Rice Situation and Outlook Yearbook. Market and Trade Economics 
Division, Economic Research Service, U.S. Department of 
Agriculture, November 2002, RCS-2002.

Contents

Summary
U.S. Outlook for 2002/03 
Bumper Crop, Record Supplies Projected for 2002/03 
U.S. 2002/03 Rice Exports Projected at Record 100 Million 
Hundredweight U.S. Season-Average Farm Price Projected Lowest 
Since 1986/87

Recap of 2001/02 U.S. Rice Market
U.S. Rice Prices Drop in Face of Record Production and Supplies 
International Outlook for 2002/03 
Global Prices Show Little Strength Despite Larger Trade
Thailand, Vietnam, and China Projected To Ship More Rice in 2003
Global Import Demand in 2003 Projected Second Highest On Record 

Special Article:

China’s Japonica Rice Market: Growth and Competitiveness

Report Coordinator
Nathan Childs (202) 694-5292

Economic Contributors
Nathan Childs (202) 694-5292
Jim Hansen

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 25, 2002. 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

Record Supplies, Weaker Prices 
Projected for 2002/03 U.S. Rice Market

Total U.S. rice supplies for 2002/03 (August-July) are projected at 
a record 264 million hundredweight (cwt) (rough basis), up almost 4 
percent from a year earlier. A 37-percent increase in beginning 
stocks to 39 million cwt more than offset a fractional drop in 
production to 212 million cwt--still the second highest on record--
and a 1-percent cut in imports to 13 million cwt. This is the 
second consecutive year of record total rice supplies, primarily 
due to bumper crops in both 2001 and 2002.

U.S. rice plantings for 2002/03 are estimated at more than 3.2 
million acres, down 3 percent from a year earlier. All of the 
acreage decline is in the South. A bearish price outlook--as well 
as heavy rains at plantings in parts of the Delta--are behind the 
decline. The average yield is projected at a record 6,611 pounds 
per acre, up 182 pounds from a year earlier. Increased plantings of 
new, higher yielding southern long grain varieties are behind this 
year’s third consecutive record yield.

Long grain accounts for all of this year’s production decline. Long 
grain production in 2002/03 is projected at 157.5 million cwt, down 
5 percent from a year earlier’s record, a result of weaker 
plantings. Nearly all U.S. long grain rice is produced in the 
South. In contrast, combined medium/short grain production is 
projected to increase 14 percent to 54.5 million cwt, primarily a 
result of larger plantings. At planting, medium grain prices were 
slightly higher than a year earlier and stronger than prices for 
long grain, a major factor behind expanded plantings of 
medium/short grain acreage this year. Last year, rice production in 
California--where more than two-thirds of the U.S. medium/short 
grain crop is grown--was down 12 percent from a year earlier, a 
main factor driving the higher medium grain prices.

In the South, acreage is typically shifted among classes of rice--
i.e., long, medium, and short--based on expected returns. Higher 
field yields for long-grain rice made long grain more profitable to 
many southern producers, despite higher prices for medium-grain 
rice.

Total use is projected at a record 225 million cwt in 2002/03, up 4 
percent from a year earlier. Exports account for the majority of 
this year’s higher use. Total U.S. rice exports are projected at a 
record 100 million cwt, 6 percent above a year earlier. Competitive 
prices, record supplies, and expanded global trade are behind the 
robust U.S. export forecast. Rough rice exports for 2002/03 are 
projected at a record 35 million cwt, up 10 percent from a year 
earlier’s previous high. Combined milled and brown rice exports (on 
a rough basis) are projected at 65 million cwt, up 4 percent from 
2001/02 and the largest since 1996/97. Total domestic use is 
projected at a record 125 million cwt, up almost 3 percent from a 
year earlier.

Total ending stocks for 2002/03 are projected at 39 million cwt, 
unchanged from a year earlier and the largest since 1992/93. The 
stocks-to-use ratio is projected at 17.3 percent, down from a year 
earlier’s 18.1 percent. About 4 million cwt of the 2002 U.S. rice 
crop has been forfeited to the U.S. Department of Agriculture’s 
Commodity Credit Corporation (CCC), the first significant 
forfeiture in 8 years. Of the 4 million cwt forfeited, 1 to 2 
million will likely be taken over by the CCC. The rest was sold 
earlier this year at or below market prices, a factor contributing 
to lower prices this year. 

U.S. Long Grain Supplies
Projected To Rise 4 Percent to Record 
U.S. long grain supplies are projected at a record 193.5 million 
cwt, up 4 percent from a year earlier. A 130-percent increase in 
beginning stocks and record imports more than offset the smaller 
crop. At 26.8 million cwt, beginning stocks of long-grain rice are 
the largest since 1987/88. Long grain imports are projected at 
nearly 9.3 million cwt, fractionally above a year earlier.

Total long grain use is projected at a record 167.7 million cwt, an 
increase of more than 5 percent from a year earlier. Domestic use 
is projected at a record 88.7 million cwt, more than 3 percent 
above 2001/02. Long grain exports are projected to climb more than 
7 percent to 79 million cwt, second only to the 1994/95 record of 
81.4 million. Long grain ending stocks are projected to drop 1 
million cwt to 25.8 million cwt in 2002/03. The resulting stocks-
to-use ratio is 15.4 percent, down from 16.8 a year earlier.

Total supplies of combined medium/short grain rice are projected at 
68.9 million cwt, nearly 3 percent above a year earlier. A 14-
percent increase in production more than offset a drop in beginning 
stocks and weaker imports. Imports, projected at 3.8 million cwt, 
are down 7 percent from a year earlier’s record.

Total medium/short grain use is projected to increase nearly 2 
percent to 57.3 million cwt. Both domestic use and exports are 
projected higher in 2002/03. Medium/short grain domestic use is 
projected to increase more than 1 percent to 36.3 million cwt. 
Exports are projected to expand 2 percent to 21 million cwt. The 
net result is a 1-million cwt increase in ending stocks to 11.6 
million cwt. The stocks-to-use ratio is projected to rise 20.3 
percent, up from 18.9 percent a year earlier.

The 2002/03 season-average farm price (SAFP) is projected at $3.70 
to $4.00 per cwt, down from $4.17 a year earlier and the lowest 
since 1986/87. This is the sixth consecutive year of declining SAFP 
in the United States. In October 2002, quoted prices for long-grain 
rice were the lowest in more than 15 years, a result of record U.S. 
supplies and continued weak international prices. For medium/short 
grain rice, U.S. price quotes began to drop in July in anticipation 
of a larger U.S. harvest this year. By mid-November, medium grain 
price quotes were slightly lower than a year earlier but still 
higher than quotes in 2000/01 when California produced a record 
crop. 

U.S. prices for long grain milled rice are well below a year 
earlier. In mid-November, prices for high-quality southern long 
grain (U.S. No. 2, 4-percent brokens, f.o.b mill in Houston) were 
quoted at $198 per ton, down $22 from a year earlier. Prices were 
actually reported as low as $165 in June, the lowest in 15 years. 
The recent price strength was primarily due to tight milling 
capacity in the South during the summer and early fall. Prices for 
California medium grain milled rice (U.S. No. 1, 4-percent brokens, 
f.o.b. mill in Sacramento) have been quoted at $265 per ton since 
mid-April, down $20 from a year earlier.

Global Rice Prices Show Little Strength,
Despite Smaller Supplies & Stronger Trade

Since July 2002, global trading prices have dropped 5 to 10 
percent, despite contracting supplies and expanding trade. Prices 
for Thailand’s 100 percent grade B have been quoted at $188-$197 
per ton since early August, quite low by historical comparison. 
From April through July 2002, prices were reported at $200-$210 per 
ton. In November 2001, trading prices began to rise due to 
government intervention purchases by Thailand. By July 2002, prices 
began to drop due to record subsidized exports from India. India 
began subsidizing exports in the spring of 2001. Global trading 
prices have shown little movement since early fall. During much of
2001, global trading prices had been the lowest in three decades,
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.

Global rice production in 2002/03 is projected at 381.8 million 
tons (milled basis) down 4 percent from a year earlier and the 
smallest since 1996/97. This is the third consecutive year of 
declining global rice production. Despite the smaller crop, only 
modest price strengthening is expected in 2002/03--a result of 
reduced export subsidies from India. Since this forecast assumes 
normal weather for the remainder of the 2002/03 market year, a 
major weather problem could alter this projection. Global ending 
stocks are projected at 106.1 million tons, down 20 percent from a 
year earlier and the lowest since 1987/88.

India and China--both major exporters--account for the bulk of this 
year’s expected reduction in global rice production. However, both 
countries are expected to have plenty of supplies for both their 
domestic market and to remain major exporters in 2002 and 2003. 
Other major exporters--Thailand, Vietnam, and the United States--
are expected to produce record or near-record crops in 2002/03. 
Drought reduced Pakistan’s 2001/02 and 2002/03 crops, limiting 
exports. Most major importers are expecting to harvest bumper crops 
in 2002/03.

For 2003, global rice trade is projected at 26.6 million tons 
(milled basis), fractionally above a year earlier and second only 
to the 1998 record of 27.7 million tons. In 2002, global rice trade 
jumped 9 percent. Indonesia, Iraq, and Iran account for most of the 
expansion in 2002 imports. In 2003, Thailand, Vietnam, Burma, 
China, and the United States are all expected to ship more rice 
than this year, while India and Pakistan are expected to export 
less.

U.S. Outlook for 2002/03
Bumper Crop, Record Supplies Projected for 2002/03

U.S. rice supplies are projected to increase almost 4 percent to 
a record 264 million hundredweight (cwt) in 2002/03, the result 
of a huge carryin, bumper harvest, and near-record imports. At 
212 million cwt, production is fractionally below a year 
earlier’s record as smaller plantings were nearly offset by a 
record yield. Long grain supplies, projected at a record 193.5 
million cwt, are up 4 percent from a year earlier. Combined 
medium/short grain supplies are projected to increase 3 percent 
to 68.9 million cwt. 

U.S. Rice Production Drops Fractionally
On Smaller Plantings 

Based on estimates by the U.S. Department of Agriculture’s (USDA) 
National Agricultural Statistics Service (NASS) in early 
November, the 2002/03 U.S. rice crop is forecast at 212 million 
hundredweight (cwt) (rough basis), down fractionally from a year 
earlier and the second largest on record. A 3-percent cut in 
plantings to 3.23 million acres was almost offset by a higher 
yield. The average yield, projected at a record 6,611 pounds per 
acre, is up 182 pounds from a year earlier. This is the third 
consecutive year of a record U.S. average yield and fourth 
consecutive year of an increasing average.

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 decline in rice 
production. U.S. long grain production is projected at 157.5 
million cwt, down 5 percent from a year earlier’s record. In 
contrast, medium grain production is projected at 52.6 million 
cwt, up 14 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, up 19 percent from 2001/02. 
California produces the bulk of U.S. short grain rice. 

Expectations of a large carryover by season-end--plus excessive 
rain in parts of the Delta--were major factors behind smaller 
long grain acreage this year. In 2001/02, U.S. long grain 
supplies jumped 22 percent, a result of a record crop. In 
contrast, at planting, medium grain price quotes had risen nearly 
50 percent since the start of the 2001/02 market year, a major 
reason for both larger plantings in California--which grows 
mostly medium grain--and shifts to medium grain acreage from long 
grain in the South.

U.S. Average Yield Estimated
At Record 6,611 Pounds Per Acre

In early November, NASS forecasted average field yields for 
2002/03 at a record 6,611 pounds per acre, up nearly 4 percent 
from a year earlier. Generally favorable weather across most of 
the South during critical growing months; expanded plantings of 
newer, higher yielding long grain varieties; and a shift in 
acreage to the high yielding California rice from the lower 
yielding southern rice are behind the record yield. This is the 
third consecutive year of a record average yield. Annual yield 
growth has averaged 4 percent since 1999/2000 after being almost 
stagnant from 1988/89 to 1998/99.

Field yields are projected higher this year for all reporting 
States except Louisiana, with record yields projected for all 
southern reporting States. The Arkansas yield is projected at 
6,450 pounds per acre, up 200 pounds from last year; California 
at 8,300 pounds, up 130; Mississippi at 6,600 pounds, up 100; 
Missouri at 6,000 pounds, up 50; and Texas at 7,000 pounds, up 
300. Louisiana’s yield is projected at 5,500 pounds, unchanged 
from a year earlier’s record. 

Despite an increase of almost 2 percent this year, rice yields in 
California remain below the 8,500 pounds per acre record achieved 
in 1991, 1992, and 1994. In fact, except for 1997, 2001, and 2002 
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.

Rice Crops Projected Smaller
In All Southern Growing States

Rice acreage is smaller this year in all reporting States except 
California. Arkansas, the largest rice producing State, accounts 
for the bulk of this year’s acreage decline. Planted area dropped 
115,000 acres to 1.52 million. Declines in other States were much 
smaller. Missouri’s rice plantings are estimated at 201,000 
acres, a drop of 10,000 from 2001/02 but still the second highest 
on record. Rice acreage in Missouri has substantially increased 
over the past decade. Mississippi’s rice acreage is estimated at 
245,000 acres, down 10,000 from a year earlier. Heavy rains early 
in the planting season likely reduced rice plantings in these 
three Mississippi Delta rice-growing States.

Louisiana’s rice acreage is estimated at 540,000 acres, down 
8,000 from a year earlier. In Texas, rice area is estimated at 
206,000 acres, down 11,000 from a year earlier and well below the 
1968 record of 599,000 harvested acres. This is the smallest rice 
plantings in Texas since the mid-1930s. Rice acreage in Texas has 
declined sharply since the early 1980s. Higher production costs 
than other southern States, lack of an economically viable 
rotation crop for many producers, and weather problems such as 
hurricanes account for the long-term decline in rice plantings in 
Texas. In contrast to the South, planted area in California is 
estimated at 523,000 acres, a 50,000-acre increase from a year 
earlier but still below the 1981 record of 600,000 acres. 

Total U.S. rice production is projected to decline about a 
million cwt in 2002, with a larger California crop nearly 
offsetting weaker production in all southern growing States. 
Reduced plantings account for the smaller crops in the South. 
Arkansas reports the largest reduction, with 2002 production 
projected to drop more than 4 percent to 97.1 million cwt, still 
the second highest on record. Crop reductions in other States are 
much smaller. Louisiana’s rice crop is projected at 29.4 million 
cwt, down 2 percent from a year earlier. In Missouri, rice 
production is projected at 11.8 million cwt, a drop of 4 percent 
from the 2001/02 record. Mississippi’s production is forecast to 
decline nearly 3 percent to 16 million cwt. At 14.4 million cwt, 
Texas’ rice production is about 1 percent below a year earlier. 

In contrast, California’s 2002 rice crop is estimated at 43.2 
million cwt, an increase of 12 percent from a year earlier. 
Greater plantings and a higher yield are behind the larger crop. 

Total U.S. Supplies Projected
At Record 264 Million Cwt

Total U.S. rice supplies in 2002/03 are projected at a record 264 
million cwt, up almost 4 percent from a year earlier and the 
second consecutive year of record supplies. A 37-percent increase 
in beginning stocks more than offset a slight drop in imports and 
the smaller crop. Based on data from the NASS August Rice Stocks 
report, beginning stocks for 2002/03 are estimated at 39 million 
cwt, up 10.5 million cwt from a year earlier and the largest 
since 1993/94. 

U.S. rice imports for 2002/03 are projected at 13 million cwt, 
down fractionally from a year earlier’s record. In 2001/02, U.S. 
rice imports jumped 22 percent to 13.2 million cwt, with large 
shipments of medium grain rice to Puerto Rico from Australia 
accounting for most of the increase. Australia shipped smaller 
amounts to Puerto Rico early in the 2002/03 market year. 
Australia has not typically supplied rice to the United States.

Excluding the Australian shipments, nearly all U.S. rice imports 
are specific 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. About 80 percent of 
U.S. rice imports typically 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, with smaller quantities often imported from 
Vietnam, China, and Egypt. 

Long grain--the dominant class of rice grown in the United 
States--accounts for the bulk of the increase in total rice 
supplies this year. Total long grain supplies are projected at a 
record 193.5 million cwt, up 4 percent from a year earlier. A 
huge carryin and record imports more than offset the smaller 
crop. Data from the August 2002 Rice Stocks report indicated long 
grain stocks at the beginning of the 2002/03 market year at 26.8 
million cwt, a 130-percent increase from a year earlier and the 
largest since 1987/88. 

For medium/short grain rice, supplies are projected at 68.9 
million cwt, up nearly 3 percent from a year earlier. This year’s 
larger crop more than offset tighter beginning stocks and a 
decline in imports. Data from the August 2002 Rice Stocks report 
indicate beginning stocks of medium/short grain rice at 10.7 
million cwt, down nearly 32 percent from a year earlier. A 12-
percent drop in California’s rice production in 2001/02 is the 
main factor behind this year’s smaller carryin. Imports of 
medium/short grain rice are projected to drop 7 percent to 3.8 
million cwt, second only to a year earlier’s record. 

U.S. 2002/03 Rice Exports Projected at Record 100 Million Cwt 

Total rice use in 2002/03 is projected to increase more than 4 
percent from a year earlier to a record 225 million cwt, with 
both domestic use and exports the highest on record. Total 
domestic use is projected to increase nearly 3 percent to 125 
million cwt, while U.S. exports are expected to climb 6 percent 
to 100 million. Long grain accounts for the bulk of the expansion 
in both domestic use and exports. Total long grain use is 
projected at a record 167.7 million cwt, up more than 5 percent 
from 2001/02. Combined medium/short grain total use is projected 
to be slightly higher this year. Ending stocks of total rice are 
projected at 39 million cwt, the largest since 1993/94. 

Total Rice Use in 2002/03
Projected at Record 225 Million Cwt

Total rice use--domestic and residual plus exports--in 2002/03 is 
projected at a record 225 million cwt, up more than 4 percent 
from a year earlier. Both domestic use--including residual, or 
unreported losses in transporting and marketing--and exports are 
projected to be record highs in 2002/03. Exports account for the 
majority of the increase in total rice use this year. Total U.S. 
rice exports are projected at a record 100 million cwt, more than 
6 percent above a year earlier and 1.2 million cwt above the 
1994/95 previous high. 

Total domestic utilization (food, industrial, and residual plus 
seed use) is projected at a record 125 million cwt, up almost 3 
percent from 2001/02. Food, industrial, and residual is projected 
at a record 121 million cwt, an increase of nearly 3 percent. 

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 (excluding shipments to U.S. 
territories) averaged more than 4 percent a year. Since 1995/96, 
growth in U.S. rice consumption has averaged 2.5 percent. 

In February, USDA’s 2002 long-term baseline projection forecasted 
a growth rate of a little more than 2 percent a year for the next 
decade. While less than half the rate achieved a decade ago, 
growth is still more than double the rate of population growth.

Food use accounts for most of the expansion in U.S. rice 
consumption over the past two-and-a-half 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. 

Per capita rice consumption--including direct food use, processed 
foods, pet foods, and beer--has nearly doubled since the early 
1980s and is currently projected at about 27 pounds. Since 
1990/91, per capita consumption has grown almost a half-a-pound a 
year, down from a pound a year in the 1980s. 

U.S. Rice Exports Projected
To Climb To Record 100 Million Cwt

U.S. rice exports in 2002/03 are projected to increase more than 
6 percent to a record 100 million cwt (rough basis). Competitive 
U.S. prices, huge U.S. supplies, and greater world trade are 
behind the robust export forecast. Exports are projected to be 
1.2 million cwt larger than the previous high reported in 
1994/95. Both rough and milled rice exports are projected to 
increase this year, with rough rice exports projected to account 
for the bulk of the increase in total exports this year. 

U.S. rough rice exports for 2002/03 are projected at 35 million 
cwt, up 10 percent from a year earlier and the second consecutive 
year of record U.S. rough rice exports. In 2001/02, record 
purchases by Mexico and Central America were responsible for a 
39-percent jump in U.S. rough exports to 31.7 million cwt. This 
year, continued strong shipments to Mexico and Central America, 
plus large purchases by Cuba and Brazil are behind the record 
rough rice export projection. Recent legislation allowing U.S. 
sales of food and medicine to Cuba is behind this year’s robust 
sales to Cuba. Brazil sometimes buys large amounts of U.S. rice 
in years when regional supplies are inadequate for Brazil’s large 
domestic market. 

Southern long grain accounts for the bulk of U.S. rough rice 
exports, with most of this rice going to Latin America. Turkey is 
the only other large market for U.S. rice. Turkey typically 
imports California medium grain rice but will take southern 
medium grain if California supplies are tight. Turkey’s purchases 
of U.S. rice--mostly rough rice--have been relatively small 
compared with previous years. Last November, Turkey placed a 
temporary ban on imports of U.S. rice, but sales have resumed. 
The European Union typically imports much smaller amounts of U.S. 
rough rice, mostly long grain. 

The United States is the only major rice exporter that allows 
rough rice exports, and rough rice has become a larger share of 
U.S. exports, accounting for more than 30 percent in recent 
years. U.S. rough rice exports have expanded substantially since 
1990/91. None of the large Asian exporting countries allows rough 
rice exports. However, Argentina, Uruguay, and Guyana ship some 
rough rice within Latin America, and Australia has shipped rough 
rice to Turkey. 

Combined milled and brown rice exports (on a rough basis) are 
projected at 65 million cwt in 2002/03, up nearly 4 percent from 
a year earlier and the largest since 1996/97. Stronger global 
rice trade in 2002 and 2003 plus competitive U.S. prices are 
behind the higher milled rice export forecast. The price 
difference over similar grades of rice from Thailand--a major 
competitor of the United States in South Africa and parts of the 
Middle East--has declined substantially in recent years. From 
almost $90 per ton in 2000/01, the difference dropped to less 
than $40 in 2001/02 and has averaged just $15 per ton since 
August 2002. 

Long Grain Accounts for Bulk of the Rise
In Domestic Use and Exports

Long grain accounts for the bulk of the projected increase in 
total rice use in 2002/03. Total long grain use is projected at a 
record 167.7 million cwt, up more than 5 percent from a year 
earlier. Both domestic use and exports are projected higher this 
year.

Total domestic use (including residual) of long grain rice is 
projected at a record 88.7 million cwt, up more than 3 percent 
from a year earlier. Long grain exports are projected to increase 
more than 7 percent to 79 million cwt, the largest since the 
1994/95 record 81.2 million cwt. Exports of both rough and milled 
long grain rice are expected to increase in 2002/03. Competitive 
prices, record U.S. supplies, and stronger global demand are 
behind expectations of increased U.S. long grain exports in 
2002/03. 

Total use of combined medium/short grain rice is projected at 
57.3 million cwt, up less than 2 percent from a year earlier but 
well below the 1993/94 record of 61.3 million. Both domestic use, 
including residual, and exports are projected to increase in 
2002/03. Medium/short grain domestic use is projected at 36.3 
million cwt, up slightly more than 1 percent from a year earlier. 

Medium/short grain exports in 2002/03 are projected to increase 2 
percent to 21 million cwt, the largest since 1987/88. Japan, 
Turkey, and Jordan have been top markets for U.S. medium/short 
grain rice at least since the mid-1990s. Three other buyers are 
important this year as well. First, South Korea--which barred 
rice imports more than two decades ago--has been a regular buyer 
of U.S. rice since 2001/02. Second, Taiwan has purchased U.S. 
medium/short grain rice from the United States, the first 
purchases in several decades. And finally, Uzbekistan has 
purchased U.S. medium/short rice under U.S. food aid programs in 
both 2001/02 and 2002/03. 

Japan is the largest global importer of medium/short grain rice 
and the largest market for U.S. medium/short grain rice as well. 
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 World Trade Organization’s (WTO) minimum 
access requirements. Extremely high tariffs on any over-quota 
rice imports virtually preclude purchases beyond the minimum 
access requirements. Japan’s WTO imports are not scheduled to 
increase until another WTO agreement is reached.

Like Japan, both South Korea’s and Taiwan’s rice imports are 
solely the result of minimum access agreements under the WTO. 
South Korea’s minimum access imports are scheduled to increase 
annually from 1995 through 2004. As a requirement for joining the 
WTO, Taiwan agreed to a minimum access import level for rice in 
2002. Access after this year for Taiwan is currently being 
debated.

U.S. Ending Stocks Projected
To Remain Largest Since 1992/93

U.S. ending stocks of all rice for 2002/03 are projected at 39 
million cwt, virtually unchanged from a year earlier and the 
largest since 1992/93. An almost 4-percent increase in total 
supplies virtually offset record total use. The resulting stocks-
to-use ratio is projected at 17.3 percent, down from a year 
earlier’s 18.1 percent. 

The ending stocks situation is expected to be somewhat different 
by class of rice. For long grain rice, ending stocks are 
projected to drop 4 percent to 25.8 million cwt, still the second 
largest since 1987/88. The long grain stocks-to-use ratio is 
projected at 15.4 percent, down from a year earlier’s 16.8 
percent but still the second highest in a decade. Assuming normal 
weather worldwide, U.S. long grain prices are expected to remain 
under severe price pressure for at least the remainder of the 
2002/03 market year.

In contrast, medium/short grain ending stocks for 2002/03 are 
projected to increase 9 percent to 11.6 million cwt. A 3-percent 
increase in medium/short grain supplies more than offset a slight 
rise in total use. The resulting medium/short grain stocks-to-use 
ratio is projected at 20.3 percent, up from 18.9 percent a year 
earlier. 

U.S. Season-Average Farm Price Projected Lowest Since 1986/87

The U.S. season-average farm price for 2002/03 is projected at 
$3.70 to $4.00 per cwt, down from $4.17 a year earlier and the 
lowest since 1986/87. Record supplies of rice at home, continued 
low international prices, and sales of forfeited rice by USDA’s 
Commodity Credit Corporation at or below market prices are behind 
the bearish price outlook. Without a major weather disturbance, 
there is little reason to expect any significant strengthening of 
world prices. U.S. producers are expected to realize marketing 
loan benefits for the remainder of the 2002/03 market year. Total 
U.S. food aid shipments in fiscal 2002 are estimated to be 
372,000 up from 231,000 tons a year earlier. 

Season-Average Farm Price
Projected at $3.70 to $4.00 Per Cwt

The 2002/03 season-average farm price is projected at $3.70 to 
$4.00 per cwt, down from $4.17 a year earlier and the lowest 
since 1986/87. This is the 6th year of declining season-average 
farm prices for U.S. rice. Record supplies of rice at home and 
continued weak prices in the international rice market are behind 
the bearish price outlook. 

Average U.S. monthly cash prices for rough rice have sharply 
declined since early 1999. In August 2002, USDA’s average cash 
price was estimated at $3.72 per cwt, the lowest since July 1987. 
Prices have rebound 10-15 cents per cwt, with the mid-November 
price reported at $3.86 per cwt. Even with the recent up-tick in 
prices, U.S. monthly cash prices have been below a year earlier 
every month since November 1998. 

Price movements by class of rice are somewhat different. Quoted 
prices for long grain rice have steadily declined since early 
2001, primarily due to two consecutive years of record U.S. 
supplies of long grain rice and extremely low prices for long 
grain rice in international markets.

In mid-November, long grain rough rice prices were quoted at 
around $3.50 per cwt in the Delta and up to 25 cents higher on 
the Gulf Coast. Although price quotes in the Delta are up 
slightly from last month, on average, southern long grain prices 
are the lowest in more than 15 years. In fact, there has been no 
significant price strength for southern long grain rice in more 
than a year.

For California medium grain rice, farm price quotes have dropped 
since May on expectations of a larger crop in 2002. In mid-
November, California medium grain prices were calculated at $4.90 
per cwt, up about 20 cents from September and October. Recent 
sales to South Korea and Taiwan are behind the slight increase. 
Despite this month’s slight increase, prices are down more than a 
dollar from May. In 2001/02, California rice production dropped 
nearly 12 percent from a year earlier’s record, boosting prices 
that year. 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. 

In the South, medium grain prices were quoted around $5.00 per 
cwt in mid-November, up from less than $4.00 in August. Despite 
higher prices for medium than long grain rice at planting, 
southern producers boosted medium grain plantings 21,000 acres to 
177,000, well below 309,000 acres in 2000. 

Marketing Loan Gains in 2001/02
Averaged $3.21 Per Cwt

U.S. producers are eligible for marketing loan benefits when 
foreign prices (represented by USDA’s weekly adjusted 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 August 1995 until late March 1999, the adjusted 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 payment rates exceeded $2 per cwt 
for all three classes of rice--long, medium, and short. Payment 
rates continued to rise in 2000/01 as the adjusted world price 
declined. 

From May through July 2001 the adjusted 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 was $3.68 for 
long grain, $3.57 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 adjusted world price 
last fall reduced the payment rate 20 to 25 cents for all three 
classes of rice. However, the average payment rate was $3.21 per 
cwt for 2001/02. 

Through November 2002, the 2002/03 payment rate has averaged 
$3.25 per cwt, up a few cents from the 2001/02 average. 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 
2002/03 market year. 


U.S. Food Aid Shipments for Rice
Increased 65 Percent in FY 2002

Total U.S. food aid shipments in fiscal 2002 (October 2001 to 
September 2002) are estimated at 380,317 tons, up almost 150,000 
from a year earlier. Food aid accounted for almost 11 percent of 
total U.S. rice exports in fiscal 2002, up from less than 8 
percent a year earlier. In both the text and tables of this 
report, U.S. food aid shipments--reported on a product-weight 
basis--are  assigned appropriate October-September fiscal years 
based on date of purchase, not actual shipment date. In fiscal 
2001, total U.S. food aid shipments totaled 230,700 tons, down 
from 394,200 a year earlier. 

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 2002, 
shipments under PL 480 Title I (concessional sales) totaled 
185,727 tons, up more than 99,500 from a year earlier. Indonesia 
accounted for the bulk of the Title I shipments in 2002, taking 
90,135 tons. Uzbekistan ranked second with 58,519 tons. The 
Philippines accounted for the remainder, purchasing 37,073 tons. 
Purchases under PL 480 Title II, or food donations, accounted for 
nearly 67,000 tons in fiscal 2002. Indonesia was the largest 
recipients of Title II donations. Other major recipients in 
fiscal 2002 were: Niger, Burkina Faso, Benin, Nepal, and 
Guatemala.

More than 64,000 tons of rice were purchased in fiscal 2002 under 
the Section 416 (b) program. Major recipients were North Korea, 
the Philippines, and Ukraine. Exports under the Food for Progress 
program totaled 38,880 tons, up from 29,090 a year earlier. 
Nigeria, Cote d’Ivoire, and Senegal together accounted for nearly 
three-fourths of fiscal 2002 shipments. Finally, shipments under 
the Global Food for Education program totaled 24,580 tons, 
slightly below a year earlier. Mozambique, Congo, and Nigeria 
together accounted for about half the total shipments. Other 
recipients under the Global Food for Education program in fiscal 
2002 included Gambia, El Salvador, and Ghana.

In fiscal 2001, Title I agreements for rice totaled 86,200 tons, 
down 55,800 from a year earlier. Uzbekistan was the largest 
recipient, purchasing 51,300 tons. The Philippines accounted for 
the remainder, purchasing 34,900 tons in 2001. In addition, 
58,100 tons of rice were purchased in fiscal 2001 under PL 480 
Title II, down 27,500 tons from a year earlier. Major recipients 
of Title II in fiscal 2001 were Indonesia, Guatemala, Benin, 
Burkina Faso, Cambodia, Niger, and Senegal. 

In fiscal 2001, 30,650 tons were shipped under the Section 416 
(b) program, down from more than 147,000 tons purchased for 
export under Section 416 (b) in fiscal 2000. Cambodia, Jamaica, 
and Nicaragua accounted for all of the shipments in 2001. U.S. 
rice exports purchased under the Food for Progress program 
totaled 29,090 tons in fiscal 2001, down 2,130 from a year 
earlier. Russia was the largest recipient, taking nearly 11,500 
tons. Togo, Haiti, Azerbaijan, and Georgia accounted for most of 
the remainder. Finally, in fiscal 2001, shipments under the newly 
created Global Food for Education program totaled 26,670 tons. 
Major recipients included Moldova, Mozambique, Congo-Brazzaville, 
El Salvador, Cambodia, and Gambia.

Recap of 2001/02 U.S. Rice Market

U.S. Rice Prices Drop in Face of Record Production and Supplies

An almost 12-percent increase in production--plus record imports 
and a larger carryin--boosted total U.S. rice supplies to 254.7 
million cwt, the largest to date. Long grain accounted for all of 
the supply expansion, combined medium/short grain supplies were 
down more than 10 percent, primarily due to an almost 1 percent 
cut in California’s 2001/02 harvest. Both domestic use and 
exports were higher than a year earlier. Ending stocks rose 
almost 37 percent to nearly 39 million cwt, the largest since 
1992/93. The season-average farm price for rice dropped almost 26 
percent to $4.17 per cwt, the lowest since 1986/87 and fifth 
consecutive year of decline. 

U.S. Rice Crop Climbs 12 Percent
To Record 213 Million Cwt

The 2001/02 U.S. rice crop is estimated at a record 213 million 
cwt, up nearly 12 percent from a year earlier. The record crop is 
the result of a 9-percent increase in plantings to 3.34 million 
acres and a 2-percent boost in the average yield to a record 
6,429 pounds per acre. This was the second consecutive year of a 
record yield. 

Long grain accounted for all the area expansion. Long grain rice 
plantings rose 23 percent to more than 2.71 million acres, 
fractionally below the 1999/2000 record. Plantings of medium 
grain rice dropped 27 percent to 595,000, the lowest since 
1988/89. Medium grain plantings were down in both California--
where more than two-thirds of the U.S. medium grain crop is 
grown--and in the South. Plantings of short grain rice--which 
accounts for less than 1 percent of U.S. rice production--were 
estimated at 26,000 acres, a drop of 10,000 from 2000/01. 
California--which produces the bulk of the U.S. short grain crop-
-accounted nearly all of the area decline.

The 2001/02 area expansion was primarily due to higher prices at 
planting for long grain rice--a result of a 12-percent drop in 
long grain supplies a year earlier--and lack of a better planting 
option. Plantings increased in every southern rice-growing State. 

In Arkansas, 2001 rice plantings are estimated at a record 1.63 
million acres, up 15 percent from a year earlier. At 548,000 
acres, Louisiana’s rice acreage was 13 percent larger than a year 
earlier. Mississippi’s rice plantings, estimated at 255,000 
acres, were up 16 percent from 2000/01. In Texas, rice plantings 
increased fractionally to 217,000. Despite the increase, Texas 
rice acreage is down nearly two-thirds from its 1968 high of 
599,000 acres. 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. Missouri’s 
rice area climbed 24 percent to a record 211,000 acres. Rice 
acreage in Missouri has expanded substantially since the late 
1980s

The national average yield for 2001 is estimated to have been 
6,429 pounds per acre, up 148 pounds from 2000 and a record to 
date. Yields were higher than a year earlier in all rice growing 
States except Texas where yields were flat. Yields in 2001 were 
the highest on record in Arkansas, Louisiana, Mississippi, 
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 2001. 

Arkansas’ yield of 6,250 pounds per acre was up more than 2 
percent from a year earlier and the highest to date. In 
Louisiana, average yields climbed 8 percent to a record 5,500 
pounds per acre. Mississippi’s yield jumped 10 percent to 6,500 
pounds per acre. The Texas yield is estimated to have been 6,700 
pounds per acre, unchanged from a year earlier. At 5,950 pounds 
per acre, Missouri’s 2001 yield was up more than 4 percent from a 
year earlier. In California, the average yield rose nearly 3 
percent to 8,170 pounds per acre, still below the record 8,500 
achieved in 1991, 1992, and 1994. Adverse weather problems, 
environmental regulations, and unique characteristics of the 
varieties have, at times, contributed to California’s weaker 
yields in recent years.

In 2001, year-to-year production changes varied by class. Long 
grain production is estimated to have been a record 165.3 million 
cwt, up 28 percent from a year earlier. A 23-percent increase in 
long grain area plus a record yield accounted for the bumper 
crop. In contrast, medium grain production dropped 22 percent 
from a year earlier, a result of weaker plantings. The short 
grain crop is estimated to have declined more than 38 percent to 
1.6 million cwt, also due to smaller plantings. The 2001 short 
grain crop was the smallest since 1997. 

Rice production increased in 2001 in every reporting State except 
California, with Arkansas and Missouri harvesting record crops. 
Arkansas accounted for the largest share of the production 
increase. Arkansas’ 2001 crop is estimated at 101.3 million cwt, 
up 18 percent from a year earlier, a result of greater plantings 
and a record yield. Arkansas is the largest rice growing State, 
accounting for more than 45 percent of total U.S. rice 
production. 

Louisiana’s 2001 rice crop is up 23 percent--and at 30 million 
cwt--is the second largest on record. Rice production in 
Mississippi is estimated at 16.4 million cwt, an increase of 
nearly 28 percent. In Missouri, 2001 rice production is estimated 
at 12.3 million cwt, also up 28 percent from a year earlier. Rice 
production in Texas is estimated at 14.5 million cwt, up 
fractionally from 2000. In contrast to the southern rice-growing 
States, California’s 2001 rice crop is estimated to have declined 
nearly 12 percent to 38.5 million cwt, a result of smaller 
plantings. 

U.S. 2001/02 Long Grain Supplies
Climb to Record 186.1 Million Cwt 

U.S. rice supplies in 2001/02 are estimated to have been 254.7 
million cwt, up 11 percent from a year earlier and the highest on 
record at that time. A bumper crop, record imports, and a larger 
carryin, were behind the expanded supplies. Beginning stocks--
estimated at 28.5 million cwt--were up nearly 4 percent from a 
year earlier and are the largest since 1995/96. California 
accounted for nearly all of the increase in beginning stocks.

U.S. rice imports in 2001/02 totaled nearly 13.2 million cwt, a 
record, and up nearly 22 percent from a year earlier. Medium 
grain shipments to Puerto Rico from Australia accounted for 
almost all of the 2.3-million-cwt year-to-year expansion in 
imports. Australia has not typically been a supplier of rice to 
the United States. Thailand, India, and Pakistan typically 
account for more than 95 percent of U.S. rice imports. 

The supply situation varied somewhat by grain type. Total long 
grain supplies jumped nearly 22 percent to a record 186.1 million 
cwt. A 28-percent increase in production to a record 165 million 
cwt plus record imports of 9.2 million cwt more than offset a 
decline in beginning stocks. Long grain rice stocks entering the 
2001/02 marketing year were estimated at 11.6 million cwt, a drop 
of 26 percent from a year earlier and the lowest since 1996/97. 
Imports of long grain rice are up nearly 5 percent from a year 
earlier.

For medium/short grain rice, total supplies dropped 10 percent in 
2001/02 to 67.1 million cwt. A 23-percent cut in production to 
47.7 million cwt more than offset a 50-percent increase in 
beginning stocks and an almost doubling of imports. Medium/short 
imports were estimated at a record 4 million cwt. Shipments to 
Puerto Rico from Australia accounted for all of the increase. At 
15.6 million cwt, medium/short grain beginning stocks were the 
highest since 1995/96.

U.S. Rice Exports
Rose 13 Percent in 2001/02 

Total U.S. rice use, including exports, domestic consumption, and 
residual (unreported losses in processing, transporting, and 
marketing), was 215.8 cwt in 2001/02, up almost 8 percent from a 
year earlier and the largest on record at the time. Both exports 
and domestic use were higher than a year earlier. 

Total domestic disappearance (domestic use plus residual) was a 
near-record 121.7 million cwt, up 4 percent from a year earlier. 
Food, industrial, and residual--estimated at 117.7 million cwt--
was up 4 percent from 2000/01. Seed use, at 4 million cwt, was 
down fractionally from a year earlier. 

Long grain accounted for all of the expansion in total domestic 
and residual use in 2001/02. Domestic and residual use of long 
grain rice is estimated at 85.8 million cwt, up 13 percent from a 
year earlier. Some of the increase was due to a shift to long 
grain from medium/short grain brewers and food processors. In 
contrast, domestic and residual use for medium/short grain rice 
is estimated at 35.9 million cwt, down 13 percent from a year 
earlier. Tighter supplies and relatively high prices--compared 
with long grain rice--accounted for the decline in medium/short 
grain domestic use.

Both milled and rough rice exports expanded in 2001/02. Rough 
rice exports, estimated at a record 31.7 million cwt, increased 
39 percent from a year earlier. Record shipments to Mexico and 
Central America were behind the robust rough rice export 
expansion. Milled rice exports are reported at 62.4 million cwt, 
up 3 percent from a year earlier. In 2001/02, U.S. milled rice 
exports were higher than a year earlier to Japan and Uzbekistan. 
In contrast, milled rice exports were smaller than a year earlier 
to the European Union,  South Africa, and Saudi Arabia. 

U.S. 2001/02 Ending Stocks
Largest in a Decade

Ending stocks for all U.S. rice rose 37 percent in 2002/03 to 39 
million cwt, the largest since 1992/93. The resulting stocks-to-
use ratio rose to 18.1 percent from 14.2 percent a year earlier. 
Long grain rice accounted for all of the increase. 

Ending stocks of long grain rice rose 130 percent to 26.8 million 
cwt, the largest since 1986/87. The resulting stocks-to-use ratio 
more than doubled to 16.8 percent, the largest since 1992/93. In 
contrast, combined medium/short grain ending stocks declined 
nearly 32 percent to 10.7 million cwt. The stocks-to-use ratio 
dropped to 18.9 percent from 26.3 percent in 2000/01.

The 2001/02 season-average price was reported at $4.17 per cwt, 
down nearly 26 percent from a year earlier and the lowest since 
1986/87. Record U.S. supplies and only fractional strength in 
international trading prices--which were the lowest in three 
decades at the start of the 2001/02 market year--were the primary 
factors behind a weaker U.S. average rice price in 2001/02. 

International Outlook for 2002/03

Global Prices Show Little Strength Despite Larger Trade 

Despite three consecutive years of declining world rice 
production and stronger trade this year, global trading prices 
remain at near-15 year lows. In fact, prices have actually 
dropped 5-10 percent since spring, primarily due to continued 
large subsidized exports by India. From March through mid-
November 2001, international prices were the lowest in three 
decades. Beginning last December, prices have been slightly 
boosted by government intervention purchases by Thailand. Little, 
if any, price strength is expected in the near-term as Thailand’s 
and Vietnam’s main crops are harvested. Although global 
production is projected to drop 4 percent in 2002/03, major 
exporting countries are projected to have adequate supplies to 
meet export commitments. In addition, except for parts of the 
Middle East and Central Asia suffering from continued drought, no 
major importing region is currently experiencing a significant 
weather problem. In Indonesia, despite a delay in the onset of 
the rainy season, a bumper 2002/03 crop is still projected. 

Global Rice Production Projected 
To Drop Third Consecutive Year 

In late November 2002, global trading prices were at near-15 year 
lows and had traded within a very narrow range since late August. 
Prices had actually strengthened from January 2002 through mid-
July, primarily due to government intervention purchases by 
Thailand. Record exports of subsidized rice by India account for 
weaker prices this fall. 

In 2003, global prices are projected to post modest increases, 
despite expectations of bumper harvests in Thailand and Vietnam 
in 2002/03. Two factors are behind the mildly bullish price 
outlook. First, the government of Thailand announced early this 
year that it would continue its intervention purchases in 
2002/03. And second, India just announced it will lower its 
subsidy level for rice exports next year, likely giving a boost 
to global prices in 2003. This price expectation assumes normal 
weather. 

World rice production is projected at 381.8 million tons (milled 
basis) in 2002/03, down almost 4 percent from a year earlier and 
the lowest since 1996/97. This is the third consecutive year of 
declining global rice production, with production projected to be 
nearly 7 percent below the 1999/2000 record of 409.3 million 
tons. 

India, a major exporter and second largest rice producing 
country, accounts for the bulk of this year’s decline, with 
2002/03 rice production projected to drop 15 percent from a year 
earlier’s record to 78 million tons, the smallest since 1992/93, 
a result of an unfavorable monsoon. China, also a major exporter, 
accounts for most of the rest of this year’s global production 
decline. This is the fifth consecutive year of lower production 
in China, the world’s largest producer. Despite smaller crops, 
both of these countries have plenty of rice for their domestic 
market and to remain major exporters. Two other exporters--
Pakistan and Australia--are projected to harvest smaller crops 
this year. However, little price strength is likely given 
projections for bumper crops in other major exporting countries, 
i.e., Thailand, Vietnam, the United States, and Egypt. 

Among the major importers, only South Korea, the Philippines, and 
Japan are projected to harvest significantly smaller crops this 
year. And except for the Philippines, the weaker crops will not 
effect import levels. Despite a boost in rice production in North 
Korea this year, total food supplies remain inadequate, a result 
of several years of declining food production. Outside Asia, 
Brazil--the largest non-Asian rice producing country--is 
projected to produce a slightly smaller crop in 2002/03, boosting 
imports. Severe drought continues to limit production in Iran and 
Iraq, although production is projected to increase slightly for 
both countries this year. And while Nigeria’s production is 
projected to increase for the third consecutive year, production 
remains 50 percent below levels reported a decade ago. In 
contrast to these importing countries, bumper crops are projected 
for Indonesia, Bangladesh, and Malaysia. 

Global ending stocks are projected to drop 20 percent to 106.1 
million tons. This is the third consecutive year of declining 
global stocks and the lowest since 1987/88. In 1999/2000, global 
ending stocks were a record 144.2 million cwt. 

China accounts for more than half of this year’s expected 
reduction in global ending stocks. China’s ending stocks have 
declined each year since the 1999/2000 record of 98.5 million 
tons. India’s ending stocks are projected to drop nearly 40 
percent this year to 13.9 million cwt, the smallest since 
1998/99. Stocks are expected to decline in 2002/03 in Indonesia, 
Vietnam, Thailand, Burma, and Brazil as well. 

World trade is projected at more than 26.6 million tons in 
calendar year 2003, fractionally above a year earlier and second 
only to the 1998 record of 27.6 million. In 2003, larger imports 
by Iran, Bangladesh, the European Union, Saudi Arabia, China, 
Russia, and Yemen are projected to nearly offset weaker imports 
by Indonesia, Iraq, Senegal, and Brazil. Imports are projected 
unchanged from 2003 for Nigeria, the Philippines, Japan, 
Malaysia, Cuba, Mexico, and South Africa. Among exporters, 
stronger exports by Thailand, Burma, China, Vietnam, Australia, 
and the United States are nearly matched by projected reductions 
for India and Pakistan. 

In 2002, global trade rose 9 percent to almost 26.6 million cwt. 
A major expansion in Indonesia’s imports to 3.5 million tons, 
near-record imports by Iran and Iraq, and continued large 
purchases by the Philippines were responsible for the bulk of the 
import expansion in 2002. On the export side, a 4.6-million-ton 
jump in India’s exports to 6.5 million more than offset 
reductions by nearly all other exporting countries this year.

International Trading Prices 
Remain Depressed

Global trading prices are currently at near-15-year lows, despite 
three consecutive years of declining world production and ending 
stocks, and--since 2001--stronger global trade. In fact, prices 
have actually dropped 5-10 percent since mid-summer, a result of 
a record pace of subsidized exports from India. 

Prices had risen from December 2001 through last spring, 
primarily due to government intervention purchases by Thailand 
and temporary supply problems in Vietnam. During much of 2001 
trading prices hovered at 30-year lows, a result of subsidized 
exports from India (which began in June 2001), and adequate 
export supplies worldwide. 

In November 2002, export price quotes for Thailand’s 100 percent 
grade B in Bangkok averaged $193 per ton, up a dollar from a 
month earlier and nearly $20 higher than a year earlier. Since 
August 2002, prices have traded between $188 and $197 per ton. 
Government intervention purchases and currency fluctuations 
account for much of the oscillation since August. Price quotes 
for Vietnamese 5-percent brokens in Ho Chi Min City averaged $186 
per ton in November 2002, down a dollar from a month earlier and 
about $5 below September. Recent declines are due to completion 
of its 10th-month harvest. Vietnam’s prices have traded within a 
very narrow range since late 2001. 

Like Thailand, Vietnam faces intense competition from India in 
low quality markets. Since June 2001, India has been the lowest-
priced source for rice, first for parboiled rice and low quality 
100 percent brokens, and more recently for higher quality regular 
milled white rice. Except for its premium basmati rice and top 
quality parboiled rice, India rarely competes with the United 
States in the global rice market.

Prices for similar type and quality of U.S. long grain rice--No. 
2, 4-percent brokens, f.o.b. Houston--have risen 20 percent since 
June largely due to tight milling capacity. In November, price 
quotes at Texas mills for U.S. long grain milled rice (number 2, 
4 percent brokens) averaged $198 per ton, unchanged from early 
September but $20 to $30 higher than quoted prices last summer. 
Despite the recent strength, prices are likely to be under 
substantial pressure the remainder of the market year due to 
record supplies and intense competition in the global market. 

The U.S. price difference over Thailand for similar grades of 
rice has narrowed substantially since the start of the 2001/02 
market year. In November 2002, the difference averaged $21 per 
ton, nearly unchanged since September 2002 but well below the 
August 2001 average of more than $100. The difference had 
actually disappeared during much of the summer. Recent price 
strength for U.S. rice accounts for the slight difference in 
prices. From 1997/98 through 2000/01 the difference averaged 
about $80 per ton.

Prices for U.S. California milled rice have remained 
substantially higher than prices for U.S. long grain. This month, 
quoted prices for California medium grain milled rice (number 1, 
4 percent brokens, Sacramento mill) average $265 per ton, 
unchanged since April. Prices dropped about $22 per ton in April 
on expectations of a larger 2002 California crop. Recent sales to 
South Korea and Taiwan--plus regular purchases by Japan--have 
offset the price effects of this year’s larger California crop. 
Thailand, Vietnam, and China Projected To Ship More Rice in 2003

Of the six largest rice exporters--Thailand, India, Vietnam, the 
United States, China, and Pakistan--only India and Pakistan are 
projected to ship less rice in 2003, with India accounting for 
the bulk of the decline. Thailand, Vietnam, China, and the United 
State are projected to export greater quantities. Among the 
medium-sized  exporters, Burma, Australia, and Uruguay are 
projected to expand exports in 2003 while exports from Egypt and 
Argentina are projected unchanged from 2002. In 2002, record 
exports of 6.5 million tons by India more than offset reductions 
by nearly all major and medium-sized exporters. 

Major Exporters

Thailand:  Thailand is expected to remain the world's largest 
rice exporter, shipping a near-record 7.5 million tons in 2003, 
up 1 million from this year. A bumper crop and robust world trade 
are behind the bullish export forecast. Thailand's 2002/03 crop 
is projected at a record 16.5 million tons (milled), unchanged 
from a year earlier and only slightly below the 2000/01 record. A 
fractional drop in area is projected to offset a higher yield in 
2002/03. 

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, China, and Pakistan in various intermediate- and low-
quality long grain markets. Thailand exports mostly indica rice--
including parboiled rice and 100 percent brokens--and smaller 
quantities of premium jasmine rice, an aromatic. Thailand exports 
more than a million tons of its premium jasmine rice each year, 
with the United States a major market.

Vietnam:  Vietnam is typically the world's second largest rice 
exporter and is projected to export 4 million tons in 2003, up 
900,000 tons from this year. Exports would still be below 
Vietnam’s 1999 record of 4.55 million tons. Intense price 
competition from India, plus occasional supply problems, 
accounted for Vietnam’s 2002 weak export performance.

Vietnam is projected to produce a near-record 27.6 million tons 
of rice in 2002/03, virtually unchanged from a year earlier but 3 
percent below the 1999/2000 record. A slightly higher yield is 
expected to offset a fractional drop in area this year. All of 
Vietnam’s rice exports are indica rice.

Vietnam produces three major rice crops a year. The 10-month crop 
accounts for 25 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 nearly 50 
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 more than doubled since 1988/89 and 
has the highest yield of the three crops. The winter-spring crop 
accounts for the bulk of Vietnam’s exports. As of late November, 
the Government of Vietnam was projecting a bumper winter-spring 
harvest. The summer-autumn crop accounts for 25 percent of annual 
production and is harvested July through September. 

China:  China's 2003 rice exports are projected to climb 500,000 
tons to 2.25 million, still well below the 1998 record of more 
than 3.7 million tons. Although China’s 2002/03 crop is projected 
to drop 1.1 million tons to 123.2 million--the sixth consecutive 
year of declining production and the smallest crop since 1994/95-
-it still has plenty of rice to satisfy domestic demand and to 
expand exports. The smaller crop is based on weaker plantings 
more than offsetting a higher yield. 

China’s 2002/03 rice area is estimated at 28 million hectares, 
down 812,000 from a year earlier and the smallest since 1963/64. 
China’s rice plantings have declined nearly 12 percent since 
1997/98, 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. 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 3.2 
million tons of rice in 2003, up 100,000 from 2002 and the 
largest on record. Record U.S. supplies, competitive prices, and 
robust global import demand are behind the record trade forecast. 
The U.S. share of world trade is projected at 12 percent, up 
fractionally from a year earlier but still below 2000. 

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 Mexico, Central America, the EU, Saudi Arabia, 
Canada, and South Africa the largest markets. Brazil sometimes 
buys substantial amounts of U.S rice, when regional supplies are 
inadequate. The United States also exports smaller quantities of 
japonica rice, mostly to Japan, Turkey, and Jordan. Since 2001 
the United States has also exported japonica rice to Uzbekistan 
and South Korea. This year Taiwan bought U.S. rice as part of its 
World Trade Organization agreement. California supplies most of 
U.S. japonica exports. 

India:  For 2003, India is projected to export 4 million tons, 
down 2.5 million from its 2002 record but still one of the 
highest levels of export for India. The export contraction is 
based on a severe tightening of supplies in India after this 
year’s 15-percent cut in production to 78 million tons, the 
smallest annual production since 1992/93. An unfavorable monsoon-
-the first since 1987/88--cut area 11 percent to 40 million 
hectares, the smallest since 1987/88. The yield was reduced in 
2002/03 as well. Since late-May 2001, India has heavily 
subsidized exports of its parboiled rice and certain grades of 
its low quality indica rice, allowing India to substantially 
expand exports, mostly parboiled and brokens to West Africa. 

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 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 1.1 million tons of 
rice in 2003, down 400,000 tons from this year and the lowest 
since 1992/93. Pakistan’s exports have dropped sharply since the 
2001 record of more than 2.4 million tons, primarily due to three 
consecutive years of severe drought that has sharply reduced 
production. 

In 2002/03 Pakistan is projected to produce 5.8 million tons of 
rice, fractionally below a year earlier and the smallest since 
1994/95. Production this year is expected to be 25 percent below 
the 1999/2000 record of more than 7.7 million tons. Weaker 
plantings account for the bulk of the 3-year production decline, 
yield reductions have been more modest. Nearly all of Pakistan’s 
rice is produced in irrigated fields. 

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 
milled rice to developing countries, mostly in Africa, where it 
competes with Thailand and Vietnam. Around a third of Pakistan's 
rice production is basmati. Higher income countries purchase the 
bulk of Pakistan’s basmati exports. For all rice, Africa, 
Afghanistan, Bangladesh, Indonesia, the Middle East, and the EU 
were leading export markets for Pakistan in 2001/02. The 
Government of Pakistan is actively trying to increase rice 
production through price incentives, timely availability of 
inputs, and technical assistance. 

Burma:  In 2003, Burma is projected to export 1.5 million tons 
of rice, an increase of 500,000 tons from 2002 and the largest in 
30 years. Burma’s rice exports have expanded each year since 
2000. Burma was the world’s largest rice exporter prior to World 
War II and remained a major exporter through the mid-1960s when 
shipments began a long-term decline. By the 1990s, exports had 
dropped sharply, averaging less than 100,000 tons a year from 
1997 through 1999. Burma’s exports have picked up in recent 
years, primarily due to larger production. Trade is strictly 
controlled by the Government of Burma. 

Burma's 2002/03 rice crop is projected at more than 10.4 million 
tons, unchanged from a year earlier but slightly below the 
2000/01 record of nearly 10.8 million tons. Area is projected at 
a record 6.2 million hectares. 

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.

Australia: Australia's rice exports in 2003 are projected to 
increase 100,000 tons to 500,000, still below the 1999 record of 
667,000 tons. Exports are down sharply from levels reported from 
1999 to 2001, a result of declining production in 2001/02 and 
2002/03. Australia’s 2002/03 rice production is projected at 
751,000 tons, a drop of 19 percent from a year earlier and the 
smallest since 1995/96. A 20-percent drop in plantings to 120,000 
hectares--the smallest since 1990/91--accounts for the 2002/03 
production decline. Limited water supplies are responsible for 
the reduced plantings this year. Rice production in Australia 
remains well below the 2000/01 record of almost 1.3 million tons. 

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-agreed imports 
were first purchased in 1995/96. Papua New Guinea and some 
countries in the Middle East--primarily Turkey and Jordan--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 500,000 tons of rice in 2003, 
unchanged from a year earlier but below the 1969 record of 
772,000 tons. Virtually all of Egypt’s rice exports are japonica 
rice, with the eastern Mediterranean a major market. Egypt’s rice 
exports have increased sharply since the late 1990s, a result of 
both larger crops and--in some years--export subsidies. In 2001 
Egypt exported 705,000 tons of rice--the second highest on 
record--a result of both record production and export subsidies.

Since 1999/2000, Egypt has harvested record- or near-record crops 
each year, a major factor behind the strong export performance in 
recent years. Egypt’s 2002/03 rice production is projected at 3.8 
million tons, up 6 percent from a year earlier but still 4 
percent below the 2000/01 yield. This year’s larger crop is the 
result of expanded area. 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, primarily to markets within Latin America. In 2003, 
Argentina’s rice exports are projected at 350,000 tons, unchanged 
from a year earlier but well below the 1999 record of 674,000 
tons. Argentina’s rice exports have dropped sharply since 1999, a 
result of both weaker demand from Brazil--the region’s largest 
market--and smaller supplies in Argentina. 

Argentina’s 2002/03 rice crop--harvested in spring 2002--is 
forecast at 510,000 tons, up 16 percent from a year earlier but 
nearly 53 percent below the 1998/99 record of 1.08 million tons. 
This year’s larger crop is the result of increased area. Despite 
larger plantings this year, rice area in Argentina remains less 
than half its 1998/99 record of 289,000 hectares. Low prices and 
declining imports by Brazil--Argentina’s largest export market--
account for the drop in harvested area for rice since 1998/99. 

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 2002/03, 
Uruguay’s rice production is projected at 1 million tons, up 6 
percent from a year earlier and the first increase since 1998/99. 
The larger crop is the result of a stronger yield; area is 
unchanged. Despite this year’s crop, production remains 23 
percent below the 1998/99 record of 1.3 million tons. Uruguay’s 
area has not declined as sharply as in Argentina. At 160,000 
hectares in 2002/03, rice plantings in Uruguay are down 22 
percent from the 1998/99 record of 205,000. 

Uruguay is projected to export 650,000 tons in 2003, up 50,000 
from a year earlier but still below the 2001 record of 806,000 
tons. Uruguay is the largest rice exporter in South America. 
Although exports are below record, Uruguay has maintained a brisk 
pace of exports since the mid-1990s. 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). 

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 2003, the EU is projected to 
export 325,000 tons, up 50,000 from a year earlier and the 
largest since 1999. Italy accounts for nearly all of the 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. 

EU production in 2002/03 is projected to be a record-high of 
nearly 1.8 million tons, up 10 percent from a year earlier. 
Larger plantings and a record yield are responsible for the 
bumper crop. Despite this year’s higher plantings, rice area 
remains nearly 8 percent below the 1996/97 record of 426,000 
hectares. The bulk of the EU’s rice production is japonica, 
although indica’s share has increased since the late 1980s.

Despite government set-a-side programs, rice production in the EU 
has been at record or near-record levels since 1996/97, a major 
factor behind the substantial accumulation of rice stocks over 
the past decade. In 2002/03, ending stocks are projected at a 
record 911,000 tons. Extremely slow expansion in domestic rice 
consumption has also contributed to rising stocks in the EU.

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. Japan is one of the highest cost rice 
producers in the world, producing primarily high-quality japonica 
(short and medium) grain rice. In 2003, Japan is projected to 
export 150,000 tons of rice, unchanged from a year earlier. In 
2001, Japan exported 501,000 tons, 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.

Rice production in Japan in 2002/03 is projected at 8.08 million 
tons, down 2 percent from a year earlier, a result of a weaker 
yield and slightly smaller plantings. Rice production in Japan 
has declined almost 39 percent since the 1967/68 record of 13.2 
million tons. A 48-percent drop in area is responsible for the 
long-term production decline. 

Taiwan:  In 2003, Taiwan is projected to export 90,000 tons of 
rice, unchanged from a year earlier but below levels shipped from 
1999 to 2001. 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. Taiwan’s 
2002/03 production is projected at almost 1.2 million tons, down 
4 percent from a year earlier, a result of smaller plantings. The 
yield is projected to be record high. Like Japan, Taiwan’s 
Government operates programs designed to shift rice land to 
alternative crop enterprises.

Guyana:  Guyana is typically the third largest rice exporting 
country in South America. In 2003, Guyana is projected to export 
175,000 tons of rice, up 25,000 from a year earlier but almost 39 
percent below the 1997 record of 285,000 tons. Guyana’s rice area 
has expanded substantially since the early 1990s, reaching a 
record 150,000 hectares in 2000/01, double 1992/93 rice area. For 
2002/03, rice production is projected at 370,000 tons, unchanged 
from a year earlier’s record and double 1993/94 production. 
Record plantings are behind recent production expansion. Yields 
remain below the 1997/98 record. 

Despite larger crops and only modest expansion in domestic use, 
Guyana’s exports have substantially declined since the mid-1990s, 
primarily due to a lack of competitiveness in world markets. The 
EU is the primary market for Guyana’s rice.

Global Import Demand in 2003 Projected Second Highest on Record

Global rice imports  climbed 9 percent in 2002 to 26.6 million 
tons (milled basis) and are projected to be fractionally higher 
in 2003. Trade in 2003 is forecast to be the second only to the 
record 27.6  million tons shipped in 1998. In 2003, higher 
imports by Iran, Bangladesh, the EU, Saudi Arabia, China, and 
Russia are projected to almost offset weaker imports by 
Indonesia, Iraq, Senegal, and Brazil. In 2002, Indonesia, Iran, 
Iraq, and Taiwan were responsible for greater global import 
demand. 

Major Importers

Asia

Asia is the largest import market for rice in the world. Asia is 
projected to import nearly 8.5 million tons of rice in 2003, up 
fractionally from a year earlier. Imports have increased each 
year since 2000, but remain well below the 1998 record of more 
than 13 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 3.25 million tons in 2003, down 
250,000 from this year and well below its record of almost 5.8 
million in 1998. Despite the slight drop, imports in 2003 are 
more than twice the levels reported in 2000 and 2001. Declining 
stocks, rising demand, and stagnant production are behind 
Indonesia’s robust import growth since 2002. Indonesia's 2002/03 
crop is projected at 32.5 million tons, up fractionally from a 
year earlier but nearly 3 percent below the 1999/2000 record. 
Indonesia has had difficulty maintaining record rice acreage, 
especially on its densely populated main island of Java. Lack of 
inputs and weather are behind weaker yields since 1999/2000. 

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 1.2 
million tons of rice in 2003, unchanged from this year but well 
below the 1998 record of 2.2 million tons. Imports have risen 
every year since 2000, despite record or near-record crops each 
year. The Philippines is projected to produce 8.3 million tons of 
rice in 2002/03, down 2 percent from a year earlier. The smaller 
crop is due to a weaker yield, area is record high. 

Despite growing domestic rice consumption, ending stocks have 
risen every year since 1998/99 and are projected at a record 3.6 
million tons in 2002/03. Consumption, projected at a record 9.1 
million tons (milled), is expected to exceed milled rice 
production by 805,000 tons. This marks the 12th 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 2003, Bangladesh is projected to import 500,000 
tons of rice, up 225,000 tons from a year earlier and the first 
increase since 1998. Imports remain well below the 1999 record of 
2.5 million tons. Extremely small beginning stocks, fractional 
growth in production, plus record consumption are behind the 
higher import forecast for 2003. In 2002/03, Bangladesh is 
projected to produce 26 million tons of rice, up 500,000 from a 
year earlier and the largest to date. A record yield more than 
offset a slight drop in area. 

From 1998/99 through 2002/03, Bangladesh produced record crops 
each year. This was a major factor behind the decline in 
Bangladesh’s rice imports each year from 1999 through 2002. 
Bangladesh has substantially increased both area and yield since 
the late 1990s. In addition, Bangladesh’s ending stocks rose 
substantially in the late 1990s, also contributing to weaker 
imports.

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. Despite expanding 
production, Bangladesh is projected to remain a major importer of 
rice over the next decade. 

China:  In 2003, China is forecast to import 300,000 tons of 
rice, up 75,000 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 2003, China’s 2.25 million 
tons of exports will exceed imports by more than 1.9 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 drop 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 650,000 tons (milled basis) of rice in 2003, 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 has been virtually no over-
quota rice imports. 

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 2002/03 crop is estimated at 5 
million tons, down 10 percent from a year earlier. This is the 
smallest rice crop since 1995/96 and the first decline in 
production since 1998/99. Both area and yield are smaller this 
year, a result of too much rain during the spring and summer. 

This year is the first decline in rice plantings in South Korea 
since 1996/97. Rice area had been declining for a decade prior to 
1997, but increased every year from 1997 to 2001. South Korea's 
rice consumption had declined from 1979/80 through 1999/2000, a 
result of declining per capita consumption. Total consumption has 
risen in recent years as population growth has offset declining 
per capita consumption. At 5.1 million tons in 2001/02 and 
2002/03, rice consumption is the largest since 1995/96. Ending 
stocks have increased every year since 1996/97 and are projected 
to be a record 2 million tons in 2002/03. 

South Korea imported about 142,520 tons (brown rice basis) of 
rice under the WTO in 2001/02. China supplied 70,000 tons, the 
United States 30,000, Australia 22,500, and Thailand 20,000 tons. 
This was the first time the United States sold any rice to South 
Korea as part of its WTO Minimum Access Agreement. In 2002/03 
South Korea is scheduled to import 171,000 tons (brown rice 
basis) under its WTO commitments. Through mid-October the United 
States has supplied 40,000 tons of rice to South Korea, all from 
California. South Korea is projected to import 150,000 tons 
(milled basis) in 2002, unchanged from a year earlier. 

North Korea:  North Korea is projected to import 450,000 tons in 
2003, up 50,000 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. South Korea gave around 300,000 tons 
of rice to North Korea in 2002.
 
North Korea’s food situation is better this year, with rice 
production expected to climb 11 percent to 1.5 million tons--the 
largest since 1999/2000--the result of larger plantings and a 
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 joined the WTO in late 2001. As a requirement for 
membership Taiwan agreed to import 144,720 tons (brown rice 
basis) in 2002. Taiwan’s import commitments after 2002 are being 
negotiated at this time. For calendar year 2003, Taiwan is 
projected to import 125,000 tons (milled basis), unchanged from 
2002. 

Taiwan is essentially self-sufficient in rice. For the past 
several decades Taiwan typically imported 3,000 to 5,000 tons of 
rice each year, almost entirely varieties not currently grown on 
the island. Producer prices on Taiwan are 4 to 5 times 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. 

Like Japan, Taiwan has experienced both declining total and per 
capita rice consumption for decades, a result of higher incomes. 
In 2002/03, Taiwan is projected to produce 1.28 million tons of 
rice, up fractionally from a year earlier, a result of a near-
record yield. At 310,000 hectares, rice area was down more than 8 
percent from a year earlier and the lowest in more than 40 years.

The Middle East

Rice imports in 2003 by the Middle East are projected at a record 
4.76 million tons, up 11 percent from a year earlier. Severe 
drought in the region has kept production well below the 
1999/2000 record of 2.24 million tons. In 2002/03, rice 
production is projected at 1.7 million tons, up 5 percent from a 
year earlier, a result of larger plantings, the yield is actually 
lower. Despite this year’s increase, production remains 25 
percent below record. 

The Middle East relies on imports to supply more than two-thirds 
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. Iran, Iraq, and Saudi Arabia are the largest importers. 
Turkey and Jordan import smaller amounts of rice, mostly 
japonica.

Iran:  At 1.5 million tons, Iran’s 2003 import projection is up 
500,000 tons from a year earlier and the largest since 1996. 
Iran’s 2002/03 crop is projected at 1.33 million tons, up 2 
percent from a year earlier but 28 percent below the 1998/99 
record 1.85 million. Rice production in Iran dropped sharply from 
1999/2000 to 2001/02, a result of a severe drought that cut both 
area and yield. 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 1.1 million tons in 2003, down 
150,000 from a year earlier. 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 2002/03 crop is projected 
at 100,000 tons, up 10,000 from a year earlier but well below the 
1994/95 record of 250,000 tons. Like Iran, Iraq’s production has 
declined each year from 1999/2000 to 2001/02. 

Saudi Arabia: In 2003, Saudi Arabia is projected to import 1 
million tons of rice, up 100,000 from a year earlier and just 
53,000 tons below the 2001 record. 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 250,000 
tons, down 25,000 this year and and well below the 1995 record of 
416,000 tons. At 260,000 tons, rice production in Turkey is up 25 
percent from a year earlier and even with the 1996/97 record. 
Despite an economic downturn, consumption continues to rise, a 
major factor behind growth in Turkey’s imports. Turkey is 
typically 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. 

 Syria’s 2003 imports are projected at 150,000 tons, unchanged 
from a year earlier but almost 50 percent below record levels 
imported in the mid-1990s. Jordan’s imports in 2003 are projected 
to remain unchanged at 90,000 tons, down about 50 percent from 
the mid-1990s. The United States typically supplies 30 to 40 
percent of Jordan’s rice imports. Finally, at 250,000 tons, 
Yemen’s rice imports in 2003 are the largest on record. The 
United States supplies little rice to Syria or Yemen. In 
addition, Syria, Jordon, and Yemen do not grow rice. 

Sub-Saharan Africa 

Imports by Sub-Saharan Africa (including the Republic of South 
Africa) are projected at nearly 6.2 million tons in 2003, down 3 
percent from a year earlier and  4 percent below the 2001 record 
of 6.4 million. A 2-percent increase in production to 7.2 million 
tons, plus record beginning stocks account 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 is the largest rice importer in Sub-Saharan 
Africa and currently ranks second only to Indonesia in the global 
import market. Nigeria’s 2003 rice imports are projected at 1.7 
million tons, unchanged from a year earlier and just fractionally 
below its 2001 record. Accelerating growth in demand with only 
marginal expansion in imports account for Nigeria’s continued 
robust import performance. 

Nigeria’s production in 2002/03 is projected at 2.2 million tons, 
up 100,000 from a year earlier but more than a million tons below 
levels achieved a decade ago. Nigeria purchases mostly parboiled 
rice. Thailand supplied the bulk of this rice during the 1990s. 
In 2001, India began to ship parboiled rice to Nigeria, all at a 
very high subsidy.

South Africa:  The Republic of South Africa is projected to 
import 650,000 tons in 2003, unchanged from this year’s record. 
India, Thailand, and the United States supply most of South 
Africa’s rice imports, largely parboiled. The United States has 
lost substantial market share in this high-quality market. 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 2003, 
Senegal is projected to import 750,000 tons of rice, down 150,000 
from a year earlier’s record. Imports by Senegal have risen 
substantially since 1995, as consumption growth has outpaced 
production. Imports supply the bulk of Senegal’s rice 
consumption. The Cote d’Ivoire is projected to import 650,000 
tons of rice in 2003, up 25,000 from a year earlier and just 
fractionally below the 2001 record. Strong growth in consumption 
drives import expansion by Cote d’Ivoire, despite record 
production in 2001/02 and 2002/03. Imports account for half of 
all rice consumed in Cote d’ Ivoire.

Ghana is projected to import 225,000 tons in 2003, unchanged from 
a year earlier’s record. Ghana’s imports continue to increase 
despite larger production. Guinea is projected to import 300,000 
tons of rice in 2003, unchanged from a year earlier but 25,000 
tons below the 2001 record. Like much of Sub-Saharan Africa, 
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 2.75 million tons in 2003, 
down fractionally 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 1 percent to 14 million tons, about a 
million tons below the 1998/99 record. 

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 500,000 tons in 2003, 
unchanged from a year earlier’s record. A long-term declining 
production and a steady rise in use account for the continued 
growth in imports. The United States supplies nearly all 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 now face no 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 
985,000 tons in 2003, up 15,000 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 2002/03 is forecast at 572,000 
tons, up fractionally from a year earlier but well below the 
record 809,000 tons in 1984/85. Substantially 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 
550,000 tons in 2003, unchanged from a year earlier, but nearly 
double levels imported prior to 1991/92. Rice production is 
projected at 260,000 tons in 2002/03, unchanged from 2001/02 but 
only half the level produced in 1989/90. Rice production in Cuba 
has declined substantially since the mid-1980s, with both 
plantings and yield well below earlier levels. 

In 2003, Haiti is projected to import a record 265,000 tons, up 
5,000 from a year earlier. Rising consumption and stagnant 
production are behind the steady rise in imports. Haiti’s rice 
imports have more than doubled in the past decade. The Dominican 
Republic is projected to import 50,000 tons in 2003, up 10,000 
from a year earlier but well 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 has expanded each 
year since 1999/2000 and is projected at 318,000 tons in 2002/03, 
just a little smaller than the record 1992/93 crop. Haiti is an 
important market 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 550,000 tons in 2003, down 50,000 from 
this year and the fifth consecutive year of declining imports. 
Imports remain well below the 1998 record of nearly 1.6 million 
tons. Brazil's 2002/03 crop is projected at 7.15 million tons, 
virtually unchanged from 2001/02 but well below the 1998/99 
record of 7.9 million tons 

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. Total rice consumption 
in Brazil appears to have virtually leveled off since the late-
1990s at around 8 million tons. Declining per capita consumption 
is being virtually offset by a rising population. 

Central America:  The region is projected to import 380,000 tons 
in 2003, down 25,000 from a year earlier’s record. Nicaragua 
accounts for all of the 2003 import decline. Production in 
Central America is expected to drop about 2 percent to 451,000 in 
2002/03, almost 22 percent below the 1997/98 record. Costa Rica 
and Panama account for most of the production decline in 2002/03. 
Rice consumption in the region has steadily increased and is 
outstripping any growth in production. The United States supplies 
nearly all of the imported rice 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 850,000 tons in 2003, up 
150,000 from this year but below the 1996 record of 923,000 tons. 
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 has produced bumper crops every year since 1996/97, with 
2002/03 production projected at a record nearly 2.8 million tons, 
a result of larger plantings and a record yield. With consumption 
growing at a very slow rate, these bumper crops have led to a 
very large increase in stocks in the EU. For 2002/03 ending 
stocks are projected at a record 911,000 tons, up 18 percent from 
a year earlier. Italy and Spain are the two largest rice-
producing countries in the EU. Northern Europe accounts for the 
bulk of EU rice imports.

The former Soviet Union:  The countries of the former Soviet 
Union are projected to import 658,000 tons of rice in 2003, up 13 
percent from a year earlier and the largest since 1999. 
Production in 2002/03 is projected at 724,000 tons, an increase 
of 13 percent from a year earlier but only about half the size of 
the 1990/91 crop. Strong growth in consumption over the past 
decade, stagnant production, and tighter stocks are behind recent 
growth. 

Russia is the largest market for rice in the former Soviet Union, 
with imports projected at 350,000 tons in 2002, up 27 percent 
from a year earlier. Russia’s rice production-projected at 
323,000 tons in 2002/03--is less than half the level produced in 
1989/90. Uzbekistan is projected to be the second largest import 
market in the region in 2003, taking 175,000 tons, unchanged from 
a year earlier’s record. Rice production in Uzbekistan collapsed 
in 2000/01 and 2001/02, a result of a severe drought in the 
region. Production in 2002/03 is projected at 125,000 tons, up 
from 42,000 a year earlier but still less than half the level 
produced in 1999/2000. 

United States: Imports by the United States are projected at a 
record 415,000 tons in 2003, up 15,000 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. Imports have expanded 
in the United States for more than 20 years.

China’s Japonica Rice Market: Growth and Competitiveness

Authors: James Hansen, Frank Fuller, Frederick Gale, Frederick 
Crook, Eric Wailes, and Michelle Moore

Abstract: This article briefly describes the evolution 
of China’s japonica rice market over the last two 
decades, including the impact of changes on China’s 
competitiveness in key Asian import markets. While 
China has traditionally exported long grain (or indica) 
rice varieties, in recent years it has exported 
substantial amounts of japonica rice as well. China’s 
share of Japan’s World Trade Organization (WTO) minimum 
access imports has more than doubled since 1995. The 
current round of WTO negotiations is expected to result 
in greater market access and lower tariffs for japonica 
rice exports to key Asian markets, with China a 
potential source for much of the expanded trade. 

Keywords: China, rice, production, policy, exports, imports, 
prices, WTO

China’s rice economy is among the world's most diverse with 
respect to both the number  of varieties grown and the different 
climatic conditions under which rice is produced. China has six 
agro-climatic zones for producing rice, ranging from the warm and 
humid tropics in the south, to the cooler subtropics of central 
China, and to northern China with its much cooler climate and 
shorter growing season. The extreme variation in agro-climatic 
conditions is a major reason for the large number of rice 
varieties grown in China. 

In China, japonica rice was traditionally grown and consumed 
primarily in the northern provinces, while indica rice was 
dominant in the south. In 2000, indica rice accounted for about 
60 percent of China's total rice production of 188 million tons 
(rough rice) and japonica rice  about 29 percent, the remaining 
11 percent is glutinous rice and some indigenous rice varieties 
(Crook et al.). Each year, China produces an early, a single, and 
a late indica crop; a single and late japonica crop in the Yangzi 
River valley; and a single japonica crop in the north. China is 
the largest rice-producing country in the world, accounting for a 
third or more of global production.

There are distinct differences between japonica and indica rice, 
the two primary types of rice grown worldwide. When cooked, 
japonica rice becomes moist, sticky, and clingy, and has a more 
rounded appearance than indica varieties. In contrast, indica 
rice typically cooks dry, separate, and fluffy; and is typically 
longer and thinner than japonica rice. Consumers typically have 
distinct preferences for either one rice or the other, with 
little substitution between the two. Indica is the dominant grain 
produced worldwide.

China’s Japonica Rice Area
Has Expanded for Two Decades

Japonica rice area in China has expanded for the past two 
decades, growing from 11 percent of total rice area in 1980 to 29 
percent by 2000 (Crook et al.). The largest expansion of japonica 
rice plantings has occurred in the three northeastern provinces, 
with growth averaging more than 5 percent a year during the 
1990s, an increase totaling more than a million hectares. Most of 
the growth occurred in Heilongjiang province, where japonica rice 
was the most profitable crop during the 1990s. In the lower 
Yangzi River valley provinces of Jiangsu, Zhejiang, and Anhui 
producers have substituted indica with japonica rice. In 2000, 
profits from japonica rice in Heilongjiang on a per-mu (the 
Chinese measure of area equal to 1/15 of a hectare) basis 
averaged 146 yuan, compared with 36 for corn, -9 for wheat, and 
86 for soybeans. 

Rapidly rising prices were responsible for much of the increase 
in China's grain production--including rice--in the mid-1990s. 
From 1992 to 1994, japonica prices in China more than doubled, 
with the expansion of rice area in Heilongjiang province 
coinciding with the rapid rise in prices. In contrast, soybean 
prices rose much slower, making rice a more attractive planting 
option to producers in Heilongjiang where soybeans are the major 
crop. 

Corn prices rose as well over this period, likely explaining why 
rice area did not expand as rapidly in Jilin where corn is the 
major crop. China’s rice prices peaked in 1995 and 1996, and have 
declined since. In Heilongjiang, rice area has remained fairly 
stable since 1999. However, while rice area in Jilin exhibited 
little growth until 1999, since 1999 rice area has increased 
almost 40 percent, adding an additional 194,000 hectares to 
China’s japonica area.

A major factor behind the expansion of rice area in Heilongjiang 
was the introduction of dry-field seedling transplantation 
methods in the mid-1980s (Kako et al.). The method generates 
faster maturation than direct seeding--important in regions that 
have a short growing season. Another factor that promoted the 
rapid area expansion in Heilongjiang was the abundance of both 
land and water resources. 

However, continued expansion of japonica production in the 
northeast is unlikely, and the existing area may even decline if 
water shortages occur. Water resources in many areas of the north 
and the northeast are already limited. Hebei and Liaoning are 
currently experiencing serious water shortages, with groundwater 
in some locations already insufficient. Some increase in rice 
plantings may occur in certain parts of northeastern China where 
water supplies are more abundant, but growth will be slow even in 
these areas. 

In recent years, the government began to understand and became 
quite concerned about the water constraints in China. The 
government has announced it will prohibit rice production in the 
Beijing area after 2005 to conserve water. In addition, a new 
water law is currently being written and the issue of 
transferability of water rights is being considered; two factors 
that could limit or reduce rice area in the future.

Japonica rice is also grown in central China in the Yangzi River 
valley (which includes the provinces of Jiangsu, Anhui, Hubei, 
Zhejiang, and Shanghai). In the past, these provinces grew mostly 
low-quality early indica rice, with much of it bought by the 
government. This type of rice was mostly grown in the southern, 
eastern, and central provinces of China. However, in 1999 China 
made a major change in its grain policy, with one result being 
that it no longer purchased low quality rice. By 2001, 
approximately 80 percent of the rice grown in Jiangsu Province 
was japonica. 

Farmers in these provinces have increased plantings of japonica 
rice, a result of both the new grain policy and a growing 
consumer preference for japonica rice in the region. In these 
areas, water is not a limiting factor. However, expansion is 
constrained by climate. The daily temperature variation is not 
large enough in the Yangzi River valley to produce high quality 
japonica rice. High quality japonica varieties require a regular 
period of cooler temperatures at night found farther north that 
allow the plant to fully develop the starch molecules.

Japonica Rice Consumption
Is on the Rise in China

Demand for japonica rice in China has been rising at the same 
time that per capita consumption of all rice has declined. 
Several factors are behind the growth in japonica consumption. 
First, migration of rural people to the cities in northern China 
has boosted japonica consumption. While high-income urban 
consumers in northern China historically preferred japonica rice, 
the rural population in the region has traditionally consumed 
little rice. However, when the rural people migrate to the cities 
they often acquired a taste for rice--and in northern China that 
is typically japonica. Other factors boosting japonica 
consumption have been increased north-south migration and 
improved national marketing channels. These two factors are 
increasing demand for japonica rice in southern China as well. 

Brand names are becoming an important marketing factor, likely 
boosting japonica consumption. Japonica brands are usually 
associated with northeastern counties or regions known for 
quality rice, such as Wu Chang, Xiang Shui, and Mei He. Branded 
rice is more commonly found in supermarkets than in wholesale 
markets, but it is sold in both outlets. Supermarkets are 
becoming an increasingly important outlet for rice in China 
because they emphasize food safety, high quality, and 
convenience.

Despite rising demand for japonica rice, the rapid expansion of 
japonica production in China, particularly in the Northeast, has 
outpaced domestic consumption. In fact, over 20 million tons of 
japonica rice are currently in stocks in Northeast China, 
depressing prices. While China’s japonica prices are below 
international levels, high internal transportation and 
transaction costs often make it unprofitable to move rice out of 
northeastern China. The cost of trucking rice from Heilongjiang 
to Shanghai can exceed $25 per ton (Crook et al.). 

Also, despite evidence that China’s rice markets are increasingly 
integrated, insufficient rail and road infrastructure continue to 
create bottlenecks in the flow of rice from north to south (Park 
et al.; Huang and Rozelle, 2002b). The persistence of large 
stocks of high-quality japonica rice in the Northeast may reflect 
continued administrative barriers to inter-provincial grain 
trade, since other provinces also have excessive rice stocks. 
Nevertheless, inter-provincial transportation and marketing costs 
are expected to decline with China’s entry to the WTO and its 
ongoing reform of its grain marketing system. Reforms include 
gradual abolition of government grain procurement and expanding 
the commercialization of China's grain bureau system. 

Freer Markets & Modern Mills
Improve Quality of China’s Rice 

China’s agricultural sector has steadily adopted more market-
oriented policies and institutions over the last two decades, and 
the changes in producer incentives have important implications 
for the future of japonica rice production in Northeastern China. 
Grain policy reforms in 1998 and 1999 were aimed at:

O Reducing the central government’s expenditures for the 
grain procurement and distribution system, 
O Creating a clear division between local grain transactions 
and maintenance of the national grain reserve, 
O Increasing the commercial orientation of local grain 
bureaus, and 
O Improving the quality of grain produced in China. 

With the reform’s emphasis on profitability of local grain 
operations and improved grain quality, grain bureaus in 
northeastern China are tapping into the growing market for high-
quality japonica rice across China and abroad.

Historically, the quality of China’s japonica rice has not been 
on a par with rice produced in Japan or the United States. The 
inferior status was a result of both the quality of the rough 
rice produced and the technology of the milling operations 
themselves. However, there have been substantial improvement in 
both of these areas in recent years. 

First, breeding programs in Heilongjiang and Jilin have produced 
japonica rice varieties of high enough quality to compete in 
international markets. And second, while average milling 
technology in China is still 20 to 30 years behind Japan, several 
new mills have been built in northern China that utilize modern 
equipment from Japan (Satake) and Switzerland (Bühler). Local 
grain bureaus have established a number of these mills as private 
companies or joint ventures with Japanese, Korean, Taiwanese, or 
Hong Kong firms. Most of these new mills have a daily capacity of 
100 tons, but a few mill more than 300 tons (Crook et al.).

Many of the new mills are designated as ‘leading companies’ or 
‘dragon-head companies’ at the local or provincial level. Leading 
companies are part of China’s agricultural industrialization 
strategy developed in the 1990s and continue to play an important 
role in the agricultural structural adjustment strategy 
emphasized since 2000 (Huang and Rozelle, 2002a). The leading 
company acts as a bridge between the older planned economy and 
the newer market economy, providing direction and substantial 
assistance to farmers while seeking to maximize profits. 
Government agencies at various levels facilitate the 
establishment of leading companies by providing land, tax breaks, 
financing, and access to agricultural inputs (Crook et al.).

The leading company facilitates the introduction of new 
technologies, production methods, and quality control practices 
at the farm level. In the rice industry, leading companies 
frequently contract with townships and villages to produce a 
specific variety of rice using prescribed production methods. At 
harvest, the rice is sold to the leading company, usually with a 
premium of 40-80 cents per hundredweight (cwt). The company 
provides the seed and technical assistance to the farmers. Some 
companies also provide operating loans, or sell fertilizer and 
other inputs on credit to farm households. In this manner, the 
leading companies are assuming some of the rural credit and 
agricultural extension activities previously carried out by the 
Ministry of Agriculture grain bureaus and other government 
agencies (Crook et al.).

In northeastern China, leading companies are playing a key role 
in the production and marketing of rice that meets China’s ‘green 
food’ standards. Detailed guidelines for green rice production 
are not publicly available; however, green rice is grown using 
reduced levels of chemical pesticide and fertilizer inputs. 

There are two grades of green rice in China:  Grade A (reduced 
chemical inputs) and Grade AA (organic). The Ministry of 
Agriculture has a Center for Green Foods, which maintains and 
enforces green food certification for production and processing. 
Once a product has been certified as meeting the green standards, 
processors can place the green food logo (a green image depicting 
the sun, water, and a seedling) on its package. Green rice is 
currently estimated to account for less than 1 percent of total 
rice production in China. However, green rice is particularly 
important for japonica because the bulk of the land that meets 
the green standards is located in northeastern China, especially 
in Heilongjiang (Crook et al.).

China Accounts for a Growing
Share of Japan’s Rice Imports...

The three largest import markets in Asia for japonica rice are 
Japan, South Korea, and Taiwan. China exported 216,000 tons of 
rice to these three markets in 2000, nearly 20 percent of all 
rice imported by the three countries. Turkey is the largest non-
Asian market for japonica rice and is typically the second 
largest import market. Egypt, Australia, and the United States 
supply most of Turkey’s rice.

Japan partially opened its domestic market to rice imports 
following the signing of the Uruguay Round Agreement on 
Agriculture in 1995. Japan’s minimum access imports--currently 
about 680,000 tons (milled basis)--are purchased under two 
programs: ordinary market access (OMA) and the simultaneous buy 
and sell (SBS) system. The OMA purchases are made by the Japanese 
Food Agency and are used almost exclusively for feed, industrial 
uses, and food aid. Under the SBS system, private firms import 
rice through a competitive tender process administered by the 
Japanese Food Agency (see Dyck et al. for a discussion of 
Japanese import policy). Although often blended with domestic 
rice, most SBS rice eventually enters consumer markets.

The United States, Australia, China, and Thailand account for the 
bulk of Japan’s rice imports. Table 1 shows the total quantity of 
Japan’s rice imports and individual country market shares for 
both total imports and SBS tenders. China’s total market share 
has increased from 8 percent in 1995 to almost 18 percent in 
2001. While the OMA import shares have been relatively stable 
since 1995, China’s share of Japan’s SBS imports has increased 
from 22 percent to almost 66 percent by 2001/02. And while the 
United States’ total market share has remained at 47 percent, the 
U.S. share of SBS imports has dropped from 53 to 25 percent.

China’s increasing share of Japan’s rice imports is a result of 
both quality improvements and competitive prices. The 
advancements in milling technology and rice breeding have enabled 
China’s exporters to supply rice of similar quality and 
appearance to rice grown in Japan. The similarities between the 
two countries’ rice allow the rice to be blended for use in the 
foodservice sector. China’s rice prices have typically been below 
California prices. (See figure 1 for japonica prices in 
California and Heilongjiang).

Price differences between China’s high-quality japonica rice and 
California’s medium grain rice are not as great as the 
differences in production costs. For example, prices were nearly 
identical in July and August 2001. In 2001 the Heilongjiang 
wholesale price increased from January through September, 
reaching almost $245 per ton by late September. Prices then 
dropped to $198 by June 2002. In the United States, the 
California medium grain price decreased during the first 9 months 
of 2001, dropping to $220 by late September. Prices jumped to 
$287 in October 2001 and then dropped slightly to $265 in April 
at the start of the 2002 plantings. California prices have 
remained quite stable since last spring. 

Production costs in northeastern China are lower than costs in 
the United States. Production costs in China are less than half 
those in California. Seed, chemicals, custom services, 
irrigation, and land costs are substantially lower in China than 
in California on both a per-hectare and a per-ton basis. However, 
labor costs per hectare and per ton are higher in China due to 
the extensive use of manual labor in rice production. Figure 2 
displays average Japonica production costs for China and 
California from 1995 to 2000.

...And Is the Largest Supplier 
Of Rice to South Korea

Since 1995, China has accounted for the largest share of South 
Korea’s WTO rice imports. However, the quality of rice China 
exports to South Korea is much lower than the quality sold to 
Japan. The bidding process for Korea’s minimum access imports 
typically grants import rights to the lowest bidder, which 
promotes imports of low-quality rice. Until 2001/02 this policy 
virtually eliminated competition from suppliers of high-quality 
japonica table rice such as the United Stares and Australia 
(Sumner and Lee). In 2001/02 South Korea made its first purchase 
of U.S. rice--about 30,000 tons--under South Korea ’s WTO minimum 
access commitments. South Korea has purchased even larger amounts 
of U.S. rice in 2002/03. 

Domestic support policies have created a surplus supply of rice 
in South Korea, and recently announced reforms are aimed at 
reducing domestic supply. Though the reforms are intended to 
prepare South Korea for further expansion of imports, they do not 
address the current practices for allocating the quota (Choi). As 
long as South Korea awards the bulk of its imports to the lowest 
bidder, the abundance of low-cost rice in northeast China will 
likely enable China to remain a major supplier. 

Taiwan’s entry into the WTO in 2002 created a new market for 
high-quality japonica rice exports. For several decades, Taiwan 
virtually banned rice imports to protect domestic producers from 
lower priced rice. Taiwan’s 2001 WTO accession agreement included 
a minimum access quota of 144,700 tons for rice (brown rice 
basis) in 2002. In addition, the agreement stated the imported 
rice could not be disposed of through food aid, re-exported, or 
used as feed; outlets frequently used by Japan and South Korea to 
prevent imports from competing with domestic table rice. 
Government authorities were granted 65 percent of the import 
quota rights; private traders the rest (Huang). 

Political considerations are likely to play an important role in 
Taiwan’s selection of import sources, particularly for the 
government’s share of the quota. However, China’s japonica rice 
should compete well in terms of quality and price with exports 
from the United States and Australia. The status of Taiwan’s rice 
import commitments after 2002 is unclear and is currently being 
negotiated.

Recent improvements in the quality of milled rice in China--
coupled with the integrated supply chain of the leading company 
system--create the potential for China to export high-quality 
japonica rice at competitive prices. However, high internal 
transportation costs continue to hamper the movement of grain 
from production areas to ports and consumption centers, as well 
as erode China’s competitiveness in export markets. If greater 
investment in transportation and other infrastructure is 
successful at lowering costs, China’s competitiveness will be 
improved. In addition, the recent emphasis on green production 
techniques may be particularly appealing to environmentally 
conscious consumers in Japan, Taiwan, and South Korea.

Growing demand for japonica rice in China may eliminate China’s 
excess stocks of high-quality japonica rice. In addition, water 
constraints and competition from other crops for crop land are 
likely to slow or even halt the expansion of japonica rice area. 
Rising water costs and increasing off-farm employment may 
eventually increase China’s production costs. However, in the 
near term, China’s japonica supplies will likely be more than 
adequate to satisfy domestic demand and allow China to remain a 
top exporter. 

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