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US loses out to intra-CARICOM rice exporters as Guyanese rice exports increase

22 March 2014

According to a USDA report, US rice exporters have lost markets in Jamaica to Guyanese and Surinamese rice exporters. Jamaica normally imports around 90,000 tonnes of rice, and until recently the US has supplied 20% of this for milling once it reached Jamaica. But, from a high of 46,000 tonnes in 2008, US rice exports fell to 3,300 tonnes in 2012 and halted altogether in 2013.

This is attributed to “quality and pricing concerns” in the face of a 25% CARICOM common external tariff (CET) on rice, and preferential treatment for imports from Suriname and Guyana. According to USDA, “Suriname has become a major supplier over the past five years, reaching 28% of total imports” into Jamaica in 2011, while Guyana “has completely replaced US paddy rice imports” as a source of imports to Jamaica’s sole rice mill.

Earlier press reports indicated that “under a preferential arrangement, Jamaica is committed to purchase 60,000 metric tons of rice from Guyana per annum,” while the Jamaican government has committed itself to expanding domestic rice production with the aim of reducing overall imports by 15% by 2015.

According to the head of the Guyana Rice Producers Association (GRPA), “the local marketing thrust is focused on dislodging the USA as a supplier to the Caribbean Region.” The Head of the GRPA, Dharamkumar Seeraj, maintained that with both quality and the volume of production improving significantly as a result of technology and better agronomical practices, Guyana has “the capacity to supply the region”. Indeed, Mr Seeraj confirmed that “at the beginning of February 2014” there was “still approximately 100,000 tonnes of paddy from the last crop of 2013 waiting to be sold”. Aggressive marketing efforts are now in progress to clear stocks. A three-pronged strategy is being pursued – “increasing the market share in countries that have agreements with Guyana; re-entering old markets, where the country once had a meaningful presence; and securing new markets”. The markets being targeted include “Venezuela, Jamaica, Trinidad and Tobago, as well as countries in Europe”. 

Editorial comment

Promoting regional trade has for a long time been seen as a principal benefit of a customs union. The convergence of prices for rice on the world market and the preferential EU market would now appear to be encouraging the development of increased intra-regional trade in rice in CARICOM.

The current regional market focus, however, reaches beyond CARICOM to Venezuela, Andean Pact countries and even northern parts of Brazil. With this enhanced market outlook, rice farmers in both Guyana and Suriname are now looking to increase yields, expand production, reduce unit costs and improve overall competitiveness.

Market development strategies must nevertheless be tailored to suit the characteristic of each individual market. For CARICOM markets, for instance, the approach should be on brand development and customer loyalty, as opposed to shipment of bulk rice. For Latin America, the shipment of varying bulk grades and “brokens” appears prudent. Product development into breakfast cereals also continues to offer attractive possibilities, particularly if developed in partnership with regional companies already established in this food processing sector.

Targeted marketing and product development will be critical in ensuring that the build-up of stock that existed at the end of the 2013 crop year is monetised at levels commensurate with rice farmers’ expectations.

In the longer term, important international trade policy issues could emerge in the rice sector. The WTO Bali Ministerial decision by the G-33 on stockpiling of food, which allows some developing countries to maintain and release stockpiles of basic agricultural products, will need to be closely monitored to ensure that the released stocks do not negatively prejudice the export interest of Guyana and Suriname. The use of US “green box” support measures will also need to be monitored. The issue of how to cushion domestic Caribbean rice producers from global market price volatility or political instability in key markets (e.g. Venezuela) also represents an important trade and agricultural policy challenge.

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