Rice Market: UK-Australia Trade Deal Not Likely to Impede U.S. Exports to Britain

    ©Debra L Ferguson Stock Photography

    Earlier this summer, the United Kingdom (UK) and Australia reached an agreement in principle on a trade deal that paves the way for increased Australian rice imports. On June 17, the governments jointly released highlights of the overall agreement that has not been fully drafted and agreed upon by both nations.

    “There will be a permanent duty-free quota of 1,000 tonnes per year for long-grain milled rice, with tariff elimination (effective from the date of entry into force) for short and medium-grain milled rice,” the agreement in principle reads.

    Australian rice, grown primarily in New South Wales and Victoria, competes with U.S.-grown medium grain in markets like Japan, Jordan, Singapore, South Korea, and Taiwan, because of some logistical advantages and similar varieties. According to the Australian Department of Agriculture, Water and the Environment, Australia exports about 74 percent of their rice crop, roughly equal to 350,000 metric tons, but that figure varies from season to season. Australia is a small exporter of mostly medium grain rice, representing around 5 percent of global medium and short grain rice exports.

    Australian rice production, similar to California production, has been significantly impacted over the years by drought-driven water shortages. For the 2019/20 marketing year, Australia’s production was nearly a tenth of typical levels, projected to increase this year to levels above the 10-year average due to improved water availability.

    A report last month by the USDA’s Foreign Agricultural Service states that Australian rice harvest occurred this spring, resulting in low exports earlier in the year, reflected by the small domestic supply of rice in the drought-impacted area in the prior marketing year 2019/20. As processing of the MY 2020/21 rice crop begins in earnest, FAS anticipates significant increases in exports of rice from Australia for the remaining nine months of this marketing year.

    “While the agreement in principle was reached in June, much work has to be done by both governments to formalize the full text of the formal free trade agreement. This process will likely take months to complete, then requiring ratification by the UK and Australian parliaments before the agreement is officially entered into force,” said Alex Waugh, Director General of the UK Rice Association.

    He added that, “Despite this move towards liberalization in terms of market access, we are expecting to see only small changes in the quantities of rice shipped between the UK and Australia, in either direction.”

    According to data from the Trade Data Monitor, the UK total rice imports from Australia averaged roughly 1,200 metric tons per year between 2011 and 2020, made up in some years by a significant portion of broken rice. During the same timeframe, U.S. exports have averaged just over 28,000 metric tons per year, primarily consisting of a combination of brown, milled, and parboiled long grain and milled medium grain rice.

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