Colombia rice imports are forecast to rebound sharply in 2022 but fall short of levels from prior years on a smaller crop and rising domestic prices.
The 2021/22 crop is estimated to be 1.9 million tons, down 100,000 from the 2020/21 crop. Rice is a staple food in Colombia, but production does not typically meet domestic demand. The smaller crop plus limited imports in the previous year have tightened supplies and caused prices to rise after trending down last year. In February 2022, Colombian retail rice prices rose to $780/ton, up $50/ton from the prior month.
Although U.S. export prices are competitive, trade is limited by a high import tariff. Under the United States-Colombia Trade Promotion Agreement, the import tariff is scheduled to decline annually and is set at 49.2 percent in 2022, compared to the Most Favored Nation tariff of 80 percent.
In addition, U.S. exporters can bid on a specific amount of the duty-free tariff-rate quota at auctions 3 times per year. With Colombia’s large crop in 2020/21 and declining domestic prices, the U.S. tariff-rate quota was not filled for the first time since implementation of the trade agreement in 2011.
In a sharp reversal, the first quota auction this year, held for 85,913 tons of U.S. rice, was fully awarded. Two other smaller quota auctions will take place in June and October.
For the first time in over 10 years, the United States was not the major supplier to Colombia in 2021. Last year, Ecuador was the top supplier with 18,000 tons compared to 10,000 tons supplied by the United States. In 2022, with the successful auction results, the United States is expected to become the largest supplier once again.
U.S. Medium-Grain Rice Prices Soar to Record Levels
U.S. medium-grain export quotes have surged to a record $1,350/metric ton, up more than 40 percent from last year. In contrast, quotes for long-grain rice, which is primarily grown in the Mississippi Delta region, have remained relatively steady over the past year.
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The increase in price for medium-grain is due to tight domestic supplies in California where the bulk of U.S. medium-grain rice is produced. The 2021 crop in California was impacted by a severe drought which cut U.S. production by approximately 18 percent, driving up prices. Water availability in California and high costs for other agricultural inputs will remain a challenge to production and exports in 2022/23.
Record-high prices are a key factor driving forecasted exports almost 24 percent lower than the prior market year. According to U.S. Export Sales data, from the beginning of August through February 24, accumulated exports of medium- and short-grain rice were down 31 percent and outstanding sales were more than 26 percent behind last year.
While U.S. exports are steady to East Asia, especially Japan, Korea, and Taiwan, exports are faltering to the Middle East. In 2021, U.S. medium-grain exports to the Middle East were down over one-third from 2020, with the largest reduction in Saudi Arabia.
The United States is a dominant player among medium- and short-grain exporters, which include China, Australia, Turkey, and the European Union. This year, the United States faces increased competition from other major medium-grain exporting countries due to its smaller crop. China has boosted exports to price-sensitive African markets.
In addition, following a larger 2021/22 crop, Australia is expected to expand its exports to the Middle East, as it historically boosts exports when supplies are high.