Bangladesh’s smaller rice production in 2017 triggered a surge in rice imports at the end of the year, causing global rice exports to swell. With near-record imports, it became the world’s third largest rice importer in 2017. This is a major reversal from near self-sufficiency in 2016.
Although the world’s fourth-largest producer, imports are typically a small proportion of total consumption. However, when poor weather reduces the crop, it intermittently becomes a significant importer. This was the case in 2017/18 when the crop fell by more than 1.5 million tons to 33.0 million.
As a result, the government purchased large quantities through both government-to-government agreements and public tenders. The purchases were largely from traditional suppliers, such as India, but also new origins such as Vietnam. In addition, the reduction of the import tariff from 28 percent to 2 percent facilitated large private sector imports.
For 2018, imports are forecast down slightly at 1.6 million tons. The size of the upcoming harvests will greatly influence the import demand, and, in fact, Bangladesh’s imports often decline after a year of large purchases. For the time being, however, the government has continued purchasing and keeping the import tariff low.
Peru Seeks to Abate Low-Priced Thai Rice Imports in New Price Band
Peru recently raised its price band on rice to curb low-priced Thai imports. The new price band may not only discourage imports but also redistribute the market share of suppliers. Peru is the third-largest producer of rice in the Western Hemisphere and just under 90 percent of consumption is met by domestic production.
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Yet even as production has been growing, imports have also been rising. Of particular concern for Peruvian producers have been low-cost Thai imports, which have steadily expanded from a marginal amount a few years ago to nearly one-fifth market share.
Thailand has become competitive as its rice export prices dropped in 2014 and have since averaged about 20 percent below Uruguayan prices.
The new price band was raised to now be reflective of the Uruguayan price. The lower bound of the price band (import price + duty) is now set at $599-$669/ton, rather than $408-$480/ton. This is much closer to wholesale prices for locally-produced rice. In addition, this upward shift will make it more viable for Western Hemisphere rice to compete, particularly Brazil, Argentina, and Uruguay.
U.S. rice is not subject to the price band through the U.S.-Peru Trade Promotion Agreement. In the past few years, U.S. exports to Peru have been minimal as they could not compete with Thai prices. However, since the lower bound of the new price band is closer to current U.S. price levels, prospects for U.S. rice exports to Peru have improved.