[By Masaru Yamada, The Japan Agricultural News Senior Special Writer]
The rice industry in the United States is not satisfied with the Trans-Pacific Partnership agreement. While they won liberalization of the Japanese rice market through the agreement, U.S. rice farmers apparently think the deal also means there is a possibility of them losing the Mexican market, their biggest customer. To make things more complicated, the industry is not single-minded regarding the TPP agreement.
To understand their situation, we should be aware that the U.S. rice industry is made up of two completely different regions. One is the southern part of the country which cultivates 80 percent of rice grown in the U.S. The other is California which grows 20 percent of rice. Farmers in the South grow long grain rice which is common in Asian countries, while Californian farmers grow medium grain which is similar to Japanese rice.
Since their uses differ, they can be considered as different crops. Last week, long grain rice produced in Arkansas was priced at 22.75 dollars per 45 kg, while Californian medium grain rice was priced at 36 dollars per 45 kg. The price for medium grain rice is 60 percent higher because it can’t be replaced by long grain rice.
Rice farmers in the South have strong concerns over the TPP pact. Prices of long grain rice is declining in the international market, and their product is facing fierce competition in the Mexican market against rice from such countries as Vietnam. Currently the U.S. rice has an advantage in Mexico thanks to the North American Free Trade Agreement which lets the U.S. export rice with zero tariffs. However, if Mexico abolishes tariffs on rice under the TPP agreement, Vietnam will definitely have a competitive advantage over the U.S.
Meanwhile, Californian farmers have stable sales channels in countries that consume medium grain rice, such as Japan and South Korea, and enjoy high prices. They remain silent over the TPP agreement because they won’t be harmed by Japan expanding its rice import quota under the pact.
There are attempts by farmers in the South to grow medium grain rice. However, the quality of their rice is low because Californian farmers don’t offer seeds of popular medium grain rice varieties to other districts. Since they don’t have channels to sell medium grain rice, prices of Arkansas-grown medium grain rice remain as low as those for long grain rice.
Thus, it is quite natural for rice farmers in the South to feel Californian farmers are the only ones benefiting from the TPP agreement. They have made complaints to U.S. Congress regarding the inequality under the deal. They are totally against the agreement unless such unfairness is rectified.
In the TPP deal signed last fall, Japan agreed to create a 60,000-ton quota to import medium grain rice for processing under the existing minimum access scheme of tax-free rice imports. Regarding this new quota, the U.S. government has recently revealed that Japan and the U.S. secretly agreed to set aside 80 percent of the quota for U.S. rice.
I interpret this as Japan planning to purchase medium grain rice from the South. Japan’s agriculture ministry denies there was any “guarantee,” but it makes sense if you think the two countries’ governments, eager to conclude the TPP talks, came up with the idea to benefit farmers in the South and relieve their dissatisfaction.