China sales could be game changer for rice farmers
ALICIA, Ark. (AP) - October 5, 2011 (WPVI) -- Three Chinese inspectors took notes but offered no visible reaction as David Smith answered their questions about pesticides and production on the 3,000-acre rice farm he calls his "beautiful garden."
Smith is among the American farmers hoping to eventually sell rice to China. The fast-growing Asian nation is the world's largest producer of rice, but it consumes nearly everything it grows and already imports some rice from Thailand and Vietnam to feed its 1.3 billion people.
After years of effort, U.S. farmers believe they are close to getting permission to sell there as well, and it could be a game changer for an industry that has seen prices stagnate recently. If China opens its markets to U.S. rice, it could cause a spike in demand that drives up prices and encourages farmers to grow more, industry observers said.
The prospect is particularly exciting to Arkansas farmers, who have been hard hit this year by spring flooding and a summer drought. Arkansas' rice crop is expected to be off by at least 20 percent this year. It typically accounts for about half of the U.S. rice harvest.
The U.S. is already the world's fourth-largest rice exporter, shipping to more than 100 countries. But China has resisted opening its markets, saying its inspection agencies have not certified that U.S. rice is safe from disease, bugs and other pests. To help move things along, the U.S. Rice Producers Association invited Chinese inspectors to tour farms in Arkansas, California and Louisiana. A federal program to develop emerging markets paid for part of the trip.
The three inspectors at Smith's farm in northeast Arkansas received a tour of rice fields ready for harvest. With storm clouds gathering overhead, Smith explained how the combines his workers drive through the fields can measure the moisture and yield of the rice at any given moment. The yield is the amount produced per acre.
"We try to do absolutely everything by the book," Smith said. Zhan Kairui, one of the inspectors, said U.S. farms appeared to be much larger and technologically advanced than Chinese farms. He did not say whether he had safety concerns about American rice.
Zhan offered short, clipped answers to questioned posed through an interpreter. Regarding whether China will eventually open its borders to U.S. rice, he smiled and said only, "It's possible."
China has long had a policy of self-sufficiency in grains, stockpiling crops such as corn, wheat and rice to cope with shortages and avoid having to rely on other countries for essentials.
But as more migrants move to cities and incomes rise, China's demand for staples has often outstripped its domestic production. It has had to import "significant quantities" of corn in some years and has grown into the largest importer of soybeans in the world, according to the U.S. Department of Agriculture. That's contributed to a spike in demand that's driven up prices for both of those items.
With the decision to import U.S. rice fraught with economic and cultural consequences, Zhan wouldn't say when the Chinese inspection agencies might make a decision. "It's not easy for me to give a prediction," he said.
The great hope is that as China's middle class becomes wealthier, its members will want to buy high-quality rice from the U.S. even if it's more expensive.
"You think of rice as just rice, but I'm always surprised by how sophisticated rice palates are," said Andy Hewes, partner in a Texas rice marketing firm and publisher of The Rice Market Letter. "Sometimes even the slightest variations can put people off."
Greg Yielding, an official with the U.S. Rice Producers Association, has conducted taste tests where he had shoppers try different varieties of American rice - the short- and medium-grain grown in California and the medium- and long-grain rice grown in Arkansas and elsewhere in the South.
"They liked everything," Yielding said.
He's also invited two Chinese rice buyers in November to visit farms in the same three states.
But Milo Hamilton, publisher of Firstgrain.com, a rice industry news service, said breaking into China could be "very tricky."
"You have to be very careful with the protocol," he said. "You've got to get it down right, and you've got to have the demand and you have to have the people to accept it."
At a Walmart in Beijing, Yu Xiaoli, a 30-year-old housewife shopping for her monthly supply of rice, chose Chinese rice to the Thai alternative. She said she doesn't choose based on price but prefers Chinese rice for its flavor and texture.
Asked if she might be interested in trying American rice, Yu looked surprised.
"I've never tried it," Yu said. "I haven't even heard anything about it."
china, united states, economy, national/world
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