Rice is waiting to be harvested by the combine harvester in the background. Photo: Bruce Schultz, LSU AgCenter
Colombian rice imports are expected to rebound strongly in 2022, but will remain below previous years’ levels due to a smaller harvest and higher domestic prices.
The 2021/22 harvest is estimated at 1.9 million tonnes, which is 100,000 tonnes less than the 2020/21 harvest. Rice is a staple food in Colombia, but production generally does not meet domestic demand. The smaller harvest and limited imports the previous year tightened supplies and caused prices to rise after a downward trend last year. In February 2022, Colombian rice retail prices reached $780/tonne, up $50/tonne from the previous month.
Although US export prices are competitive, trade is constrained by a high import tariff. Under the U.S.-Colombia trade promotion agreement, the import tariff is expected to drop each year and is set at 49.2% in 2022, compared to a most favored nation tariff of 80%. .
Additionally, US exporters can bid on a specific amount of the duty-free TRQ in auctions 3 times a year. With Colombia’s bountiful 2020/21 harvest and falling domestic prices, the US tariff rate quota has not been filled for the first time since the implementation of the trade deal in 2011.
In a sharp reversal, the first quota auction this year, held for 85,913 tonnes of US rice, was fully allocated. Two other smaller quota auctions will take place in June and October.
For the first time in more than 10 years, the United States was not the main supplier to Colombia in 2021. Last year, Ecuador was the first supplier with 18,000 tons against 10,000 tons supplied by the United States. In 2022, with the success of the auctions, the United States should once again become the largest supplier.
US medium-grain rice prices soar to record highs
US average grain export quotations hit a record high of $1,350/metric ton, up more than 40% from a year ago. In contrast, quotations for long-grain rice, which is grown primarily in the Mississippi Delta region, have remained relatively stable over the past year.
The increase in the price of medium-grain rice is due to tight domestic supply in California, where most US medium-grain rice is produced. The 2021 crop in California was affected by a severe drought that reduced US production by around 18%, pushing prices up. California’s water availability and high costs of other agricultural inputs will remain a challenge for production and exports in 2022/23.
Record prices are a key factor driving forecasted exports nearly 24% lower than the previous market year. According to export sales data from the United States, from early August to February 24, cumulative exports of medium and short grain rice fell 31% and exceptional sales were more than 26% lower than Last year.
While US exports are stable to East Asia, particularly Japan, Korea and Taiwan, exports to the Middle East are faltering. In 2021, US exports of average grains to the Middle East fell by more than a third from 2020, the largest reduction in Saudi Arabia.
The United States is a dominant player among medium and short grain exporters, which include China, Australia, Turkey and the European Union. This year, the United States faces increased competition from other major medium grain exporting nations due to its smaller crop. China has boosted its exports to price-sensitive African markets.
Also, following a larger 2021/22 harvest, Australia is expected to increase its exports to the Middle East, as it has historically boosted exports when supplies are high.