Global Markets: Rice – U.S. Regains Market Share in Central America

    Rice harvest. ©Debra L Ferguson Stock Photography

    Central America continues to be a key rice importing region in the Western Hemisphere. Demand is expected to grow given rising consumption trends for this staple grain. With limited production in most of these countries, imports will remain significant. While the United States is a major rice exporter to the region, South American countries have been formidable competitors, although not this year.

    Despite the United States’ free trade agreements with the Central American countries, U.S. market share has been trending down. Both the U.S.- Panama Trade Promotion Agreement and the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) offer U.S. exporters expanding tariff-rate quotas and gradually declining tariffs.

    Nevertheless, U.S. rice only accounted for half of total Central American imports in 2020. In contrast, exports from South American countries, primarily Brazil, Paraguay, Uruguay, and Argentina, have increased over the past decade.

    These key exporting countries do not benefit from free trade agreements with the region but have made significant gains due to favorable prices and proximity. South American exporters made significant gains in 2020.

    For 2020/21, the Central American region is importing less as its production rebounds. In a reversal of the trend, the United States has recaptured most of the market share this year with competitive prices and more ample supplies.

    Looking forward to 2021/22, Central America is anticipated to import more rice. With a smaller U.S. crop and ample South American supplies, U.S. exporters may face challenges in maintaining the majority market share in the coming year.

    Nepal Rice Imports Rise Rapidly

    Nepal rice imports are projected at a record 1.3 million tons in 2021/22 (October- September marketing year), making it the sixth-largest importer worldwide. It has catapulted onto the global rice market, having imported less than 50,000 tons a decade ago. With final data coming in for the 2020/21 marketing year, imports are estimated at 1.2 million tons, up nearly 50 percent from 2019/20.

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    Almost all of Nepal’s imports are from neighboring India, which is exporting record-breaking volumes with abundant supplies, very competitive export prices, and a large projected crop for the upcoming harvest.

    Rice is an important staple in Nepal and the commodity is domestically produced. While Nepal consistently produces nearly 4 million tons of rice annually, production has remained stagnant and cannot satisfy the rising consumption. Increased consumption can be due to several factors, including population growth, changing tastes and preferences, and urbanization.

    Nepal increasingly relies on imports to fulfill its growing domestic needs, with imported rice making up almost 25 percent of its supply in 2020/21. In comparison, in 2015/16, imports made up less than 15 percent of all rice consumed in Nepal.

    Most imported rice is milled white rice, followed by paddy rice, and small amounts of broken rice. Importation of paddy rice suggests that there is ample milling capacity in Nepal, with mills benefiting from the value addition in-country.

    It is likely Nepal will continue to supplement its supply from India for the foreseeable future. Close proximity, low prices, and ample supplies make importing from this global rice powerhouse an easy and cost-effective way to fulfill Nepal’s growing demand.

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