A historic trade agreement with China will allow exports of milled rice from the United States, providing a big opportunity for Louisiana rice mills and farmers, agriculture officials said Thursday.
"This is a, I don't want to say a saving grace, but it's definitely a huge accomplishment for the rice industry as a whole," said Glenden Marceaux, a rice farmer and president of the Louisiana Independent Rice Producers Association.
China consumes the equivalent of the entire U.S. rice crop every 13 days, according to USA Rice, a global advocate for the U.S. rice industry. The U.S. Department of Agriculture expects China to import 5.3 million tons of milled rice in 2017-18.
Agriculture officials are hopeful the milled rice exports can lead to shipments of rough rice harvested from the field.
Louisiana is the United States' third-largest rice producer, trailing only Arkansas and California, LSU AgCenter economist Michael A. Deliberto said. The state produced 1.4 million tons of rice in 2016 on 420,821 acres. The crop, after value-added activities, was worth $407.2 million.
Louisiana already exports well over 60 percent of the rice it produces, Marceaux said.
"With this protocol, the U.S. has the opportunity to gain a new rice export customer, and that customer is the largest in the world," Deliberto said. "That is encouraging news to rice producers who have been facing lower commodity prices over the past couple of years."
The U.S. is projected to produce 6.9 million tons of rice in 2017-18. The U.S. Department of Agriculture estimates that China will produce 159.5 million tons of rice and will import 5.5 million tons in 2017-18.
China opened its rice market when the country joined the World Trade Organization in 2001, but U.S. rice was barred from the market because the two countries lacked a protocol to protect against the introduction of certain pests into China.
Rice mills will be inspected by Chinese sanitation officials before exports can begin, so shipments of U.S.-milled rice to China could be several months away.
The state's two major rice mills have agreed to the protocol, and the agreement will boost packaged products Louisiana sells overseas, Marceaux said.
Demand for U.S.-milled rice, at least initially, is expected to be strongest in coastal areas of China among higher-income consumers and in the hotel and restaurant trade.
"Food safety is a major issue for China's consumers, and U.S. rice is well positioned as a safe, high quality food," Chris Crutchfield, chairman of the USA Rice Asia/Turkey Promotion Subcommittee told The Associated Press. "We have promotion programs up and running in China in anticipation of today's signing and exports to come. We'll tailor our promotion activities going forward to include large trade seminars here and in China to educate Chinese consumers about the types and qualities of U.S. rice."
The China deal also could help strengthen rice prices, which have been low for some time, and would help farmers, Deliberto said. Futures prices are hovering around $12 per 100 pounds. That's up from around $10 a year ago, mainly because flooding in Arkansas and Missouri are expected to reduce production.
Deliberto said Louisiana's rice acreage typically ranges between 410,000 and 490,000 acres, with about 70 percent of the crop produced in southwest Louisiana.
The crop has to be irrigated so it requires a higher degree of management than corn or soybeans, he said. Rice prices will have to increase significantly to take acreage from other crops.
Marceaux said rice acreage has shrunk the past couple of years for economic reasons. No one wants to overproduce something they can't sell, he added.
Rough rice exports — the rice harvested from the field — have been steady to Central and South America, he said. Otherwise, Louisiana's producers would be in a bind.
Louisiana's exports of rough rice — also including shipments originated in other inland states and exported through New Orleans — were valued at $444 million in 2016, while milled rice exports were valued at $252 million, according to the U.S. Census Bureau.
The milled rice that China wants will help replace a void left by Iraq, once one of the biggest markets for long-grain rice, he said.
"It's going to be a big economic upturn, I think," Marceaux said. "It may take a little while to get fully engaged in that market with the exports, but I see nothing but a plus."
The agreement is a tremendous leap towards selling U.S. rice in China and caps a decade of effort by the rice industry and U.S. government to open access to the world's largest rice importer, said USA Rice Chairman Brian King.