Summary
While EU rice producers fear the impact of increased imports from LDCs, to date it is other third country suppliers which have been worst affected. Competition amongst third country suppliers will intensify in the coming period, with the effects on ACP countries potentially being compounded by the UK’s departure from the EU. This will depend on the trade regime set in place by the UK from day 1 of BREXIT.
According to the EC’s latest ‘Prospects for EU agricultural markets and income 2016-2026’, 2016 saw a high supply of rice on the EU market with ‘solid production (1.8 million t, +1 %), record imports (1.7 million t, +10 %) and stable demand (both domestic and exports)’. This gave rise to high EU stock levels (0.6 million tonnes). (1)
In the EU Japonica rice accounts for 75% of domestic EU rice production. 80% of EU rice production takes place in Spain and Italy. Voluntary coupled support payments (i.e. payments only available to EU rice producers) are maintained in 7 out of 8 of the EU rice producing countries, including in Spain and Italy. This stabilizes EU rice production, with this expected to continue in the coming decade (although under a slightly reduced area). (1)
Rice consumption in the EU is growing, increasing from ‘4.7 kg in 2005 to 5.5 kg per capita in 2016’ (+17%). By 2026 EU per capita consumption of rice is projected to reach 5.8 kg (+5.5%). This represents a slowing down of growth in rice consumption in the EU. The bulk of the rice consumed in the EU is Indica rice (60%) with Japonica rice representing 40% of EU consumption
Projected EU rice production, consumption, export and imports 2016-2026 (million tonnes milled equivalent)
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 16-26 | |
| Production | 1.8 | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.8 | 1.8 | 0% |
| Consumption | 2.8 | 2.8 | 2.9 | 2.9 | 2.96 | 2.9 | 2.9 | 3.0 | 3.0 | 3.0 | 3.0 | +7.1% |
| Exports | 0.3 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0% |
| Imports | 1.3 | 1.4 | 1.4 | 1.4 | 1.4 | 1.4 | 1.5 | 1.5 | 1.5 | 1.5 | 1.5 | +15.4% |
| EU rice price | 602 | 611 | 627 | 628 | 634 | 642 | 653 | 661 | 663 | 665 | 665 | +10.4% |
| WM rice price | 359 | 368 | 378 | 355 | 351 | 352 | 357 | 361 | 362 | 364 | 364 | +1.4% |
| EU price premium | +68% | +66% | +66% | +77% | +81% | 82% | +83% | +83% | +83% | +83% | +83% | – |
| € EU price premium | +243 | 243 | 249 | 273 | 283 | 290 | 296 | 300 | 301 | 301 | 301 | +23.9% |
Source: Extracted from, ‘EU agricultural outlook: Prospects for EU agricultural markets and income 2016-2026’,Table 9.10, December 2016
According to the EC, ‘since 2010, duty-free imports under the ‘everything but arms’ (EBA) agreement have started to crowd out imports from other regions’. It is maintained that ‘currently about 27% of (EU) imports originate from EBA countries, Cambodia and Myanmar, while traditional suppliers Thailand and India have a share of 18 and 23 % respectively’. (1)
Total EU rice imports and imports from ACP and main EU Rice suppliers 2009-2015 (tonnes)
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | + % | |
| Total | 1,646,350 | 1,484,646 | 1,314,837 | 1,614,672 | 1,392,703 | 1,447,658 | 1,647,704 | 1,910,820 | +16.1% |
| India | 306,396 | 252,939 | 246,718 | 242,761 | 491,031 | 365,783 | 343,164 | 437,383 | +42.8% |
| Thailand | 509,704 | 485,598 | 368,222 | 402,723 | 220,917 | 209,526 | 272,595 | 291,520 | -42.8% |
| Guyana | 120,219 | 146,116 | 146,721 | 75,633 | 42,682 | 63,590 | 81,002 | 194,004 | +61.4% |
| Surinam | 20,448 | 26,331 | 33,489 | 17,243 | 16,333 | 13,764 | 21,029 | 5,723 | -72% |
| Myanmar | 559 | 437 | 241 | 12,052 | 25,923 | 39,657 | 157,843 | 198,245 | +35,364% |
| Cambodia | 2,656 | 12,086 | 38,682 | 122,925 | 119,728 | 227,010 | 251,365 | 304,812 | +11,376% |
Source: Extracted from EC, Market Access Data Base (EU member state – EU28; Product Code – 1006; partner country – ALL)
EU rice sector reforms and the opening up of increased quota free access for LDC rice exporters saw Myanmar and Cambodia increase their share of EU imports or rice from 0.2% in 2008 to 26.3% in 2015. This saw the combined share of India and Thailand in EU rice imports fall from 49.6% in 2008 to 38.1% in 2015. (2)
More directly of interest to ACP countries it saw the share of EU rice imports of Guyana and Suriname fall from 15.3% in 2010 to a low of 4.3% in 2012. This low in 2012 corresponded with a period of high global rice prices, when world market prices were between 11% and 37% higher than EU prices. In subsequent years the price premium on the EU market began to recover and by 2014 EU rice prices were 77% above world market prices. This saw a strong recovery in Guyanese rice exports to the EU, as market opportunities in the alternative Venezuela market diminished sharply. By 2015 Guyana was once again accounting for 10.2% of EU rice imports. Exports of rice to the EU from Suriname showed a much more variable trend. (2)
EC projections show rising EU demand for rice over the 2016-26 period will be met entirely from imports. According to the EC this trend towards sourcing from EBA suppliers is expected to continue ‘with a share of around 50% by 2026’. This is seen as decreasing the EU’s ‘self-sufficiency rate to slightly below 60%’. (1)
Sources:
(1) EC, ‘Prospects for EU agricultural markets and income 2016-2026’, December 2016
https://ec.europa.eu/agriculture/sites/agriculture/files/mp-mto-2016-fullrep_en.pdf
(2) EC, Market Access Data Base (EU member state – EU28; Product Code – 1006; partner country – ALL)
http://madb.europa.eu/madb/statistical_form.htm
(3) Agritrade, ‘Rice Sector’ Executive Brief, September 2013
https://publications.cta.int/media/publications/downloads/Rice_Executive_Brief_EN.pdf
| Comment and Analysis While EU rice production is stable EU rice consumption is growing. This is seeing increased EU rice imports. However, the EU’s system of ‘coupled’ direct aid payments for rice producers, alongside the ‘managed’ rice import regime applied (based on TRQs for non-LDC 3rd country suppliers of certain varieties of rice) (3), effectively insulates EU rice producers from the worst market effects of rising levels of imports (+16.1% between 2008 and 2015). This can be seen in the substantial rice price premiums which have returned to the EU market since 2014 and which are projected to continue for the next decade, at between 66% and 83% above world market rice prices.These price premiums will continue to make the EU rice market attractive for third country suppliers. EBA access for LDCs will however intensify competition for ACP rice exporters and other 3rd country suppliers. To date the third country suppliers worst affected by the growing imports of rice from EBA beneficiaries have been Thailand and, amongst ACP countries, Suriname. Since by 2026 the EC is expecting EBA suppliers to account for 50% of EU imports, this suggests total EU rice imports from non-EBA suppliers could fall by some 21.5% or some 210,000 tonnes of milled rice equivalent. This could put pressure on ACP suppliers. The situation of ACP rice exporters could be compounded by the UK’s departure from the EU. In recent years the UK has accounted for between 22% and 30% of total EU28 rice imports. There are two dimensions to the rice sector consequences of BREXIT. Firstly, the potential loss of duty free-quota free access to the UK market. The worst affected ACP rice exporter in this regard is Guyana. Since 2010 up to 29% of Guyana’s rice exports to the EU have gone to the UK market (in 2014). Indeed, between 2010 and 2015 Guyanese rice exports to the UK increased 130%, while exports to the EU28 market increased only 32%. It was only when the volume of Guyanese rice exports to the EU grew dramatically in 2015 (+140%) that the % share of the UK market in total Guyanese exports to the EU dropped significantly (down to 11.6%). Guyana rice exports (1006) to the EU and UK market 2010-2015
Source: EC market access data base (EU member state – EU28/UK; Product Code – 1006; partner country – Guyana) It appears as if the UK has provided a stable market for Guyanese rice exports since 2010, but with EU27 markets becoming more important when overall Guyanese rice export volumes to the EU increased. If continued duty free-quota free access for Guyanese rice to the UK market cannot be secured from day 1 of BREXIT, then Guyanese rice exporters will need to rely exclusively on EU27 markets in their trade with the EU. This leads to the second dimension of the BREXIT effect, namely, that existing EU TRQ arrangements for non-LDC suppliers of rice will continue to apply, but only to the territory of the EU27. This needs to be seen in the context of the de facto shrinking of EU rice import demand, as a result of the departure of the UK from the EU. Significantly UK rice imports in 2015 were more than double the projected increase in EU28 rice consumption between 2016 and 2026 (452,287 compared to 200,000 tonnes). Depending on the trade regime established by the UK authorities for LDCs from day 1 of BREXIT, this could greatly increase competition on EU27 markets for ACP rice exporters such as Guyana. EU and UK rice imports (1006) 2010-2015
Source: EC market access data base (EU member state – EU28/UK; Product Code – 1006; partner country – ALL) |
| Key words: Rice, EBA, LDCs, Guyana Suriname Area for Posting: Cereals, Caribbean EPA, BREXIT |