaller difference, U.S. milled rice exports are behind a year earlier to several top markets, including the European Union (EU) and South Africa. U.S. rough rice exports are projected at 23 million cwt in 2001/02, up fractionally from a year earlier but still more than 3 million cwt below the 1997/98 record. Mexico and Central America are the largest markets for U.S. rough rice, taking almost exclusively long grain. Turkey, primarily a medium grain market, is the only other regular large market for U.S. rough rice. In addition, the EU typically imports small amounts of U.S. rough rice, mostly long grain. While not typically a market for U.S. rough rice, South America often imports huge amounts when regional supplies are tight, typically due to crop shortfalls in the region. As recently as 1998, Brazil, Colombia, and Ecuador have all purchased substantial amounts of U.S. rough rice--mostly long grain. In 2001/02, Mexico and Central America are projected to remain top markets for U.S. rough rice. As of mid-November U.S. exports of rough rice to these markets were well ahead of a year earlier’s pace. In contrast, U.S. shipments to Turkey are substantially behind a year earlier. In late August the Government of Turkey placed a temporary ban on rough (or paddy) rice imports. The United States is the only major exporter of rough rice, and rough rice has become a larger share of U.S. exports, accounting for 25 to 30 percent in recent years. U.S. rough rice exports have expanded substantially since 1990/91. And while the 1997/98 El Nino pushed U.S. shipments to record- and near-record levels in 1997/98 and 1998/99, shipments to regular buyers have risen over the past decade as well. While none of the major Asian exporters ships rough rice, Argentina, Uruguay, and Guyana ship some rough rice within Latin America, and Australia has shipped rough rice to Turkey. Long Grain Accounts for All of the Rise In Domestic Use and Exports Long grain accounts for all of the projected increase in total rice use in 2001/02. Total long grain use is projected at 156.1 million cwt, up 10 percent from a year earlier and just 1 percent below the 1999/2000 record. Both domestic use and exports are projected higher this year. Total domestic use (including residual) of long grain rice is projected at 86.1 million cwt, up more than 13 percent from a year earlier but about 1 percent below the 1999/2000 record. Expectations of some shift by brewers’ and food processors to long grain from medium grain rice is behind much of the projected increase in domestic use of long grain rice. Last year, smaller supplies of long grain rice caused some shift to the more abundant and lower priced medium grain rice. Long grain exports are projected to increase 7 percent to 70 million cwt, slightly below levels achieved from 1997/98 through 1999/2000. Milled rice is expected to account for most of the increase in long grain exports. A declining price difference of Thailand--the primary U.S. competitor in the Middle East and South Africa--as well as record supplies are behind expectations of increased U.S. long grain exports in 2001/02. U.S. Medium/Short Grain Exports Projected To Decline in 2001/02 In contrast to the U.S. long grain market, total use of combined medium/short grain rice is projected to decline 14 percent to 50.9 million cwt, the smallest since 1992/93. Both domestic use, including residual, and exports are projected to decline in 2001/02. Medium/short grain domestic use is projected at 34.9 million cwt, a decline of more than 15 percent from a year earlier. Expectations of shifts to lower priced long grain rice for use in processed foods and beer account for most of the reduction in medium/short grain use. Medium/short grain exports in 2001/02 are projected to decline 11 percent to 16.0 million cwt. Despite the decline, exports are about 600,000 cwt higher than in 1997/98 and 1998/99. Japan, Turkey, and Jordan are typically the top markets for U.S. medium/short grain rice. In addition, this year the United States has shipped medium/short grain rice to Uzbekistan and South Korea. Several factors account for the projected decline in U.S. medium/short grain exports this year. First, both Australia and Egypt--major competitors of the United States in the global medium/short grain market--are projected to harvest bumper crops in 2001/02. Second, Turkey’s recent ban on paddy rice imports is a major hindrance to U.S. trade. Rough rice has accounted for the bulk of U.S. rice exports to Turkey in recent years. And finally, Japan’s WTO imports are not scheduled to increase until another WTO agreement is reached. Japan is the largest global importer of medium/short grain rice and the largest market for U.S. medium/short grain rice. In fact, more than half of California’s annual rice exports typically go to Japan. The United States supplies about half of Japan’s annual rice imports. China, Australia, and Thailand supply most of the rest. Virtually all of Japan’s rice imports are purchased under the WTO’s minimum access requirements. Extremely high tariffs on any over-quota rice imports virtually preclude purchases beyond the minimum access requirements. U.S. Ending Stocks Projected To Be Largest Since 1986/87 U.S. ending stocks of all rice for 2001/02 are projected at 42.2 million cwt, up 48 percent from a year earlier and the largest since 1986/87. An almost 9-percent increase in total supplies more than offset a 3-percent increase in total use, resulting in the 13.7-million-cwt increase in ending stocks. The resulting stocks-to-use ratio is projected at 20.4 percent, well above a year earlier’s 14.2 percent and the largest since 1992/93. The ending stocks situation is expected to be somewhat different by class of rice. For long grain rice, ending stocks are projected to jump 130 percent to 26.8 million cwt, the largest since 1986/87. The long grain stocks-to-use ratio is projected at 17.2 percent, more than double a year earlier’s and the largest since 1992/93. Assuming normal weather worldwide, U.S. long grain prices are expected to remain under severe price pressure for at least the remainder of the 2001/02 market year. In contrast, medium/short grain ending stocks for 2001/02 are projected to drop 9 percent to 14.1 million cwt. A 13-percent drop in medium/short grain supplies was more than offset by a 14- percent reduction in total use. Despite the expected 1.5-million- cwt decline, 2001/02 ending stocks are still more than 20 percent above the 1996/97 to 2000/01 average. The resulting medium/short grain stocks-to-use ratio is projected at 27.8 percent, up from 26.3 percent a year earlier and the largest since 1992/93. While some price strengthening is expected for medium/short grain rice this year--a result of smaller supplies, ending stocks of this level will limit any price increase. U.S. Season-Average Farm Price Projected Lowest Since 1986/87 The U.S. season-average farm price for 2001/02 is projected at $4.00 to $4.50 per cwt, down from $5.56 a year earlier and the lowest in 15 years. Record supplies of rice at home and extremely low international prices are behind the bearish price outlook. Without a major weather disturbance there is little reason to expect any strengthening of world prices. Thus U.S. producers are expected to realize marketing loan benefits for the remainder of the 2001/02 market year. Total U.S. food aid shipments in fiscal 2001 are estimated to be 205,400 tons, down almost 189,000 tons from a year earlier. Season-Average Farm Price Projected at $4.00 to $4.50 Per Cwt The 2001/02 season-average farm price is projected at $4.00 to $4.50 per cwt, down from $5.56 a year earlier and the lowest since 1986/87. This is the fifth year of declining season-average farm prices for U.S. rice. Record supplies of rice at home and extremely low prices in the international rice market are behind the bearish price outlook. Average U.S. monthly cash prices for rough rice have declined since the start of the 2001/02 market year. In November, USDA estimated November’s mid-month price at $4.23 per cwt and revised October’s to $4.36. These are the lowest monthly prices since September 1987. U.S. monthly cash prices have dropped every month since August when harvest of this year’s record crop began in Texas and Southwest Louisiana. Prices declined further in September when harvest peaked in the Delta--the largest rice- growing region in the United States. Currently, the price drop is being cushioned by some farm-holding of rice. However, without a major weather disturbance somewhere in the world, U.S. prices are expected to decline even further in 2001/02. Price movements by class of rice are somewhat different. Quoted prices for long grain rice have steadily declined since early 2001 on expectations of a record long grain crop this year and, since April, extremely low international prices. In mid-November, long grain rough rice prices were quoted at around $3.75 per cwt across the South, the lowest in at least 15 years. Prices were around $6 per cwt at the end of the 2000/01 market year in July, but steadily declined as the record long grain crop was harvested. In 2000/01, U.S. long grain prices were supported by a 12-percent decline in supplies. In contrast, medium grain farm prices have increased since June due to a much smaller crop in both California and the South this year. Prices for California medium grain rice in mid-November were calculated at about $5.00 per cwt, up from $3.20 to $3.30 in June. Because the bulk of California’s rough rice is sold under some form of pooling method, rough rice prices are determined by the milled rice price. A record 2000 California crop pushed medium grain prices to near-record lows in 2000/01. In the South, medium grain prices were quoted at $4.44 per cwt in mid-November, up from less than $4.00 in August. Marketing Loan Gains Exceed $3.35 Per Cwt U.S. producers are eligible for marketing loan benefits when foreign prices (represented by USDA’s weekly announced world price) fall below the loan rate for rough rice. Loan rates vary by class of rice--long, medium, and short grain--with an all-rice average loan rate fixed at $6.50 per cwt. Since the spring of 1999 world prices have remained below the loan rate, making U.S. rice producers eligible for marketing loan benefits. From the start of the 1995/96 market year until late March 1999, the announced world price exceeded the loan rate, thus marketing loan payments were not available. Payment rates were less than $1 per cwt from the spring of 1999 until the start of the 1999/2000 market year. Declining world prices caused payment rates to rise during 1999/2000 and by mid- March 2000 exceeded $2 per cwt for all three classes of rice-- long, medium, and short. Payment rates continued to rise in 2000/01 as the announced world price declined. From May through July 2001 the announced world price for all three classes of rice averaged $2.82 per cwt, the lowest on record. The average payment rate during these 3 months by class were $3.69 for long grain, $3.67 for medium, and $3.55 for short grain. This is the largest payment rate for long grain rice since the summer of 1987 and the largest payment rate on record for medium and short grain rice. A slight strengthening of the announced world price this fall reduced the payment rate 20 to 25 cents for all three classes of rice. However, the average payment rate still exceeded $3.35 per cwt in mid-November. Without a major weather disturbance in some part of the globe, little if any significant increase in the world price is likely, indicating continued high payment rates at least until the end of the 2001/02 market year. U.S. Food Aid Shipments Dropped in FY 2000 and FY 2001 Food aid and credit guarantees account for the bulk of government assistance available for U.S. rice exports. Total food aid shipments in fiscal 2001 (October 2000 to September 2001) are estimated at 205,400 tons, down almost 189,000 from a year earlier. Food aid accounted for less than 7 percent of total U.S. rice exports in fiscal 2001, down from almost 12 percent a year earlier. In both the text and tables of this report, U.S. food aid shipments are assigned appropriate October-September fiscal years based on date of purchase. In fiscal 2000, total U.S. food aid shipments totaled 394,200 tons, down 167,500 from a year earlier. Food aid shipments in fiscal 1999--estimated at nearly 561,000 tons--were the largest since 1985. In fiscal 1999, PL-480 accounted for the bulk of U.S. food aid shipments. U.S. rice is shipped under four food aid programs: PL 480 (Title I and Title II), Section 416 (b) surplus removal, Food for Progress, and Global Food for Education. In fiscal 2001, shipments under PL 480 Title I (concessional sales) totaled 86,280 tons, down 55,650 from a year earlier. Uzbekistan accounted for the bulk of the Title I shipments in 2001, taking 51,350 tons. The Philippines accounted for the remainder, purchasing 34,930 tons. Purchases under PL 480 Title II, or food donations, accounted for more than 58,000 tons in fiscal 2001. Major recipients of Title II donations were: Indonesia, Guatemala, Benin, Cambodia, and Niger. In addition, nearly 32,000 tons of rice were purchased in fiscal 2001 under the recently created Global Food for Education program. Major recipients were Cambodia, Congo Brazzaville, El Salvador, Gambia, Moldova, and Mozambique. Exports under the Food for Progress program totaled 29,200 in 2001, down 2,240 tons from a year earlier. Russia accounted for the bulk of the shipments, purchasing more than 11,000 tons in fiscal 2001. Haiti, Togo, Azerbaijan, and Central Asian Republics accounted for most of the remainder. In fiscal 2000, Title I agreements for rice totaled almost 142,000 tons, down 174,000 from a year earlier. The Philippines was the largest recipient, purchasing more than 104,000 tons. Jamaica purchased almost 21,000 tons and Angola more than 17,000 tons. In addition, about 73,600 tons of rice was purchased in fiscal 2000 under PL 480 Title II, down 126,000 from a year earlier. Indonesia was the largest recipient, taking almost 32,000 tons. Angola, Cambodia, Mozambique, East Timor, Burkina- Faso, and Guatemala were other major recipients. Fiscal 2000 was the first time since 1991 that U.S. rice was donated under the Section 416 (b) program. More than 147,000 tons of rice was purchased for export under Section 416 (b) in fiscal 2000. Indonesia was the largest recipient, taking 100,000 tons. Haiti, Bulgaria, Congo Brazzaville, and Yemen were other major recipients. U.S. rice exports purchased under the Food for Progress program totaled 31,400 tons in fiscal 2000, down almost 14,000 tons from a year earlier. Russia was the largest recipient, taking more than 19,000 tons. Azerbaijan, Georgia, and Cote d’Ivoire accounted for the remainder. Credit guarantees also assist U.S. rice exports. The Foreign Agricultural Service and other government agencies offer a number of programs that help U.S. agricultural exporters finance the marketing and distribution of their products abroad. The Commodity Credit Corporation administers export credit guarantee programs for commercial financing of U.S. agricultural exports. The programs encourage exports to buyers in countries where credit is necessary to maintain or increase U.S. sales, but where financing may not be available without CCC guarantees. The two largest programs--GSM-102 and GSM-103--underwrite credit extended by the private banking sector in the United States (or, less commonly, by the U.S. exporter) to approved foreign banks using dollar-denominated, irrevocable letters of credit to pay for food and agricultural products sold to foreign buyers. These programs promote exports by providing exporters greater access to credit and credit risk protection. The Export Credit Guarantee Program (GSM-102) covers credit terms for up to 3 years. The Intermediate Export Credit Guarantee Program (GSM-103) covers longer credit terms for up to 10. In fiscal 2000 and 2001, West Africa, Turkey, and Central America accounted for the bulk of U.S. rice exported under credit guarantees. In the past 2 years the Caribbean, South America, Mexico, and the Andean Region have imported smaller quantities of U.S. rice using credit guarantees. Recap of 2000/01 U.S. Rice Market U.S. Rice Prices Decline Despite Smaller Supplies A more than 7-percent drop in production cut total U.S. rice supplies nearly 4 percent in 2000/01. Long grain accounted for all of the supply contraction, combined medium/short grain supplies were up more than 18 percent, primarily due to a record California harvest. Both domestic use and exports declined from a year earlier. Ending stocks rose almost 4 percent to nearly 28.4 million cwt, the largest since 1994/95. Despite smaller total supplies, the season-average farm price for rice dropped more than 6 percent to $5.56 per cwt, the lowest since 1986/87. U.S. Rice Crop Drops 7 Percent On Smaller Plantings The 2000/01 U.S. rice crop is estimated at 190.9 million cwt, down more than 7 percent from a year earlier’s record. The smaller crop is the result of a 13-percent decrease in plantings to 3.06 million acres. The yield, estimated at a record 6,281 pounds per acre, was up 7 percent from a year earlier. This was only the second time the U.S. average yield exceeded 6,000 pounds per acre. Long grain accounted for the bulk of the area contraction. Long grain rice plantings dropped more than 19 percent to 2.2 million acres, the smallest since 1996/97. Plantings of short grain rice, which accounts for about 1 percent of total U.S. rice acreage, dropped 30 percent to 36,000 acres. In contrast, total medium grain plantings rose more than 9 percent to 818,000 acres, the largest since 1996/97. Medium grain plantings were up in both California--where more than two-thirds of the U.S. medium grain crop is grown--and in the South. The area decline was primarily due to expectations of low prices- -especially for long grain rice--at harvest and, in Louisiana, severe problems stemming from drought and salt-water intrusion. Plantings declined in every rice-growing State except California where rice acreage increased almost 8 percent to 550,000 acres. In Arkansas, 2000 rice plantings are estimated at 1.42 million acres, down 13 percent from a year earlier’s record. At 485,000 acres, Louisiana’s rice acreage is down 22 percent from a year earlier. Mississippi’s rice plantings, estimated at 220,000 acres, were down almost a third from 1999. Missouri’s rice area was lowered nearly 9 percent from a year earlier’s record to 170,000 acres. Rice plantings in Texas declined more than 17 percent to 215,000 acres, the smallest rice acreage since 1936. Rice acreage in Texas has declined substantially over the past decade, a result of high production costs, lack of a viable rotation crop for many producers, and more problems with hurricanes, flooding, and drought than other regions. The national average yield for 2000 is estimated to have been a record 6,281 pounds per acre, up 415 pounds from 1999. Yields were higher than a year earlier in all rice growing States, with record yields reported in Louisiana, Missouri, and Texas. In the South, generally favorable weather conditions across the region and the introduction of new, high yielding long grain varieties were the main factors behind such strong yields in 2000. Louisiana’s yield of 5,080 pounds per acre was up almost 2 percent from a year earlier. In Missouri, average yields were estimated at 5,700 pounds per acre, an increase of nearly 6 percent. The Texas yield is estimated to have been 6,700 pounds per acre, up nearly 14 percent from a year earlier and the highest average yield ever achieved by a southern State. Arkansas’ yield is estimated at 6,110 pounds per acre, up more than 4 percent from a year earlier. At 5,900 pounds per acre, Mississippi’s 2000 yield was up more than 4 percent from a year earlier. California’s yield is estimated at 7,940 pounds per acre, an increase of more than 9 percent from 1999 but well below the 1991, 1992, and 1994 records of 8,500 pounds per acre. In fact, California’s average yield has exceeded 8,000 pounds only once-- in 1997--since 1995. Adverse weather problems, environmental regulations, and unique characteristics of the varieties have, at times, contributed to California’s weaker yields in recent years. In 2000, year-to-year changes in rice production varied by class. Long grain production is estimated to have been 128,756 million cwt, down 15 percent from the 1999 record. A 19-percent decline in long grain area accounted for all of the production decline, the average yield was the highest on record. In contrast, medium grain production rose nearly 18 percent from a year earlier, a result of both a higher yield and larger plantings. The short grain crop--grown mostly in California and typically accounting for 1 to 2 percent of total U.S. rice production--is estimated to have declined more than 28 percent in 2000, a result of smaller plantings. Rice production declined in 2000 in every State except California, with Arkansas accounting for the bulk of the total decline. Arkansas’ 2000 crop is estimated at 86.1 million cwt, down more than 9 percent from a year earlier’s record. Despite the smaller crop, Arkansas remains the largest rice-growing State, accounting for more than 45 percent of total U.S. rice production. Louisiana’s 2000 rice crop was down 21 percent--and at 24.4 million cwt--the smallest since 1993. Rice production in Mississippi is estimated at 12.9 million cwt, a drop of nearly 30 percent from the 1999 near-record. In Missouri, 2000 rice production is estimated at slightly more than 9.6 million cwt, down 3 percent from a year earlier’s record. Rice production in Texas is estimated at 14.3 million cwt, a drop of 6 percent from 1999. In contrast to the southern rice growing States, California’s 2000 rice crop was up nearly 19 percent to a record 43.5 million cwt, a result of both larger plantings and a higher yield. U.S. Long Grain Supplies Drop 11 Percent in 2000/01 U.S. rice supplies in 2000/01 are estimated to have been 229 million cwt, down almost 4 percent from a year earlier’s record but still the third highest to date. A 15.2-million-cwt drop in production more than offset larger beginning stocks and higher imports. U.S. rice imports in 2000/01 totaled nearly 10.9 million cwt, a record and up more than 7 percent from a year earlier. Beginning stocks of rice on August 1, 2000, are estimated at 27.5 (rough-equivalent) million cwt, up nearly 25 percent from a year earlier. Stocks were higher than a year earlier in every State except Texas, with Arkansas and California accounting for the bulk of the year-to-year increase in stocks. In contrast, beginning stocks in Texas were 55 percent below a year earlier. The supply situation varied somewhat by grain type. Total long grain supplies dropped nearly 11 percent to 153 million cwt, the smallest since 1997/98. A 15-percent decline in production to 128.8 million cwt more than offset larger beginning stocks and higher imports. Long grain rice stocks entering the 2000/01 marketing year were estimated at 15.6 million cwt, up 11 percent from a year earlier, primarily the result of a 1999 record long grain crop. Imports of long grain rice are estimated at a near- record 8.8 million cwt, up 16 percent from a year earlier. For medium/short grain rice, total supplies rose almost 12 percent in 2000/01 to 74.8 million cwt, the largest since 1994/95. An almost 15-percent increase in production to 62.1 million cwt plus larger beginning stocks more than offset a decline in imports. Combined medium/short grain stocks totaled 10.4 million cwt on August 1, 2000, up 53 percent from a year earlier’s extremely tight level. The huge increase was primarily due to a 20-percent increase in medium/short grain production in 1999/2000, with Arkansas and California accounting for most of the larger medium/short grain crop. Medium/short grain imports were estimated at 2.1 million cwt, up 17 percent from a year earlier. Long grain accounts for the bulk of U.S. rice imports. U.S. Rice Exports Dropped 6 Percent in 2000/01 Total U.S. rice use, including exports, domestic consumption, and residual (unreported losses in processing, transporting, and marketing), was 200.7 million cwt in 2000/01, down almost 5 percent from a year earlier’s record. Both exports and domestic use declined from 1999/2000. Total domestic disappearance (domestic use plus residual) was 117.2 million cwt, down nearly 4 percent from a year earlier’s record. Food, industrial, and residual--estimated at 113.1 million cwt--is down 4 percent from the 1999/2000 record. Seed use, at 4.1 million cwt, is up fractionally from a year earlier. Long grain accounted for all of the decline in total domestic and residual use in 2000/01. Domestic and residual use of long grain rice is estimated at 76 million cwt, down 11 percent from a year earlier’s record. Some of the decline was due to a shift to medium/short grain from long grain by brewers’ and food processors. In contrast, domestic and residual use for medium/short grain rice is estimated at 41.2 million cwt, up almost 19 percent from a year earlier. Large supplies and relatively low prices--compared with long grain rice--accounted for the stronger medium/short grain domestic use. Both milled and rough rice exports declined in 2000/01. Rough rice exports, estimated at 22.8 million cwt, were down nearly 10 percent from a year earlier’s near-record. Turkey accounted for most of the decline in rough rice exports in 2000/01. Milled rice exports are reported at 60.7 million cwt, a decline of nearly 5 percent from a year earlier and the smallest since 1991. The European Union, the former Soviet Union, South Africa, Jordan, and Saudi Arabia accounted for the bulk of the decline in U.S. milled rice exports in 2000/01. Despite Smaller 2000/01 Supplies, Ending Stocks Rose Almost 4 percent Ending stocks for all U.S. rice rose 1 million cwt in 2000/01 to 28.5 million cwt, the largest since 1994/95. The resulting stocks-to-use ratio rose to 14.2 percent from 13 percent a year earlier. Combined medium/short grain rice accounted for all of the increase. Ending stocks of medium/short grain rice rose 50 percent to 16 million cwt, the largest since 1995/96. The resulting stocks-to- use ratio climbed to 26.3 percent from 19.7 percent a year earlier. In contrast, long grain ending stocks declined nearly 26 percent to 11.6 million cwt. The stocks-to-use ratio dropped to 8.2 percent from 9.9 percent in 1999/2000. Both ending stocks and the stocks-to-use ratio for long grain rice were the lowest since 1995/96. The 2000/01 season-average price was reported at $5.56 per cwt, down nearly 7 percent from a year earlier and the lowest since 1986/87. A substantial decline in international trading prices-- which reduced U.S. competitiveness in some markets--was the primary factor behind a weaker U.S. average rice price in 2000/01. In 2000/01, long grain prices were boosted slightly due to a tighter supply situation than a year earlier. Medium/short grain prices declined in 2000/01, primarily a result larger supplies, especially in California, where the bulk of the U.S. medium grain rice is grown. International Outlook for 2001/02 Global Trade Stagnant; Prices Near 15-Year Low From late March through mid-November, international prices remained the lowest in almost 15 years, despite smaller global production and declining world stocks. Stagnant import demand, coupled with abundant supplies in major exporting countries account for the bearish price situation. Price have risen slightly since mid-November, primarily due to a temporary tight supply situation in Vietnam. Prices are expected to be under downward pressure when Thailand’s and Vietnam’s main crops are available for export in early 2002. Although global production is projected to drop about 1 percent in 2001/02, major exporting countries are projected to harvest bumper crops. Except for parts of the Middle East, no major importing region is currently suffering a significant weather problem. Despite Smaller Global Production Export Supplies Remain Abundant In mid-November 2001, global trading prices were the lowest in 15 years and had remained at these levels since late March. The low prices and lack of any sustained price strength were the result of large supplies in nearly all major exporting countries and, except for parts of the Middle East, no significant production problem in a major importing country. Global trading prices steadily declined from early 1999 through late March 2001 and showed no sustained strength through mid-November. In late November, global prices began to slightly rise due to a temporary supply shortage in Vietnam, a pick-up in export sales, and government intervention purchases by Thailand. Despite the recent price strength, without a major weather disturbance somewhere in the world there is little expectation for any significant price strength for the remainder of the 2001/02 market year. In fact, global prices will likely be under downward pressure early in 2002 as the Thai main crop is available for export and when harvest of Vietnam’s main winter- spring crop begins in late February or March. World rice production is projected at 393.3 million tons (milled basis) in 2001/02, down almost 1 percent from a year earlier and almost 4 percent below the 1999/2000 record. This is the second consecutive year of declining global rice production. China accounts for the bulk of the drop in production in both years. However, despite smaller crops, China has plenty of rice for both its domestic market and to expand exports in 2002. Pakistan, also a major exporter, is projected to produce a smaller crop this year due to severe drought in the region. Except for China and Pakistan, the other major Asian exporters--Thailand, Vietnam, and India--are projected to produce record- or near-record rice crops in 2000/01. Among the top importers, only Iran, Iraq, and North Korea are having major production problems this year. Severe drought has cut crops in Iran and Iraq since 1999/2000. And despite a small increase in North Korea’s rice production this year, total food supplies remain extremely low, a result of several years of declining food production. In contrast, bumper crops are projected for Indonesia, the Philippines, and Bangladesh. And while Brazil’s rice production is projected to drop for the third consecutive year, imports are projected to increase only slightly as per capita consumption continues to decline and Brazil draws down stocks. World consumption is projected at a record 404.6 million tons, up almost 1 percent from a year earlier. India and Indonesia account for most of the increase. In contrast, rice consumption in China, Japan, and Brazil is projected to be virtually unchanged from 2000/01. With consumption exceeding production by more than 11 million tons, ending stocks are projected to drop more than 8 percent from a year earlier to 126.3 million tons. This is the second consecutive year of declining global stocks. In 1999/2000, global ending stocks were a record 142.8 million cwt. In May 2000, USDA made substantial revisions to China’s domestic use and ending stocks for market years 1980/81 through 2000/01. The revisions significantly boosted global ending stocks from prior estimates. China accounts for 85 percent of this year’s expected reduction in global ending stocks, with stocks expected to decline in Indonesia, Vietnam, Thailand, and Brazil as well. While global ending stocks are projected to decline 8 percent in 2001/02, global stocks excluding China are projected to drop less than 4 percent. And even with a projected 10-percent decline in ending stocks, China will have more than enough rice to satisfy domestic demand and remain a major exporter. In contrast, India’s stocks are projected to be the largest on record, exceeding 21.4 million tons, a result of a near-record crop this year and bumper crops since 1998/99. The global stocks- to-use ratio is projected at 31.2 percent, down almost 3 percentage points from a year earlier and the smallest since 1984/85. However, even with smaller stocks and a tighter stocks- to-use ratio, unless there is a major weather problem in a major growing area, there is little expectation of any price strength in 2001/02 due to abundant supplies in major exporting countries. World trade is projected at almost 23 million tons in calendar year 2002, virtually unchanged from 2000 and 2001, but 17 percent smaller than the 1998 record of 27.7 million. In 2002, declining imports in Latin America and Africa are nearly offset by larger imports by the Middle East and the former Soviet Union. Asia’s imports are projected to be fractionally higher. Little change is projected for imports by North America, the European Union, and Eastern Europe in 2002. In 2001, global trade rose fractionally to slightly more than 23 million tons. A major expansion in Nigeria’s imports to a record 1.6 million tons was almost offset by declining imports by Indonesia, Iraq, Iran, Brazil, and Bangladesh. Imports by Asia and Latin America were nearly steady in 2001, while imports by the Middle East dropped substantially and Africa’s rice imports were record-high. International Trading Prices Dropped to Lowest in 15 Years From late March through mid-November, international trading prices were the lowest in 15 years. In addition, international prices had not remained at this low of a level for such a sustained period since the early 1970s. From early 1999, when the record El Nino-driven purchases by Indonesia, the Philippines, and Brazil were completed, through late March 2001, international rice prices declined sharply. From late March 2001 through mid- November 2001, prices for Thailand’s 100-percent Grade B averaged just $175 per ton, with prices trading within a very narrow range. By the end of November, prices were reported at $182 per ton, the highest in more than 8 months. Despite the recent increase, prices are still $10 to $15 per ton lower than a year earlier and well below the 1999/2000 season-average of $231. The weak prices are due to abundant export supplies worldwide and, except for the Middle East, no significant production problems were reported in a major importing country. Prices for Vietnamese 5-percent broken rice averaged $193 per ton during the last 2 weeks of November, up $18 to $19 from mid-October and more than $25 per ton higher than the 2000/01 average. Sever flooding in the Mekong River Delta last summer caused transportation problems, reduced plantings of the 10-month crop, and delayed planting of the country’s main winter-spring crop. Vietnam is currently selling very little rice. Vietnam’s prices are $15 to $20 per ton higher than comparable grades of Thai rice. Typically, Vietnam’s rice is priced $20 to $30 per ton lower than Thai rice due to quality factors. Supply and transportation disruptions caused by the flooding have subsided. Vietnam’s prices are expected to decline after March when supplies from its Winter-Spring crop hit the market. Prices for similar type and quality of U.S. long grain rice--No. 2, 4-percent brokens, f.o.b. Houston--have declined since the start of the 2001/02 market year. Prices were quoted at $220 per ton for the week ending November 19, down from $243 a week earlier and $276 in early August. Prices for U.S. long grain rice are the lowest since the summer of 1987. Harvest of a record U.S. total and long grain crop this year and extremely low international prices are behind the bearish U.S. price situation. In 2000/01, prices for U.S. long grain milled rice rose from less than $250 per ton in July to $276 by mid-October. The price increase was largely due to a 12-percent drop in U.S. long grain supplies in 2000/01. Vietnam and China Projected To Ship More Rice in 2002 Of the six largest rice exporters--Thailand, Vietnam, the United States, China, Pakistan, and India--only India is projected to ship less rice in 2002. Vietnam, the United States, and China are projected to export greater quantities of rice, while Thailand’s and Pakistan’s exports are projected to be unchanged from 2001. Among the smaller exporters, both Argentina and Uruguay are projected to reduce shipments in 2002, a result of smaller supplies and weaker regional demand. Australia and Egypt are projected to expand exports. Major Exporters Thailand: Thailand is expected to remain the world's largest rice exporter, shipping 7 million tons in 2002, unchanged from a year earlier’s record. Expectations of sustained record exports are the result of two consecutive years of record production, large stocks, and greater price competitiveness with Vietnam. Thailand's 2001/02 crop is projected at a record 16.8 million tons (milled), unchanged from a year earlier. Both area and yield are projected virtually unchanged from 2000/01. Thailand traditionally competes with the United States in certain high-quality long grain rice markets--primarily in the European Union (EU), the Middle East, and South Africa--and with Vietnam, India, and Pakistan in various intermediate- and low-quality long grain markets. Thailand exports mostly indica rice and smaller quantities of premium jasmine rice, an aromatic. About 20 percent of Thailand’s exports are jasmine rice, with the United States a major market. Vietnam: Vietnam is the world's second largest rice exporter and is projected to export 4 million tons in 2002, up 400,000 tons from this year but 555,000 tons below the 1999 record. Vietnam is projected to produce a near-record 20.6 million tons of rice in 2001/02, up fractionally from a year earlier but 326,000 tons below the 1999/2000 record. A slightly higher yield is expected to more than offset a fractional drop in area this year. Severe flooding in late summer and early fall is estimated to have reduced plantings of Vietnam’s 2001/02 10-month crop and will likely delay planting of the country’s main winter-spring crop as well. All of Vietnam’s rice exports are indica rice, mostly intermediate and low quality. Vietnam produces three major rice crops a year. The 10-month crop accounts for nearly 30 percent of production and is harvested between November and February in the South. This crop is declining in area and is the lowest yielding of Vietnam's three crops. The largest crop, the winter-spring crop, accounts for more than 45 percent of total production and is harvested in February-March.-----1/ ----- 1/ The harvest dates are for production occurring in southern Vietnam. Harvest dates differ in the north, but most rice production occurs in the south. ----- The winter-spring crop has expanded more than 75 percent since 1988/89 and has the highest yield of the three crops. The winter- spring crop accounts for the bulk of Vietnam’s exports. The summer-autumn crop accounts for more than 24 percent of annual production and is harvested July through September. China: China's 2002 rice exports are projected at 2 million tons, up 200,000 from this year but well below the 1998 record of more than 3.7 million tons. This projection assumes China has not yet joined the World Trade Organization. Although China’s 2001/02 crop is projected to drop nearly 4 percent to 126.7 million tons- -a result of smaller plantings and a slightly weaker yield, China has more than enough supplies to meet domestic demand and increase exports. From 1996/97 through 1999/2000, China harvested record- or near-record crops each year, leading to a large accumulation of stocks. This year’s rice production is the smallest since 1994/95. China’s 2001/02 rice area is estimated at 29.2 million hectares, down 562,000 from a year earlier and the smallest since 1963/64. China’s rice plantings have declined nearly 7 percent since 1999/2000, with its early indica crop accounting for the bulk of the decline. China announced a new grain policy in 1999 that reduces incentives to plant low-quality early rice, which is grown mostly in the south. It is too early to know what the long-term impact of this policy will be on China’s rice production and available exports. Much of the early rice crop is of poor quality and is either stored for years or used as feed. United States: The United States is projected to export 2.7 million tons of rice in 2002, up 50,000 from 2001 but more than 14 percent below the 1998 record. Record U.S. supplies and lower prices are behind the higher trade forecast. The U.S. share of world trade is projected at almost 12 percent, up fractionally from a year earlier but nearly identical to the 2000 share. The U.S. share of world rice trade has generally declined since the mid-1970s. In 1975, the United States accounted for about 28 percent of global rice exports. By 1989, the U.S. share had shrunk to 20 percent and was less than 15 percent by 1995. Greater supplies from low-cost Asian exporters account for the bulk of the decline in the U.S. market share over the past 25- plus years. In the late-1980s, Vietnam re-entered the global rice export market after an absence of more than 30 years. In the mid- 1990s, India switched from exporting a few hundred thousand tons a year to regularly exporting more than a million tons. In addition, by the 1990s the top South American exporters-- Argentina and Uruguay--both significantly expanded exports, mostly within the MERCOSUR trading block. Southern long grain accounts for around 80 percent of U.S. rice exports, with Latin America, the EU, Saudi Arabia, Canada, and South Africa the largest markets. The United States also typically exports smaller quantities of japonica rice, mostly to Japan, Turkey, and Jordan. This year the United States also exported japonica rice to Uzbekistan and South Korea as well. California supplies most of U.S. japonica exports. India: For 2002, India is projected to export 1.5 million tons, down 100,000 from 2001 and well below the country’s 1998 record of nearly 4.7 million. A big decline in imports by Bangladesh since 2000 and an internal pricing policy that prices most of India’s rice out of the international market account for India’s weak export performance since 2000. However, since May, India has subsidized exports of its parboiled rice and certain grades of its low quality indica rice, allowing India to substantially expand exports, mostly parboiled rice to West Africa. India’s 2001/02 crop is projected at 89 million tons, up 3 percent from a year earlier and second only to its 1999/2000 record 89.5 million ton crop. This year’s bumper crop is the result of a higher yield. Area is fractionally lower. Rice production has increased substantially in India since the mid- 1990s, primarily due to expanding area. India has accounted for the bulk of increased global rice area since 1996/97. India’s yields have risen as well. India’s record crops have resulted in a huge increase in stocks. In 2001/02, ending stocks are projected at a record 21.4 million tons, more than double 1997/98 ending stocks. Stocks of this level are burdensome to the Government of India. India exports both a premium-priced basmati rice to higher income countries, as well as low-quality non-aromatic long grain milled rice to developing countries. Principal markets for basmati rice are the Middle East, the EU, and the United States. Russia, South Africa, other Sub-Saharan Africa, and the Middle East are major export markets for India's non-basmati rice. Much of India’s non- basmati exports to South Africa and the Middle East are parboiled. Pakistan: Pakistan is projected to export 1.9 million tons of rice in 2002, unchanged from this year but 126,000 tons below the country’s 2000 record. Two consecutive years of smaller production account for the decline in exports. Pakistan's 2001/02 crop is projected at 4.5 million tons, down nearly 200,000 from a year earlier and more than 650,000 tons below the 1999/2000 record. Weaker plantings in 2000 and 2001--due to severe drought in the region--account for the bulk of the production decline. Yields remain below the 1999 record. The same drought that has affected Iraq and Iran has reduced water-availability in Pakistan as well. Like India, Pakistan exports both high-quality basmati rice-- which sells at a substantial premium in high-income markets--as well as intermediate- and low-quality non-aromatic long grain rice to developing countries, many in Africa, where it competes with Thailand and Vietnam. Around a third of Pakistan's rice production is basmati. Africa, Afghanistan, Bangladesh, Indonesia, the Middle East, and the EU were leading export markets for Pakistan in 2000/01. The Government of Pakistan is actively trying to increase rice production through price incentives, timely availability of inputs, and technical assistance. Australia: Australia's rice exports in 2002 are projected to increase 100,000 tons to a record 700,000. The substantial increase in exports is the result of a bumper 1.5-million-ton crop--second only to the 2000/01 record--and large beginning stocks. Last year’s record 1.76-million ton-crop was the result of record area and yield. There has been adequate water for irrigation available in both 2000/01 and 2001/02. Australia's rice farmers plant in October and harvest in April- May. The rice crop is grown primarily in New South Wales. The bulk of Australia’s rice is exported. Australia produces and exports primarily high-quality japonica rice and has captured around 18 percent of the Japanese market since WTO-required imports were first purchased in 1995/96. Papua New Guinea and certain countries in the Middle East are other major export markets for Australian rice producers. Limited supplies of water for irrigation are a constraint on any significant expansion in Australia's rice production. Egypt: Egypt is projected to export 650,000 tons of rice in 2002, up 100,000 from a year earlier and the largest in more than 30 years. Virtually all of Egypt’s rice exports are japonica rice, with the eastern Mediterranean a major market. The higher exports are a result of a record 2000/01 crop and a huge accumulation of stocks. In addition, the Government of Egypt provided some subsidy to exports in 2001. With the exception of 1998/99, Egypt has harvested record- or near-record crops from 1996/97 to 2000/01, a major factor behind the steady growth in exports in recent years. While Egypt’s 2001/02 rice production is projected to drop 12 percent from a year earlier’s record to 3.4 million tons, total supplies of 4.5 million tons are the largest on record. Much of Egypt’s rice production receives government subsidy. Argentina: Argentina and Uruguay are the two largest rice exporters in South America, growing and shipping mostly indica rice. In 2002, Argentina’s rice exports are projected to drop 25,000 tons to 250,000 tons, the smallest since 1994 and the third consecutive year of declining exports. Smaller production is behind the bearish export forecast. Argentina’s 2001/02 rice crop--harvested in spring 2002--is forecast at 450,000 tons, down nearly 8 percent from a year earlier and more than 58 percent below the 1998/99 record. The smaller crop is a result of a lower average yield and a slight drop in plantings. In 2000/01, rice plantings in Argentina dropped 30 percent from a year earlier to 133,000 hectares, the lowest since 1990. Low prices and declining imports by Brazil-- Argentina’s largest export market--account for the 55-percent drop in harvested area for rice since the 1998/99 record of 289,000 hectares. Uruguay: Like Argentina, rice production in Uruguay has declined since the 1998/99 record, as weaker prices and smaller imports by Brazil after 1998 have led to reduced plantings. In 2001/02, Uruguay’s rice production is projected at 650,000 tons, down more than 7 percent from a year earlier. Smaller plantings account for the bulk of the decline. At 140,000 hectares, Uruguay’s 2001/02 rice area is down nearly 7 percent from a year earlier and 32 percent below the 1998/99 record of 205,000 hectares. This year’s yield is projected to be fractionally below a year earlier’s record. Both Argentina and Uruguay have special trade arrangements in the Brazilian market afforded them by their membership in the MERCOSUR trade block (which includes Argentina, Brazil, Paraguay, and Uruguay). In 2001, Uruguay exported a record 700,000 tons of rice, despite weaker imports by Brazil. With Brazil’s market less than a third of its 1998 record, in 2001 both Uruguay and Australia began shipping rice outside South America, primarily to the Middle East. Smaller Exporters: In addition to the major exporters described above, several other countries typically export smaller amounts of rice each year. The EU: Although a net importer of rice, the EU regularly exports rice outside the region. In 2002, the EU is projected to export 350,000 tons, unchanged from a year earlier and slightly higher than 2000. Italy accounts for the bulk of EU rice exports outside the region. The EU exports japonica rice, mostly to countries in the eastern Mediterranean. The EU exports smaller amounts of rice--mostly food aid--to the former Soviet Union, the Balkans, North Korea, and Sub-Saharan Africa. Despite an almost 12-percent decline in rice production since the 1997/98 record crop of 1.8 million tons, ending stocks continue to rise and are projected at a record 900,000 tons in 2001/02. Rice consumption in the EU is expanding at a very slow pace. The bulk of the EU’s rice production is japonica, although indica’s share has increased since the late 1980s. Burma: While typically the world’s largest rice exporter prior to World War II, Burma exported less than 100,000 tons a year from 1997 through 1999. However, exports have picked up in recent years. For 2002, Burma is projected to export 500,000 tons, unchanged from this year and the largest since 1995. Larger production since 1998/99 is the main factor behind the greater exports. Burma's 2001/02 rice crop is projected at almost 9.9 million tons, unchanged from a year earlier and even with its 1995/96 record. Burma was the largest rice exporting country before World War II and typically ranked first or second until the mid-1960s. While Burma’s exports averaged almost 1.5 million tons a year in the early and mid-1960s, they declined to an average of only 542,000 tons from 1967 to 1989. Exports continued to decline during most of the 1990s. Trade is strictly controlled by the Government of Burma. Burma exports mostly low-quality, but competitively priced, long grain rice. Most of Burma's rice exports are 25-percent brokens, with the remainder being parboiled and small quantities of high- quality long grain rice. Burma exports almost exclusively indica rice. Japan: Although a net importer of rice, Japan has exported rice each year since 1997. Virtually all of this rice is shipped as food aid, mostly to Asia. In 2002, Japan is projected to export 150,000 tons of rice, with North Korea accounting for the bulk of the shipments. In 2001, Japan is estimated to have exported 550,000 tons, also mostly to North Korea. In 1998, it exported 642,000 tons of rice, mostly food aid to Indonesia. This was the largest amount of rice exported by Japan in a single year since 1981. Japan’s rice exports are primarily the result of declining domestic consumption and large supplies, including rice imported under the World Trade Organization Minimum Access Agreement. Despite declining rice area in Japan, rising yields offset much of the area contraction, contributing to large ending stocks. Producer prices in Japan are substantially above trading prices, a major factor behind its large supplies and high ending stocks. Taiwan: Taiwan typically exports a small amount of rice each year, mostly as food aid. Like Japan, Taiwan faces declining rice consumption that, when combined with producer prices above international trading levels, leads to surplus rice. In 2002, Taiwan is projected to export 90,000 tons of rice, unchanged from 2001 but 30,000 tons below 2000. These projections were made under the assumption that Taiwan was not a member of the WTO. Guyana: Guyana is typically the third largest rice exporting country in South America. In 2002, Guyana is projected to export 150,000 tons of rice, down 25,000 from a year earlier and more than 47 percent below the 1997 record of 285,000 tons. Guyana’s rice area and production have fluctuated substantially over the past four decades. Since the early 1990s rice area has expanded substantially, reaching a record 150,000 hectares in 2000/01, double 1992/93 rice area. For 2001/02, rice production is projected at a record 370,000 tons, up 5,000 from a year earlier and double 1993/94 production. Despite larger crops and only modest expansion in domestic use, Guyana’s exports have substantially declined since 1996/97, primarily due to a lack of competitiveness in world markets. The EU is the primary markets for Guyana’s rice. Other South America: Ecuador is projected to export 100,000 tons in 2002, unchanged from a year earlier but 30,000 tons below levels exported in 1999 and 2000. Weaker production is the main factor behind smaller trade. Venezuela is projected to export 75,000 tons in 2002, fractionally down from a year earlier. Venezuela became a regular rice exporter in the early 1990s, a result of larger crops. Both Ecuador and Venezuela export almost exclusively within the Andean Region. Surinam is also a regular exporter of rice, with shipments projected at 20,000 tons in 2002, down 5,000 from a year earlier. Surinam’s exports are well below levels shipped in the late 1980s and early 1990s. Surinam’s rice production has declined sharply since the late 1980s, with both area and yield well below levels reported in the mid-1980s. The EU is a major market for Surinam’s rice exports. Global Import Demand Flat Since 2000 Global rice imports have remainded at 23 million tons since 2000, down almost 8 percent from 1999 and nearly 17 percent below the 1998 record. In 2002, higher imports by the Middle East are projected to be more than offset by weaker imports by Sub-Saharan Africa. Strong crop recoveries since the 1997/98 El Nino, plus a large stocks build-up in many large rice importing countries account for the stagnant level of global imports since 1998. Indonesia, Iran, Iraq, and Nigeria are projected to be the largest importers in 2002. Major Importers Asia Asia is the largest import market for rice in the world. Asia is projected to import nearly 6.1 million tons of rice in 2002, up 2 percent from a year earlier. However, the region’s imports remain well below the 1998 record of more than 13.3 million tons. The huge expansion in imports in 1998 was largely driven by El Nino crop damage in the region, primarily in Southeast Asia. Indonesia: Indonesia is projected to remain one of the world’s largest rice importers, taking 1.6 million tons in 2001, up 300,000 from this year but well below its record of almost 5.8 million in 1998. Declining stocks and rising demand are behind the projected strong import growth. Indonesia's 2001/02 crop is projected at 32.5 million tons, up 500,000 from a year earlier but nearly 3 percent below the 1999/2000 record. Use has exceeded production every year since 1991/92, causing Indonesia to regularly import large amounts of rice. Indonesia’s ending stocks have declined each year since the 1998/99 record and are unlikely to continue declining. USDA’s long-term global rice market forecast projects Indonesia to regularly increase imports and remain a major importer of rice for the foreseeable future. The Philippines: The Philippines are projected to import 800,000 tons of rice in 2002, down 150,000 from this year and nearly 1.4 million tons below the 1998 record. The decline in exports in 2002 is based on expectations of a record 2001/02 crop. The Philippines is projected to produce 8.25 million tons of rice in 2001/02, up more than 1 percent from a year earlier. Area is projected to be record-high in 2001/02; the yield fractionally below a year earlier’s record. The Philippines has produced record crops each year since 1999/2000, a result of larger plantings and higher yields. Despite growing domestic rice consumption, ending stocks have risen every year since 1998/99 and are projected at a record 2.6 million tons in 2001/02, a major factor behind smaller imports. Consumption, projected at a record 8.9 million tons (milled), is expected to exceed milled rice production by 650,000 tons. This marks the 11th consecutive year that consumption has exceeded production. Lack of resources to expand rice growing areas and develop infrastructure, slow growth in yields, and steadily increasing population indicate the Philippines will be a regular importer of significant amounts of rice in the foreseeable future. Bangladesh: In 2002, Bangladesh is projected to import 500,000 tons of rice, up 5 percent from a year earlier and the first increase since 1998. A 6-percent drop in production to 23 million tons and a huge decline in ending stocks are behind the higher import forecast. From 1998/99 through 2000/01, Bangladesh produced record crops each year. This was a major factor behind the decline in Bangladesh’s rice imports each year from 1999 through 2001. Imports declined from a record 2.5 million tons in 1998 to just 475,000 tons in 2001. Bangladesh has substantially increased both area and yield since the late 1990s. In addition, Bangladesh’s ending stocks rose substantially in the late 1990s and early 2000s, also contributing to weaker imports. Bangladesh's constant population pressure drives an upward trend in consumption and leaves little room for error. Bangladesh has a preference for parboiled rice, although price is a limiting factor and may force imports of low-quality long grain if cheap parboiled is not available. In recent years India has supplied the bulk of the country’s rice import needs. However, Burma has supplied much of this rice this year due to more competitive prices. Despite expanding production, Bangladesh is projected to remain a major importer of rice over the next decade. China: In 2002, China is forecast to import 310,000 tons of rice, up 10,000 from this year. Nearly all of China's rice imports are fragrant rice from Thailand that is bought by high- income urban consumers. China is self-sufficient in rice, given the current policy environment. For 2002, China’s 2 million tons of exports will exceed imports by almost 1.7 million tons. China is projected to increase imports over the next 10 years, mostly higher quality specialty rice to urban consumers. China has agreed to open its market for up to 2.6 million tons of rice under a tariff-rate quota (TRQ) upon membership into the WTO, evenly split between japonica and indica. The TRQ will increase to 5.3 million by 2004. Rice imported under the TRQ will face a minimal tariff. Above-quota imports will face very high tariff rates. China is not expected to import the full TRQ in the next few years. Japan and South Korea: Since 1995, these two countries have opened their rice markets to limited imports in accordance with minimum access criteria of the Uruguay Round of the General Agreement on Tariffs and Trade (UR-GATT). Both have extremely strong preferences for japonica varieties for table consumption. The United States competes with Australia and China, and to a lesser extent Italy and Egypt--for the medium grain exports into these East Asian markets. However, because Japan and South Korea use long grain rice in certain processed uses, a portion of the import competition is open to other potential suppliers, mostly Thailand. Under the UR-GATT, Japan's minimum access purchases were scheduled to rise from nearly 380,000 tons (milled basis) in 1995/96 to 758,000 tons by 2000/01. However, in late 1998 Japan opted for rice tariffication as part of the GATT-WTO. This allowed the rate of growth in its annual rice imports--0.8 percent of base period (1986-88) consumption--to halve to 0.4 percent in return for allowing over-quota imports. Japan imported 644,000 tons of rice in its 1999/2000 fiscal year (April-March), and 682,000 tons in 2000/01 in accordance with UR-GATT minimum access import criteria. Japan’s minimum access imports are expected to remain at 682,000 tons a year unless a new agreement is reached. The United States has supplied almost half of Japan’s minimum access imports since 1995/96. Japan is projected to import 700,000 tons (milled basis) of rice in 2002, unchanged from a year earlier. The tariff on over-quota imports was set at 352 yen per kilogram for 1999/2000, nearly 5 times the average price of U.S. rice imported in 1998/99. To date, there have been virtually no over- quota rice imports. Japan is estimated to have produced 8.25 million tons of rice in 2001/02, down more than 4 percent from a year earlier, with both area and average yield below 2000/01. Declining rice area is the result of the government’s rice area diversion program. South Korea's minimum access amount is much smaller than Japan’s, rising from only 57,000 tons (milled basis) in 1995/96 to 205,000 tons by 2004/05. South Korea’s 2001/02 crop is estimated at 5.5 million tons, up nearly 4 percent from a year earlier, a result of a higher yield. Area remains unchanged from 2000/01. Rice area in South Korea had been declining for a decade prior to 1997 but increased every year from 1997 to 2000. South Korea's rice consumption had declined from 1979/80 through 1999/2000, but has risen in recent years. At 5.2 million tons in 2001/02, consumption will be the largest since 1995/96. Ending stocks have increased every year since 1995/96 and are projected to rise sharply in 2001/02. South Korea imported about 142,520 tons (brown rice basis) of rice under the WTO in 2001/02. China supplied 70,000 tons and the United States 30,000 tons. Australia and Thailand supplied the remainder. This was the first time the United States sold any rice to South Korea as part of its WTO Minimum Access Agreement. South Korea is projected to import 150,000 tons (milled basis) in 2002, up 15,000 from a year earlier. North Korea: North Korea is projected to import 450,000 tons in 2002, down 100,000 from a year earlier. Food aid accounts for all of North Korea’s rice imports. Japan has provided the bulk of these shipments in recent years. Both Korea’s have discussed South Korea providing up to 300,000 tons of rice in 2002. North Korea’s food situation is slightly better this year, with rice production expected to climb almost 4 percent to 1.35 million tons, a result of a slightly higher yield. However, production remains well below the 1999/2000 crop of 1.6 million tons and far below even a minimal level of subsistence. North Korea’s rice production has contracted severely since the late 1980s. Existing data suggest that during the 1980s North Korea's rice production averaged slightly more than 2 million tons (milled basis) on 642,000 hectares, with an average paddy yield of nearly 4.7 tons per hectare. From 1990 to 1999, rice production averaged 1.44 million tons on 596,000 hectares with paddy yields of 3.5 milled tons per hectare. Taiwan: Taiwan, which is essentially self-sufficient in rice, typically imports 3,000 to 5,000 tons of rice a year, almost entirely varieties not currently grown on the island. Producer prices on Taiwan are 4 to 5 times the prices in the international market for similar grades of rice. The Government of Taiwan strictly controls imports to protect producers from lower priced imported rice. Taiwan’s 2002 rice imports are projected at 4,000 tons, up 1,000 from a year earlier. These projections do not assume Taiwan’s accession to the WTO. Like Japan, Taiwan has experienced both declining total and per capita rice consumption for decades, a result of higher incomes. By the late 1970s ending stocks on Taiwan were 2 to 3 times the levels of just a few years earlier and expanded even more in the early 1980s. In an attempt to correct this imbalance, the Government of Taiwan implemented area diversion programs to reduce the rice production. When Taiwan joins the WTO it will be required to import 144,720 tons (brown rice basis) annually under a minimum access requirement. The Middle East Rice imports in 2002 by the Middle East are projected at 4.3 million tons, up 11 percent from a year earlier but 200,000 tons below the 2000 record. Rice production is projected to drop more than 5 percent to 1.43 million tons in 2001/02, the third consecutive year of declining production. Production in 2001/02 is nearly 35 percent below the 1998/99 record of more than 2.2 million tons and the smallest since 1988/89. The Middle East relies on imports to supply three-fourths of its rice consumption. The region has little ability to expand production and is expected to consume more rice each year. The region is traditionally the world's strongest market for high- quality rice--mostly parboiled, premium long grain varieties, and basmati--led by Iran, Iraq, and Saudi Arabia. Turkey and Jordan import smaller amounts of japonica rice. Iran: A 450,000-ton increase in Iran's 2002 imports to 1.25 million tons accounts for most of the region’s higher imports. Iran’s 2001/02 crop is projected to drop nearly 6 percent to 1.1 million tons--the smallest since 1988/89--on weaker plantings. This is the third year of declining rice production in Iran, a result of a severe drought. Rice production is 42 percent below the 1998/99 pre-drought level. Iran has been a major rice importer since the late 1970s and imported a record 1.76 million tons in 1995. Iraq: Iraq is projected to import 1 million tons in 2002, unchanged from a year earlier’s record. Iraq imports rice under the United Nation’s Oil-for-Food Program. Like Iran, Iraq’s rice crop is suffering from severe drought. Iraq’s 2000/01 crop is projected at 137,000 tons, down 9 percent from a year earlier. Like Iran, Iraq’s production has decline each year after 1998/99 due to severe drought. Production is more than 31 percent below 1998/99. Saudi Arabia: In 2002, Saudi Arabia is projected to import 875,000 tons, down 75,000 from this year and the smallest since 1999. Saudi Arabia does not grow any rice. The country is a major market for parboiled rice. Other Middle East: Turkey’s imports are projected at 350,000 tons, up 50,000 from this year and about the same as in 2000. Production is projected unchanged from a year earlier but more than 11 percent below the 1996/97 record. Despite an economic downturn, consumption continues to rise, a major factor behind growth in Turkey’s imports. Turkey is the second largest market for japonica rice--after Japan--with the United States, Egypt, Australia, and the EU its major suppliers. Turkey only became a significant import market in the mid-1980s when production declined. Jordan’s imports are projected to remain unchanged at 90,000 tons. The United States typically supplies 30 to 40 percent of Jordan’s rice imports. Jordan does not grow rice. Sub-Saharan Africa Imports by Sub-Saharan Africa (including the Republic of South Africa) are projected at nearly 5.3 million tons in 2002, down nearly 8 percent from a year earlier’s record 5.75 million tons. A 4-percent increase in production to 7.5 million tons accounts for most of the decline in imports. With the exception of the Republic of South Africa, most of Sub-Saharan Africa has traditionally been a low-quality rice market. Nigeria: Nigeria accounts for the bulk of the decline in the region’s imports. Nigeria’s 2002 rice imports are projected at 1.2 million tons, down 400,000 from a year earlier’s record. Nigeria’s production is projected at 2.1 million tons, up 5 percent from a year earlier. Nigeria is the largest market for rice in Sub-Saharan Africa. Nigeria purchases mostly parboiled rice, with Thailand supplying the bulk. In 2001, India also shipped parboiled rice to Nigeria. Despite this year’s larger crop, Nigeria’s rice production remains substantially below levels achieved in the early 1990s, a result of lower yields. South Africa: The Republic of South Africa is projected to import 550,000 tons in 2002, unchanged from this year. India, Thailand, and the United States supply most of South Africa’s rice imports, mostly parboiled. South Africa does not produce rice. Other Sub-Saharan Africa: Senegal is a major market for brokens and a growing market for rice in Sub-Saharan Africa. In 2002, Senegal is projected to import 750,000 tons of rice, unchanged from a year earlier. Imports by Senegal have risen substantially since 1995, as consumption growth has outpaced production. The Ivory Coast is projected to import 650,000 tons of rice in 2002, also unchanged from a year earlier’s record. Strong growth in consumption drives import expansion by the Ivory Coast, despite record production in 2000/01 and 2001/02. Ghana is projected to import 210,000 tons in 2002, down 10,000 from a year earlier’s record. Ghana’s imports have increased substantially since the late 1980s. Guinea is projected to import 310,000 tons of rice in 2002, down 15,000 from a year earlier’s record. Production cannot keep up with Guinea’s rising rice consumption. Latin America Imports by Latin America (Mexico, the Caribbean, Central America, and South America) are projected at slightly less than 2.5 million tons in 2002, down about 50,000 from this year. Imports remain well below the 1998 record of 3.65 million tons that were largely driven by El Nino crop damage to the region. Total production in the region is projected to increase 2 percent to almost 14 million tons, with both area and yield up slightly. Latin America is primarily an indica market, with the United States a major supplier to Mexico, Central America, and much of the Caribbean. Except for the Caribbean, these are primarily rough rice markets for the United States. In South America, the bulk of milled rice imports are typically from other South American countries--primarily Argentina and Uruguay. Regional trading preferences and locational advantages account for much of the intra-regional buying within South America. Mexico: Mexico is projected to import 425,000 tons in 2002, unchanged from a year earlier’s record. Declining production and a steady rise in use account for the continued growth in imports. The United States supplies the bulk of Mexico’s rice imports. Mexico imports mostly rough rice, nearly all long grain. U.S. exporters have a locational advantage over Asian exporters and face extremely low tariffs under the North American Free Trade Agreement. The United States is one of few rice exporting countries that allows rough rice exports. In fact, none of the major Asian exporting countries ships rough rice. The Caribbean: The region is projected to import a record 875,000 tons in 2002, up 25,000 tons from a year earlier. Imports by the Caribbean have nearly doubled over the past decade, largely due to declining production and steadily rising use. Rice production in the Caribbean for 2001/02 is forecast at 510,000 tons, down from 485,000 a year earlier and well below the 1984/85 record of 809,000. Smaller plantings account for most of the long-term production decline. Cuba, Haiti, and the Dominican Republic are the largest markets for rice in the Caribbean. Cuba is projected to import a record 455,000 tons of rice in 2002, up 5,000 from a year earlier. Rice production is projected to increase almost 4 percent in 2001/02, a result of a higher yield. Despite this year’s projected increase, rice production in Cuba has declined substantially since the mid-1980s, with both plantings and yield well below earlier levels. In 2002, Haiti is projected to import a record 260,000 tons, up 10,000 from a year earlier. Rising consumption and stagnant production are behind the steady rise in imports. The Dominican Republic is projected to import 40,000 tons in 2002, up 5,000 from a year earlier but below levels imported in the mid- and late 1990s. Rice imports by the Dominican Republic have varied from as low as 1,000 tons in 1994 to a high of 73,000 in 1999. Rice production in the Dominican Republic is well below levels achieved in the early 1990s. Both Haiti and the Dominican Republic are important markets for U.S. rice, with U.S. food aid accounting for some of both countries’ imports. Brazil: Brazil is Latin America's largest rice importer. Brazil is projected to import 500,000 tons in 2002, unchanged from this year but well below the 1998 record of nearly 1.6 million tons. Brazil's 2001/02 crop is projected at 7.4 million tons, up more than 5 percent from the 2000/01 crop, a result of expanded plantings and a higher yield. Despite a larger crop, ending stocks are projected to decline for a second consecutive year. Rice consumption has exceeded production every year since 1988/89, making Brazil a major rice importer. Because of special trade arrangements under the MERCOSUR trade agreement, Argentina and Uruguay dominate the Brazilian market. In years when Argentina and Uruguay were unable to supply Brazil’s import needs, the United States typically shipped substantial amounts to Brazil, mostly in the form of rough rice. Rice consumption in Brazil appears to have virtually leveled-off since the late 1990s at 8 million tons. Declining per capita consumption is being virtually offset by a rising population. Central America: The region is projected to import 285,000 tons in 2002, down 25,000 from a year earlier’s record. Production is expected to increase about 5 percent to 523,000 in 2001/02, about 10 percent below the 1997/98 record. Nicaragua accounts for most of the higher production and smaller projected imports. Rice consumption in the region has steadily increased and is outstripping any growth in production. The United States is the largest supplier to the region. The bulk of Central America’s rice imports are rough rice, nearly all long grain. Costa Rica, Nicaragua, and Honduras are the largest rice markets in Central America. Other regions The EU: The EU is projected to import 800,000 tons in 2002, unchanged from this year but below imports in the mid-1990s. The EU imports mostly indica rice--with the United States and Thailand the largest suppliers--as well as basmati rice from India and Pakistan. The EU produced bumper crops every year from 1996/97 to 1999/2000, a result of larger plantings and several years of record yields. With consumption growing at a very slow rate, these bumper crops led to a very large increase in stocks in the EU. The 2001/02 EU harvest is projected at almost 1.6 million tons, fractionally below a year earlier, a result of smaller area. Both Italy and Spain are the two largest rice producing countries in the EU. Despite smaller crops, EU ending stocks are projected to be record-high in 2001/02. The former Soviet Union: The countries of the former Soviet Union are projected to import 638,000 tons of rice in 2002, up 48,000 from a year earlier and the largest since 1999. An almost 10- percent drop in production in 2001/02 to 622,000 tons is a major factor behind the larger imports. Russia is the largest market for rice in the former Soviet Union, with imports projected at 350,000 tons in 2001 and 2002. Uzbekistan is projected to be the second largest import market in the region in 2002, taking 175,000 tons, up 33,000 from a year earlier. Rice production in Uzbekistan has collapsed since 1999/2000, a result of a severe drought in the region. Production in 2001/02 is projected at just 55,000 tons, about half a year earlier’s crop and well below the 269,000 tons in 1999/2000. United States: Imports by the United States are projected at 325,000 tons in 2002, up about 10,000 from a year earlier. Thailand accounts for almost 80 percent of U.S. rice imports, shipping mostly jasmine rice. Basmati rice from India and Pakistan account for most of the remainder. Special Article Taiwan’s Rice Import Market To Open With WTO Accession Sophia Huang -----1/ ----- 1/ Huang is an agricultural economist with the Market and Trade Economics Division, Economic Research Service. ----- Abstract: Taiwan, under the recently negotiated provisions of its membership in the World Trade Organization (WTO), has committed to market access terms including the lifting of its ban on rice imports. Rice, a symbol of Taiwan agriculture, was the most controversial issue for Taiwan during its lengthy WTO membership negotiations, which began in 1992. With the partial opening of this once closed and highly protected sector, Taiwan has adjusted its rice policy to respond to this coming new reality. Keywords: WTO, Minimum Access Quota, Riceland Diversion Program, rice policy, rice procurement, guaranteed price. On November 11, 2001, the 142-member governments of the WTO formally endorsed the accession package for Chinese Taipei (the WTO’s working name for Taiwan). The Taiwan legislature had already passed all WTO-related laws and on November 16 ratified its WTO accession. Taiwan is expected to formally become the WTO’s 144th member on January 1, 2002. Upon WTO accession on January 1, Taiwan will allow rice imports through a minimum market access quota set at 144,720 tons (brown rice basis), about 8 percent of domestic consumption during the base period 1990-92. Taiwan authorities will control 65 percent of the import trade, with private traders accounting for 35 percent. While the tariff rate for minimum access rice imports is zero, Taiwan is allowed to add a markup on the imported rice of up to NT$23.26/kg (about US$.74 per kilogram or US$740 per ton) when it enters Taiwan. Taiwan has committed to reducing the markup every two weeks to market clearing levels. In addition, the imported rice cannot be re-exported, given away as food aid, or used as livestock feed. Restrictions which currently limit the release of the authorities’ central rice stocks into retail and food processing channels will be eliminated, and rice imported by the authorities and placed in central stocks will be sold in the retail market in a timely fashion. Taiwan has maintained an effective ban on most rice imports through the absolute control of trade in rice by the Council of Agriculture (COA), Taiwan’s equivalent of the United States Department of Agriculture. When Taiwan reached an agreement over WTO entry with the United States in February 1998, Taiwan agreed to a minimum access level for rice, in the form of progressively increasing import quotas, roughly parallel to those of Japan. In essence, the schedule for Taiwan’s rice minimum access quota starts in 1995 at 4 percent of domestic consumption, rising to 8 percent in 2000. Because of the delay in Taiwan’s WTO accession, the minimum access quota for rice imports in 2000 (144,720 tons, brown rice basis) is the minimum access quota for rice imports upon Taiwan’s WTO accession. Although Japan changed its rice imports into a tariff-rate quota system in 1999, Taiwan has not followed suit, and the final terms of rice imports will depend on the outcome of future WTO negotiations. Evolving Rice Policy Rice, a traditional crop with great political and social significance, has received the strongest policy intervention since the Nationalists fled to Taiwan after the Communists took power over the Mainland in 1949. Over the next several decades, Taiwan’s agricultural authorities have tightly controlled every aspect of the rice economy from production through trade. Taiwan’s rice policy--fairly constant over the decades in its stated goals--stressed self-sufficiency, at least until recently. This rice policy, however, has been adjusted from time to time as new issues and problems emerged in the course of Taiwan’s rapid economic development. Subsidization Leads to Riceland Diversion Programs The most fundamental shift in the evolution of rice policy came in the early 1970s when Taiwan reoriented its rice policy from taxing to subsidizing farmers. Specifically, Taiwan established the Food Stabilization Fund with a budget of NT$3 billion ($94 million) in 1974 to purchase rice from farmers at prices exceeding world market prices. Because Taiwan's rice prices were much higher than required for self-sufficiency, a persistent rice surplus resulted. To dispose of its burdensome stocks, Taiwan used exporting as the main strategy. Eventually, the exports were effectively restricted by the signing of the 5-year (1984-88) U.S.-Taiwan rice agreement, which limited the volume and destination of Taiwan's rice exports. As a result of this restriction, Taiwan modified its previous ‘more is better’ policy by adopting its first full-scale Riceland Diversion Program (1984-89) to encourage farmers to divert their riceland to other crops, particularly soybeans and coarse grains which Taiwan has a low self-sufficiency ratio. In addition, in 1984 Taiwan started using large quantities of rice as feed--about 300,000 to 400,000 tons initially--by selling old rice to feed mills at prices equivalent to imported feed corn. By the time the first diversion program ended in 1989, Taiwan’s rice production had decreased 26 percent, and government stocks had been substantially reduced. To prevent further oversupply in rice production, Taiwan then decided to launch its second diversion program in 1990, which lasted until July 1997. This time its focus was less on reducing rice supplies than on maintaining a supply and demand balance for rice. Meanwhile, as negotiations for WTO membership intensified, Taiwan’s agricultural policy increasingly came under pressure because of trade liberalization demands from its trading partners. In particular, Taiwan’s ban on rice imports lost the political cover of Japan and South Korea when these countries agreed to a minimum access for rice imports in the Uruguay Round of the Agreement on Agriculture and partially opened their rice import market beginning in 1995. Since then, Taiwan authorities have been quietly preparing for a partial opening of its domestic market as the process moved forward. Adjusting Rice Policy as WTO Accession Draws Near Taiwan’s implementation of the 4-year Rice Paddy Utilization Adjustment Program (RPUAP) in July 1997, which replaced the second Riceland Diversion Program, was the main measure used to address compliance with WTO accession commitments, including the reduction of domestic production subsidies. Although Taiwan was not yet a WTO member, Taiwan followed its previously scheduled pace to annually reduce its domestic production subsidies. Under this program, farmers were paid to set rice land aside to fallow, to plant green manure crops, or to rotate the rice crop to other crops. In addition, the program’s guaranteed purchase of sorghum, corn, and soybeans diverted from rice production was adjusted from two- or three-crops-a-year coverage to only one-crop-a-year coverage. Currently, a new 4-year program is in place after the RPUAP ended. The new program is a continuation of the RPUAP with some variations. One special feature in this new program is to enlarge the fallow area to match Taiwan’s minimum access quota to avoid an oversupply of rice on the domestic market. For example, Taiwan is preparing to enlarge the fallow area to at least 32,000 hectares in the first year of its WTO accession. The 32,000- hectares are equivalent to the area required to produce 144,720 metric tons of brown rice, which is the amount Taiwan has agreed to import under the minimum access quota in the year of its WTO accession. Taiwan’s rice procurement policy also underwent adjustments over the years. The unlimited rice procurements in the early years were replaced by limited quantities per hectare in 1977, while nominal purchase prices were changed only twice. Currently, if a farmer were to sell the maximum per-hectare quantities allowable under the authorities’ two rice procurement programs--the guaranteed purchase program and the price guidance program--the quantity sold would equal about half of total production. From 1996 to 2000, authorities purchased about 22 percent of Taiwan’s total rice production. The rice from these purchases was put into the central stocks maintained for food security purposes in accordance with Taiwan’s Food Administration Law. Central stocks of new-crop rice can be auctioned and then released in the domestic market when retail prices exceed preset limits. In addition, stocks are managed by selling new-crop rice to schools, the army, and prisons, while old-crop rice is sold to food processors, feed mills, or exported. Food aid is also an option. The nominal pre-established prices under these two purchase programs have been revised only two times since 1982--in 1989 and in 1995. The nominal prices paid under the guaranteed purchase program were frozen from 1982 to 1988, and frozen again from 1990 to 1994 after a 1-percent increase in 1989. The 9-percent price increase in 1995 was the last price increase. Despite policy adjustments, Taiwan authorities have paid a substantial price to protect the rice sector. After more than a quarter century of operation, the Food Stabilization Fund had accumulated a debt of NT$201.47 billion ($6.28 billion) as of June 1999. These rice operation programs, in general, required authorities to buy high and sell low. In particular, rice for export or feed costs the authorities the difference between the farm procurement price and the world market price. For example, the guaranteed price for rice was $981 per ton (japonica rice, milled basis, using a conversion factor of 0.69 to convert from paddy to milled rice) in 2000, while the average f.o.b. price for Taiwan’s rice exports was $144 per ton. Taiwan has exported an average of 100,000 tons of old-crop rice from the authorities’ central stocks annually over the past 3 years, mostly to African countries that have diplomatic ties with Taiwan. Rice--Still the Dominant Crop Taiwan’s rice economy changed dramatically during the past five decades. The rice sector, once a major tool for the authorities to achieve the multiple policy objectives of tax revenue, self- sufficiency, foreign exchange, and price stabilization, has increasingly depended for its survival on protective policy intervention. By Taiwan’s estimates, the support for rice amounts to 30 to 40 percent of Taiwan’s total Aggregate Measure of Support to agriculture. Due to its high level of protection, rice remains the dominant crop; it is grown on the largest number of farms and occupies a large share of farmland. Over the past 25 years, Taiwan's rice sector has declined substantially. Rice production, after reaching its peak of 2.7 million tons (brown rice basis) in 1976, decreased almost continuously to 1.5 million tons in 2000. The termination of unlimited purchases in 1977 was a major factor behind declining acreage prior to the adoption of the first Riceland Diversion Program in 1984. Although rice remains the most important crop in Taiwan, it has been knocked from the number one position in farm production since 1986 due to rapid growth in certain high-value products, notably hogs. Meanwhile, rice consumption, the staple food of Taiwan, has declined over the decades, a result of a strong economic growth and resulting diet diversification. Average per capita rice consumption in 1999, estimated at 54.9 kilograms (mainly short grain rice), was about half of the level of two decades earlier. The role of rice exports has long switched from earning foreign exchange to that of stock reductions with heavy financial costs. Rice exports have been relatively small since the signing of the rice agreement with the United States in 1984 due to uncompetitive prices and concern over the reaction from the U.S. rice industry, even though the agreement was not renewed after expiration in December 1988. In fact, rice farming has become less attractive because of the lack of new incentives to growers. And the average age of rice farmers is rising. In addition, production costs have increased rapidly as land prices and labor costs have risen. Taiwan has lost the competitive advantages it once held in rice production, including low labor costs, land availability, and easy accessibility of water. Currently, producer prices in Taiwan are about three times that of U.S. prices. However, farmers can still produce two crops of rice a year even in the northern-most regions of Taiwan. Many farmers are reluctant to give up rice production--the basis of Taiwan’s agriculture. Taiwan’s farmers have grown rice for centuries, and their irrigation systems are designed for rice production. Rice in Taiwan is much less affected than other crops by natural disasters such as typhoons. In addition, insects and diseases are effectively controlled, and machinery and equipment for rice production are well developed. And most important of all, without import competition, guaranteed purchase prices ensure rice farmers of at least some viable income level. As a result, rice area as a percentage of total crop area has declined only modestly. It accounted for 38 percent of total crop area during 1998-2000, down from 49 percent from 1960 to 1962. Rice farms still account for more than 40 percent of Taiwan’s farms, although most of them are operated by part-time farmers. Rice production is still the dominant crop, accounting for more than 20 percent of the total value of crop production. The Prospects In general, Taiwan’s agricultural policy has been cast in anticipation of membership in the WTO, and rice policy is no exception. Taiwan’s rice policy, however, undoubtedly will enter a new phase after its WTO accession. So far, Taiwan’s protective rice policy, in addition to causing costly budgetary expenditures, has in fact benefited mostly part-time farmers who use rice as a cash crop that fits their needs for adequate returns with low labor requirements. Because of high labor costs, mechanized rice production in Taiwan makes rice farming easier for part-time farmers. This is ironic given the authorities’ stated policy of promoting the full-time entrepreneurial type of farmers. To chart a new course for the rice sector in the 21st century, the authorities have focused on evaluating the potential impacts of trade liberalization and structural adjustments to improve the sector's long-term competitiveness and to better utilize resources. The scope of policy options for the rice sector, however, is narrow. The old measures for reducing stocks by exporting or feed use are no longer options not only because of their financial costs but also because of restrictions under the terms of Taiwan’s WTO accession. Riceland diversion to other crops is not a viable option due to high costs and concern over the WTO restriction on production subsidies. In fact, there are few crops in Taiwan that could be planted to compete with imported products under trade liberalization. Taiwan’s authorities are well aware that their rice production costs are high, which makes Taiwan vulnerable to import competition. Rice production as well as rice purchases under the current guaranteed price and guidance price purchase programs are expected to decrease. Low yielding farmland will be released for non-farm uses. The authorities estimate that up to 50,000 hectares of paddy fields will no longer be worked in the next few years. Final rice policy, including import relaxation, is still pending the outcome of future WTO consultations. For the United States, the opening of Taiwan’s rice market provides a potential export market for high-quality japonica rice. References 1. Various attaché reports by USDA Foreign Agricultural Service http://www.fas.usda.gov/scriptsw/attacherep/default.asp 2. Internet publications provided by Taiwan’s Council of Agriculture http://www.coa.gov.tw 3. Sophia Wu Huang. Structural Change in Taiwan’s Agricultural Economy, Economic Development and Cultural Change, October 1993, Volume 42, Number 1.