U.S. Rice Exports May Gain Edge as Australian Drought Reduces Production

Colorful State Map of Australia
Weather woes in Australia rice country
Feb 03, 2020
CANBERRA, AUSTRALIA – Last week, USDA Foreign Agricultural Service (FAS) published a report projecting the lowest domestic rice production in decades, as the country enters its third consecutive year of drought conditions.  Australian rice production has grown in recent years, concentrated primarily in the states of New South Wales and Victoria, and targeting medium and short grain varieties bound for Asian export markets.

In a normal year, Australian rice competes with U.S.-grown temperate japonica in markets like Japan, Singapore, South Korea, Taiwan, and others because of some logistical advantages and similar varieties.  The recently implemented Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the successor of the Trans Pacific Partnership Agreement, without the U.S.) provides Australia a quota for access into Japan, further complicating that market for U.S. exports.

Australia’s 2020 production is projected to be nearly one-tenth of its 10-year average, primarily due to increased water prices, estimated to be 19-times higher in January 2020 than in January 2017.  With lower production comes lower exports, projected to be 20,000 tons, down from 262,000 tons just two years ago.

“Australia’s rice consumption is expected to fall as a result of the small crop, and nearly all of consumption will need to be met with imports,” said the report.  “Because of the dearth of domestic rice, mills have had to lay off staff in Australia and sharply reduce milling operations.”

USA Rice Director of Asia Promotion Programs Jim Guinn said, “As the U.S. rice industry has had its share of weather challenges over the years, we know just how debilitating it can be to domestic and export markets as well as operational infrastructure.  That said, after two years of seriously reduced exports by Australia, the U.S. may earn back some market share in those countries where we’re both doing business.”

Sign-Up for the Daily