2021 Bringing Hope and Anticipation to Rice Trade

As January turns to February, the U.S. Rice industry is looking further into the new year with great hope and anticipation.

In January, Iraq’s Ministry of Trade announced a global tender for 30,000 MT of rice. This tender is outside of the US-Iraq Memorandum of Understanding (MOU) and can be filled by any country. Companies have one week to submit bid documents to the Ministry.

“USA Rice has been relentless in pursuit of getting an Iraqi tender since last summer,” said USA Rice Chair Bobby Hanks. “From engaging with the State Department both in Washington, DC and Baghdad, to inviting the Ministry of Trade to a seminar in Dubai last February, to involving Congress on this issue, USA Rice is making sure there are strong export markets for our long grain crop.”

Iraq last purchased 60,000 MT of rice from the U.S. in a July 2019 tender. Iraq typically purchases more than one million tons of rice per year, with about two-thirds of imports coming from India. South America has supplied the market in recent years, though the tight crop prevented exports from there in 2020.

“While the U.S. was hopeful for a tender sooner than 2021, the drop in global oil prices and the COVID-19 pandemic placed unprecedented strains on the Iraqi economy,” said Hanks. “Last summer, the Export Import Bank of the United States authorized $450 million of insurance coverage on letters of credit for rice purchases but this can only be utilized when purchasing U.S. rice.”

In addition to the increase in international tenders, rice producers are finding renewed hope that the Biden Administration will resume reopening the Cuban export market.

“Cuban per capita rice consumption is more than seven times that of Americans and with the capacity to grow less than half of the island’s needs, the country imports roughly 500,000 MT of rice per year,” said Asiha Grigsby, USA Rice director of international promotion in the Western Hemisphere. “For a brief period in the early 2000s, the U.S. was permitted to sell and ship to
Cuba and consumers there were excited to have access again to our high-quality rice.” In 2004, at the peak of the commercial relationship, 176,000 MT of long grain rice was purchased, making Cuba the sixth largest export destination that year.

“During challenging years, like 2020, with tough economic conditions and a sufficient long grain supply, the U.S. could have greatly benefited from an export market just 100 miles from our shores, and potentially outperform some of our export competitors like Vietnam and Brazil,” said Grigsby.

In support of a renewed relationship with Cuba, USA Rice joined with more than 20 other national agriculture trade associations in signing a letter from the U.S. Agriculture Coalition for Cuba (USACC) encouraging the new administration to resume efforts to normalize relations with Cuba. The group urged restoration of regulations to those in place on January 20, 2017, suspension of Title III of the Helms-Burton Act, and resumption of full operation of the U.S. Embassy in Havana.

Despite support from many in the agriculture community, there remain significant challenges to overcome before a gainful relationship with Cuba can resume. While the Biden Administration has indicated it intends to engage with Cuba, the extent to which they are willing and able to do so remains unknown. Many simultaneous problems, including the COVID-19 pandemic and its ensuing economic crisis, will likely take priority.

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