U.S. Department of Agriculture Secretary Sonny Perdue made the announcement Thursday, one month after securing an agreement to allow beef imports from the U.S. into China after more than a decade.
In 2016, China imported about 5.0 million tons of rice and is the world’s biggest consumer, importer, and producer of rice. China consumes the equivalent of the entire annual U.S. production of rice every two weeks, reports USA Rice, the organization representing U.S. rice farmers.
The phytosanitary protocol was a key document in securing the trade agreement. The protocol outlines an operational work plan that spells out the responsibilities and sanitary requirements needed to be met by businesses wanting to ship rice to China. China has strict requirements for mills wanting the certification that ensure no pests or diseases will be brought into the country.
“We know China wants to send a team here to inspect mills and facilities certified to ship to China, and we are working with USDA to make that happen in the quickest and most efficient way,” said Carl Brothers, chairman of the USA Rice International Trade Policy Committee, reports the BBC.
It is surprising that the agreement was even signed, coming after trade talks between the Trump administration and China broke down on Wednesday this week. However, as Bloomberg points out, if the two countries are ever going to make a meaningful dent in the U.S.’s $347 billion trade deficit with China, it;s going to take more than the beef and rice agreements.
It could be said that any trade agreement with China will have far-reaching financial and economic effects in the U.S. Trading in rice was little changed right after the announcement but quickly jumped 1.6 percent in trading by the end of the day on Thursday, with September futures up 1.5 percent at $12.04 per 100 pounds by the middle of the day.
Another thing to watch is the import status of the three countries the U.S. will be competing with in the future, Pakistan, Vietnam, and Thailand. Not only are they the world’s biggest suppliers to China, but they are among the world’s biggest producers of rice. The U.S. comes in fifth place.
“This market represents an exceptional opportunity today, with enormous potential for growth in the future,” said US Agriculture Secretary Sonny Perdue.
