In mid-October, the USDA's Animal and Plant Health Inspection Service (APHIS) received a draft protocol from the Chinese government on requirements for importing U.S. milled rice. Now in the hands of U.S. mills for study and response, the document is one of the final steps to opening up the Chinese market – perhaps as early as 2013.
“A number of mills in different states are looking at the draft and talking to determine if this is a protocol they can ship rice under, manage sales and so forth,” says Dwight Roberts, president and CEO of the U.S. Rice Producers Association (USRPA), which has helped spearhead outreach efforts to the Chinese since 2004.
On Wednesday (Oct. 24), “we’ll have a conference with APHIS to discuss the protocol. Mills will provide input and I think that will lead to tweaks of the protocol. Those will go into the response that’ll head back to the Chinese.
“This first draft, from the initial reactions of some of the mills, is a great start. As we get into this, hopefully it won’t be too lengthy of a process before final agreement. I’m enthused about the first draft and the direction we’re going.”
Chinese buyers are eager and ready to deal, says Greg Yielding, head of the Arkansas Rice Growers Association, which works in concert with the USRPA. “We just don’t need to be too picky with what their government has proposed. The conditions are pretty straightforward. There doesn’t seem to be much to worry about in the draft.”
Yielding, who has traveled to China repeatedly to make inroads with rice buyers and to conduct taste tests and surveys, says millers he’s spoken with are keen to pick up the new business. “Mills that are interested in selling to the Chinese have told me, ‘Hey, we’ll do this. Most of this is about pests and we know we won’t have any problems with (those) in milled, pre-packaged rice anyway.’
“The Chinese want to buy U.S. rice, are ready to pick it off the shelf, and are willing to pay more for it as long as it’s high-quality. We’re this close to providing that product.
“U.S. rice farmers need that market opened up. Farmers just want to sell their crop. I’m not suggesting we should just sign on and agree to everything in the draft, but we don’t need to hem-haw around and have 50 conference calls and drag things out. Let’s get it done.”
For full coverage of the USRPA/Yielding’s work with the Chinese, see here.
The Chinese draft contains 16 articles. At least 11 deal with keeping rice pests from reaching Chinese shores.
“APHIS would say that’s very standard,” says Roberts. “Those that specialize in these types of agreements will recognize anything that needs to be fleshed out a bit more.
“The main thing is we’ve got the protocol. I’m a little surprised that it has moved along so quickly, actually. This is a huge first step and something that will be very good for our industry in the not-too-distant future.”
Among other concerns, the Chinese government is asking that pest traps to be set out around U.S. mills and for the traps to be checked regularly.
“Mills, of course, already have traps set up for pests because they don’t want them in any rice headed to any consumer,” says Yielding. “The Chinese also want some more record-keeping. And if they find pests in a shipment – which they won’t – then they can come back over and check the U.S. mills again. Rice is their major crop and food and it’s understandable that they want to protect it.
“The United States requires certain things of those wanting to sell products and commodities into our country. We’re very particular, for instance, on imported fruit.”
Deal for 2013?
Does Roberts think U.S. rice could be shipped to China within a year?
“No one has set a time frame. But I think we could see this happening within six months, certainly within a year as long as we move forward promptly. That’s certainly a possibility and I feel we’re on the brink.”
China has a tremendous challenge in feeding a vast population. That’s always been the case, says Roberts. “The demographics there mean they’re looking for other sources for rice. According to First Grain, in the first four months of 2012, China bought some 680,000 metric tons of rice from Vietnam. They bought nearly 400,000 metric tons in April alone. Their sources indicate China is expected to buy more than 1.2 million metric tons of rice in 2012 from Vietnam – that’s about three times what they bought last year. They’re also bringing in rice from Cambodia and Pakistan.”
Yielding envisions U.S. milled rice as a premium product in upscale Chinese supermarkets and is extremely complimentary of the Emerging Markets Program of the USDA’s Foreign Agriculture Service. “In 2006, we received our first grant money under the program. That led to the initial work in supermarkets and tastings. The USDA has since encouraged us to continue those marketing efforts and has helped us with funding to conduct them.
“The Chinese buyers have an attitude of ‘Let’s get this protocol worked out. We want to do this business.’ They know it’ll draw attention to be able to offer their shoppers high-quality, U.S.-packaged rice.”
Having worked huge Chinese cities in the past, Yielding has submitted a proposal to the FAS to do outreach in smaller Chinese cities. “That would continue the taste tests we’ve already done and show their importers that there’s a widespread desire by the population to buy U.S. rice. We’ve already been doing that in the major cities – 30 million and 50 million people – and now we want to work in smaller cities of 5 million to 10 million. We also want to visit different regions, especially in northern China, and broaden outreach with long-grain, medium-grain and short-grain.
“Gathering that data will only help us with marketing. We’ve gotten where we are today because we did market research. We let the Chinese consumers taste the rice, let them make a decision. Then we shared that data with the importers and that gave them confidence going forward.”
Through the years-long process, the USRPA “has developed a very unique and positive relationship with the Chinese authorities,” says Roberts. “That’s played the most important role in the whole set-up. Our relationship with them and the work done in China – surveys, in-store promotions, tastings that we will continue – is paying off and helped speed things up.”
It hasn’t been easy.
“When we first started this effort around 2005, I remember discussing this with some (U.S. rice leaders) and they laughed. ‘That will never happen! Not in China.’
“But we had encouragement from some people who’d spent considerable time in China and understood the direction of the population and the changes in food needs. They said there was an opportunity developing and said to keep at it.”
Besides China, Yielding is hopeful of opening even more markets for U.S. rice.
“It’s important that we engage the Iraqis in Iraq. The Thais and Indians and Vietnamese head into Baghdad and get the business. We always insist their buyers come to the United States or meet in Dubai or somewhere else.”
Earlier this year, “I went to (Arkansas Rep.) Rick Crawford and (Texas Rep.) Ted Poe. I asked ‘Will y’all go over there with us to talk to the Iraqis? We need to sit down on their turf and talk about the problems they have, their specifications, and sell them on our rice.’ They agreed to go over with a group of us wanting to export rice to Iraq.
“I’ve spoken with the FAS people in Iraq and they’re supporting the idea. Hopefully, we’ll get the grant and be able to travel there.”