Summary
In terms of trade with the EU the UK is not a major market for ACP rice exporters. However the impact of the UK’s departure from the EU on ACP rice exporters will not be felt via changes to UK rice import tariffs, but rather as a result of the increased competition on the smaller EU27 market, where the departure of the UK will reduce overall EU rice import demand by around 23% while the EU’s TRQ market access commitments under existing bilateral agreements will remain unchanged. The removal of UK import demand is also likely to exacerbate the competitive challenges which ACP rice exporters face as a result of the DFQF access granted to LDC rice exporters to the EU. This measure saw imports from the main LDC rice exporters to the EU increase from under 7,500 tonnes in 2007 to around 500,000 tonnes in 2015 and 2016.
- ACP Rice Exporters
While Eurostat reports 9 ACP countries exporting rice to the EU in 2016, seven of these countries (Mauritius, Malawi, Haiti, Ghana, DRC, Nigeria, and Guinea) accounted in total for only 156 tonnes. Only 2 ACP countries had significant rice exports to the EU, namely Guyana and Surinam. In 2016 Guyana’s rice exports to the EU totalled 265,733 tonnes and Surinam’s 24,251 tonnes. This represented 13.6% and 1.2% of total EU rice imports respectively.
This trade has undergone rapid changes in the past ten years. Initially the granting of fully duty free quota free access to the EU market in 2008, saw an increase in rice exports to the EU from both Guyana and Suriname (+9.8% and + 111% respectively between 2007 and 2010). Subsequently ACP rice exports to the EU varied.
- Surinam’s Rice Exports to the EU/UK
In the case of Surinam a peak of 33,489 tonnes of rice exports to the EU was attained in 2010 before falling dramatically in the following five years (to a low of 5,723 tonnes in 2015). Export volumes to the EU subsequently recovered to some 24,251 tonnes in 2016. For Surinam the UK market is of relatively marginal significance in its direct rice trade with the EU.
Total EU rice imports and rice imports from Suriname 2007-2016 (tonnes)
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| EU Total | 1461107 | 1646350 | 1484646 | 1314837 | 1614672 | 1392703 | 1447659 | 1647704 | 1910820 | 1953263 |
| Suriname to EU |
15834 |
20448 |
26331 |
33489 |
17243 |
16333 |
13764 |
21029 |
5723 |
24251 |
| Suriname % share |
1.1% |
1.2% |
1.8% |
2.5% |
1.1% |
1.2% |
0.95% |
1.3% |
0.3% |
1.2% |
| Suriname to UK |
0 |
0 |
0 |
916 |
123 |
0 |
250 |
409 |
0 |
0 |
| UK % EU |
0% |
0% |
0% |
2.7% |
0.7% |
0% |
1.8% |
1.9% |
0% |
0% |
Source: EC market access data base
For Surinam, the UK has been only an intermittent market for rice exports (last exports in 2014), with volumes never exceeding 1,000 tonnes (never more than 2% of total exports to the EU28 market in past seven years).
- Guyana’s Rice Exports to the EU
In the case of Guyana from 2011 the initial expansion of rice exports to the EU reversed itself, as rice was increasingly exported to neighbouring Venezuela. This trend however came to a halt with deterioration in relations between Venezuela and Guyana, which in June 2015 saw the cancellation of the supply contract for 194,000 tonnes after only 68,640 tonnes had been supplied (4).
As a consequence Guyanese rice exports to the EU took off again in 2015, with the EU market coming to account for fully 43% of total Guyanese rice exports in 2015 (4) and 53% in 2016 (5). By 2016 Guyana was exporting almost twice as much rice to the EU market as in 2007.
Total EU rice imports and rice imports from Guyana 2007-2016 (tonnes)
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| EU Total | 1461107 | 1646350 | 1484646 |
1314837 |
1614672 |
1392703 | 1447659 | 1647704 | 1910820 | 1953263 |
| Guyana |
133578 |
120219 |
146116 |
146721 |
75633 |
42682 |
63590 |
81002 |
194004 |
265733 |
| % share |
9.1% |
7.3% |
9.8% |
11.2% |
4.9% |
3.1% |
4.4% |
4.9% |
10.2% |
13.6% |
Source: EC market access data base
However, since 2012 the average price paid for Guyanese rice imports into the EU has fallen year on year. By 2016 the average recorded price per tonne paid for Guyanese rice imported into the EU was 28.6% below the average recorded price per tonne received in 2012. These trends in prices received in what is now Guyana’s major export market, has contributed to the difficulties faced by Guyanese rice farmers, with prices received by farmers reportedly down around 20% in 2016 (6).
It is noteworthy that this trend in Guyanese rice prices contrasts somewhat with the overall trend in EU rice import prices, which rose in 2013 and 2014, before falling back in 2015 and 2016, as rice import volumes surged (being in 2015-2016 on average 17% above 2014 import volumes, which were in turn 14% above 2013 import volumes – an increase of 40% over 5 years). By 2016 average EU import prices for rice were 12.1% below the average prices for EU rice imports in 2012.
Average recorded prices Guyanese rice exports to the EU 2012-16
| 2012 | 2013 | 2014 | 2015 | 2016 | change 2012-16 | |
| Tonnes | 42682 | 63590 | 81002 | 194004 | 265733 | +522.6% |
| Euro | 16819290 | 23610143 | 26776871 | 61996483 | 74790091 | +344.7% |
| Euro/tonne | 394.06 | 371.29 | 330.57 | 319.56 | 281.45 | -28.6% |
| % Annual change | -5.8% | -11% | -3.3% | -11.9% |
Average recorded price of EU rice imports (2012-2016)
| 2012 | 2013 | 2014 | 2015 | 2016 | change 2012-16 | |
| Tonnes | 1,392,703 | 1,447,659 | 1,647,704 | 1,910,820 | 1,953,263 | |
| Euro | 837,131,489 | 909,062,207 | 1,060,418,934 | 1,164,099,064 | 1,044,119,318 | |
| Euro/tonne | 601.08 | 627.95 | 643.57 | 609.21 | 534.55 | -12.1% |
| % annual change | +3.6% | +2.5% | -6.3% | -12.3% |
Source: EC market access data base
This in part reflects the relative composition of imports of Guyanese rice compared to overall EU imports of rice. Imports of rice from Guyana are concentrated in the category of paddy or rough rice (rice in husks 100610), with 51% of exports falling into this category. The price obtained by Guyanese rice exporters is only 9% below the average EU import price for this category of rice.
However, only 7.6% of total EU rice imports fall into the category of paddy rice (rice in husks 100610). The main category of EU rice imports are Semi-milled or whole milled rice (100630) and Husked (brown) rice (100620). In 2016 average EU import prices for these categories of rice were 76% and 64% higher than the prices obtained for Guyanese rice exports in the same product category.
Only 0.7% of Guyana’s rice exports fell into the highest unit value rice import category of Semi-milled or whole milled rice.
In 2016 the average EU import price for Semi-milled or whole milled rice (100630) was 167% higher than the average price paid for Guyana’s main rice export category, paddy rice (100610).
EU imports of Guyanese rice imports and total EU rice imports 2016 by product category – tonnes and average prices
| Tonnes | % share total | Value | % share total | Price per tonne | |
| Guyana |
265,733 |
74,790,091 |
|||
| Rice in the husk (100610) |
135,467 |
51.0% |
34,012,341 |
45.5% | €251.07 |
| Husked (brown) rice (100620) |
103,307 |
38.9% |
33,169,357 |
44.3% | €321.08 |
| Semi-milled or whole milled (100630) |
1,895 |
0.7% |
723,690 |
1.0% | €381.89 |
| Broken rice (100640) |
25,064 |
9.4% |
6,884,703 |
9.2% | €274.68 |
| Total EU |
1,953,263 |
1,044,119,318 |
|||
| Rice in the husk (100610) |
148,240 |
7.6% |
40,478,001 |
3.9% | €273.06 |
| Husked (brown) rice (100620) |
777,706 |
39.8% |
409,956,748 |
39.2% | €527,14 |
| Semi-milled or whole milled (100630) |
742,090 |
38.0% |
497,583,531 |
47.7% | €670,52 |
| Broken rice (100640) |
285,227 |
14.6% |
96,101,038 |
9.2% | €336.93 |
The increase in EU rice imports is attributable to the 229% increase in EU rice imports from the two leading LDC rice suppliers (Cambodia and Myanmar), which by 2016 accounted for over 25% of total EU rice imports, up from a mere 0.14% in 2007; the year before the entry into force of full duty free-quota free access to the EU market for LDC rice suppliers (see companion article ‘Rising EBA rice exports to EU could squeeze ACP rice exports out of EU market’, 20 February 2017).
- Guyana’s Rice Exports to the UK
For Guyana, the UK has on occasion been a significant market within the EU, taking over a quarter of total Guyanese exports to the EU from 2012 to 2014. However despite the rapid expansion of Guyanese exports to the EU market in 2016, exports to the UK actually fell compared to the preceding two years (1).
Guyana’s rice exports to EU28 and UK (tonnes)
| Guyana | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
| EU | 133,578 | 120,219 | 146,116 | 146,721 | 75,633 | 42,682 | 63,590 | 81,002 | 194,004 | 265,733 |
| UK |
3,088 |
219 |
6,008 |
9,798 |
7,247 |
10,930 |
15,963 |
23,669 |
22,544 |
16,393 |
| UK % | 2.3% | 0.2% | 4.1% | 6.7% | 9.6% | 25.6% | 25.0% | 28.4% | 11.6% | 6.2% |
Source: EC market access data base
Guyana has reduced its dependence on the UK market from a recent peak of 28.4% in 2014 to a mere 6.2% in 2016, a level significantly below the % share of the UK in the EU’s overall GDP (1).
- Effects of Brexit on ACP Rice Exporters
ACP countries thus have little to fear from any post Brexit liberalization of the UK rice market, with ACP rice exporters currently having little or no exposure to the UK market.
However, the exit of the UK from EU will reduce the total size of the EU market for rice imports. Between 2013 and 2016 the UK accounted for on average almost 23% of total EU28 rice imports. This means that existing bilaterally agreed EU TRQ arrangements for third country access to the EU rice market will in future be concentrated on a much smaller overall EU rice market (1).
EU28 and UK Rice Imports 2014-2016
| 2014 | 2015 | 2016 | Average 14-16 | |
| EU28 |
1,647,704 |
1,910,820 |
1,953,263 |
1,837,262 |
| UK |
411,337 |
452,287 |
380,851 |
414,825 |
| UK % |
25% |
23.7% |
19.5% |
22.6% |
In the EU, market access for rice is carefully regulated to ensure rice imports do not disrupt markets for domestically produced rice, while at the same time ensuring growing EU consumer demand for rice is met without unduly increasing prices.
Import tariffs for rice are regulated on a twice yearly basis, ‘at the beginning and half of each marketing year (i.e. in September and in March), on the basis of import licenses issued during the previous period’ (2).
In addition ‘following international agreements under WTO or bilateral negotiations, various Tariff Rate Quotas (TRQs) allow rice imports at a lower or even zero duty’. The total quantities of rice under TRQs are summarised in the following table (2):
| Type of rice | Quantity (tonnes) |
| Paddy |
7 |
| Husked |
*28,819 |
| Milled /semi-million |
**247,165 |
| Broken |
225,530 |
| * 4 000 tonnes from Bangladesh which may be imported in other forms than husked rice
** 22 000 tonnes from Central America and 40 800 tonnes from Peru which may be imported in other forms than milled rice |
|
The ‘above quantities do not include duty-free rice imports with no quantitative limits from Least Developed Countries and ACP countries and of husked Basmati rice from India/Pakistan’, for which country specific arrangements are in place (2).
In 2016 of total EU27 rice imports of 1,572,412 tonnes, 462,867 tonnes came from LDCs which have enjoyed duty free-quota free access to the EU market since 2008 (1), while 501,521 tonnes entered the EU28 market under various TRQs (2).
Main LDC rice exports to the EU28 2007-2016 (tonnes)
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Cambodia |
2,023 |
2,656 |
12,086 |
38,682 |
122,925 |
119,728 |
227,010 |
251,365 |
304,812 |
327,322 |
| Myanmar | – |
559 |
437 |
241 |
12,052 |
25,923 |
39,657 |
157,843 |
198,245 |
166,091 |
| Laos |
230 |
134 |
90 |
896 |
1,798 |
1,670 |
2,746 |
3,883 |
3,279 |
4,829 |
| Bangladesh |
5,183 |
4,946 |
4,197 |
2,445 |
272 |
666 |
1,815 |
2,260 |
2,080 |
1,602 |
| Sub- Total |
7,436 |
8,295 |
16,810 |
42,264 |
135,047 |
147,987 |
271,228 |
415,351 |
508,416 |
499,844 |
Source: EC, Market Access Data Base
- Price Prospects in the EU Rice Sector
The December 2016 EC Prospects for EU agricultural markets and Incomes report had price projections on the EU and world market rice prices which would see major price premiums on the EU market in the coming 10 years (without factoring in the Brexit effect). These price premiums on the EU market are substantially above those of the preceding ten year period (3).
EC rice price projections EU and world markets 2017-2026 (€/tonne)
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
| EU | 611 | 627 | 628 | 634 | 642 | 653 | 661 | 663 | 665 | 665 |
| WMP | 368 | 378 | 355 | 351 | 352 | 357 | 361 | 362 | 364 | 364 |
| EU price premium | +243 | +249 | +273 | +273 | +290 | +296 | +300 | +301 | +301 | 301 |
Source: EC, ‘EU Agricultural Outlook: Prospect for the EU agricultural markets and income 2016-2026’, December 2016, table 9.10
| Comment and Analysis The main impact of Brexit on ACP rice exporters will not be felt through any liberalization of the UK rice market which may take place post Brexit. Rather the impact will primarily be felt in terms of increased competition for ACP rice exporters on the EU27 market. The departure of the UK from the EU needs to be seen in a context where in the past three years the UK took some 23% of total EU rice imports. All in all the various EU TRQs for rice at zero of lower than standard import duties, are equivalent to just over 25% of EU 28 imports or almost 32% of EU27 rice imports. LDC suppliers, who since 2008 have enjoyed duty free quota free access to the EU market, have come to account for a growing volume of EU rice imports, accounting for 29.4% of total EU27 rice imports by 2016. The UK’s departure from the EU will intensify competition from third country suppliers on the EU rice market. It remains to be seen how competitive ACP rice suppliers will be on EU27 markets in the face of the rising attractiveness of the EU rice market to third country rice exporters (see price table above) and the rapid increase in rice exports from LDC suppliers since the full introduction of DFQF access for LDC suppliers in 2008 (increasing from 7,436 tonnes in 2007 to around 500,000 tonnes in 2015 and 2016). Given Guyanese rice exports to the EU are concentrated in the lowest value category of rice imported into the EU, there would appear to be a need to review the production and marketing strategy for the Guyanese rice sector. Potentially this could focus on the promotion of both a) the production of more specialty rice varieties which can secure higher prices; b) the export of value added and consumer ready packaged rice. Production of aromatic rice varieties is already being rolled out by the Guyana Rice Development Board (7). However this may require additional investment to accelerate and extend this process of introducing new higher value rice varieties. Investments may also be required in the production and export of value added rice, with this potentially requiring the establishment of joint venture arrangements with a partner in European, capable of improving the marketing of Guyanese rice in the EU. Against the background of the financial implications of the adjustment needs arising from the market effects of Brexit, consideration my need to be given to ACP countries approaching the EU for the establishment of a dedicated marketing adjustment support programme aimed at assisting ACP producers and exporters in adjusting to the market consequences of Brexit in the rice, and other affected sectors of export interest to ACP countries. |
Sources:
(1) EC market access data base
http://madb.europa.eu/madb/statistical_form.htm
(2) EC, ‘The EC rice regulatory regime’, February 2015
http://ec.europa.eu/agriculture/sites/agriculture/files/cereals/factsheet-rice_en.pdf
(3) EC, ‘EU Agricultural Outlook: Prospect for the EU agricultural markets and income 2016-2026’, December 2016
https://ec.europa.eu/agriculture/sites/agriculture/files/markets-and-prices/medium-term-outlook/2016/2016-fullrep_en.pdf
(4) newsroom.gy, ‘Guyana’s rice sector shows incredible resilience in spite of international woes’, 24 July 2016
http://newsroom.gy/2016/07/24/guyanas-rice-sector-shows-incredible-resiliencein-spite-international-woes/
(5) Guyana Chronicle, ‘Rice exports net US$178M, 7 January 2017
https://guyanachronicle.com/2017/01/07/rice-exports-net-us178m
(6) Stabroeknews.com, ‘Rice exports to Europe have surged -farmers getting lower price for paddy’, 23 May 2016
http://www.stabroeknews.com/2016/news/stories/05/23/rice-exports-europe-surged/
(7) Guyana, Rice Development Board, ‘Despite Talks Of Failing Rice Industry – 2017 First Crop Production Sow Surpass That Of 2016’, 10 March 2017
http://grdb.gy/despite-talks-of-failing-rice-industry-2017-first-crop-production-sow-surpass-that-of-2016/
| Key words: Rice Suriname, Guyana, BREXIT Area for Posting: Cereals, Caribbean EPA, BREXIT |