The United States and China have been able to finalize the deal on allowing US rice to enter the Chinese market. This is great news for American farmers as they would be able to sell their rice to the world’s biggest consumer of rice. China consumed about 5 million tons of rice from the previous year. This deal signals the continuous improvement of US-China trade relations.
China was reluctant on signing the trade agreement as they want a couple of stipulations included in the deal. One of their main concerns is an inclusion of strict protocols on passing imported rice as of top quality. China had previous experience on receiving bad quality rice from importation due to the lack of regulations on inspecting rice. This led to China closing its door from receiving imported rice.
Phytosanitary Protocol for Rice Imports
The US Department of Agriculture (USDA) was able to make Chinese officials agree to the deal through allowing the Chinese wishes of drafting a document detailing on protocols US rice importers need to follow. The agreement includes Chinese inspectors coming into the United States to check out different farmers and millers across the country.
According to the chairman of USA Rice International Trade Policy Committee Carl Brothers; USDA us trying to fast track the said inspection in order to immediately open up transactions between US and China. China will try to certify every US rice businesses that would enter into their market. They will inspect everything from the farm up to the plant operations of rice producers.
USA Rice vows to work with USDA in making their members comply with the regulations agreed upon by China and US.
Significant help for US rice farmers
US rejoice from this vital agreement as it could be able to boost the agricultural economy of the country. China’s growing rice demand could provide significant benefits in the future. OECD predicts that every Chinese consumer will need about 75 kg of rice by 2024 in comparison to the future average consumption of 13 kg in North America as well as 5 kg of rice in Europe. As of now China is known to consume rice equal to the annual consumption of US for only 13 days.
The announcement of the trade agreement came as a surprise as a couple of experts predicted that it would eventually lead to a fall out. This came after the news of failed negotiations between the current administration and China on July 19. The trade in rice immediately experience positive change after the official announcement of USDA. The trading gained 1.6 percent by the end of the day. Experts are predicting that the trading would experience further growth by September. They predict a 1.5 percent increase per 100 pounds.
Competitors on providing rice supply
US would be competing against Pakistan, Vietnam, and Thailand in supplying rice to China. These three countries are known to be the top supplier of China for rice. They are also known to be the top producer of rice in the world.
Despite the possible gains that the US would be experiencing in the future, it would still be all dependent on their ability to compete against the big three. Although US still has the space to be able to experience the said benefits as China’s demand grows exponentially. A lack of supply could cause a sharp increase on the price of rice affecting the provinces such as Nanjing (known for where the Nanjing massacre took place) whose staple food is rice.
US-China Trade Deficit
The rice agreement between US and China is just one of the measures taken in order to reduce US’s $347 billion trade deficit. Recently the two have signed an agreement allowing beef imports to come in to China. Chinese businessmen also signed a deal of $5 billion to purchase 12.53 million tons of US soybeans. US-China trade relations continue to improve through the ability of US to provide agricultural supplies for the Chinese.