Latin America – strong market for U.S. rice
Jan 12, 2010 11:09 AM, By Elton Robinson, Farm Press Editorial Staff
The best opportunity for U.S. rice sales in Latin America could very well come from the country that is already the U.S. rice industry’s biggest export customer – Mexico, according to a panel of U.S. and Latin American experts speaking at the USA Rice Outlook Conference in New Orleans.
Mexico imports more rice, 594,000 metric tons, than any other country in the Latin American market, which consists of 14 countries south of the Rio Grande River. Todd Burich, with ADM Rice, Inc., says the United States has a significant opportunity to build the market because Mexico’s per capita consumption of rice has so much room to grow.
German Rosales Wybo, president, Productos Verde Valle, Mexico, added that Mexico “doesn’t have the right type of land or weather for rice production. We would rather grow another type of crop and export it to you.”
Wybo says that Mexican citizens may not be completely aware of how much U.S. rice they currently consume. In a recent survey, 92 percent of Mexican consumers “do not know that 70 percent of the rice they consume comes from the United States. Ninety-nine percent of Mexican consumers have heard about GMO rice on the Internet, even though much of the information they receive is inaccurate.”
Wybo says that generally, U.S. rice has a good reputation in Mexico. “We encourage you to keep promoting U.S. rice and improving its reputation.”
The survey showed that Mexicans placed the highest value on the appearance of rice, specifically regarding whole rice, followed by low price and favorite brand. However, the brand of rice that Wybo markets, Verde Valle, is both the best-selling rice in the country as well as the highest-priced rice.
Burich noted that most Latin American countries grow their own rice, and most trade that occurs through trade agreements or import permits. Most trade is now privatized, but there has been a consolidation of the destination rice industry in that not many new firms are getting involved in trade.
Burich said there is a demand for high quality rice, as well as a demand for risk management, credit and inventory control in Latin America.
Much of these characteristics play into opportunities for U.S. rice, Burich says. Strengths of U.S. rice include its high quality, which is similar to what is produced locally. “U.S. rice cooks up big, which is one reason why Haiti is such a good market.”
The U.S. rice market is also flexible – all types of rice are available for export, and the proximity of the market is also an advantage.
Other advantages for U.S. rice include the U.S. rice industry’s strong infrastructure which can often deliver rice within 12 days after purchase. “We have well-established banking networks for credit programs and negotiated trade agreements are already in place.”
Weaknesses include “antiquated trade restrictions still in place with Cuba,” Burich said. “And the increased volatility in the U.S. rice markets is having some negative influence on buyers.”
Opportunities for U.S. rice include increasing per capita consumption in both Mexico and Guatemala, a potential new market in Cuba, and opportunities in Central America.
On the other hand, several countries are developing rice infrastructure which could compete with the United States. This is taking place in Guyana and Suriname.
Other threats include the rise of anti-American sentiment in some Latin American countries, and non-tariff barriers to trade, such as GMOs, and phytosanitary and mycotoxin issues.
But the potential is great, according to Burich. “Half a billion people live there, making it an important market for U.S. rice.”
According to Nestor Gutierrez Aleman, National Federation of Rice Producers, Colombia, “Trade comes after you build confidence and develop relationships between the trading partners.”
Aleman noted that while rice exports are growing in Latin America, imports are growing faster. “This is an opportunity.”
Wybo noted that the financial crisis has had a significant negative impact on Mexican consumers, “but rice consumption is growing by 10 percent annually over the last three years, even though we are still a corn country.”
email: erobinson@farmpress.com
