Lower U.S. Tariffs Have Ripple Effect as Turkey Reciprocates

ISTANBUL, TURKEY -- As a response to the U.S. lowering import duties last week on Turkish steel and aluminum from 50 to 25 percent, the Government of Turkey published an official announcement yesterday reducing the retaliatory tariff on U.S. rice from 50 percent to 25 percent, effective immediately.  This brings the current effective applied rates on U.S. rice exports to Turkey to 70 percent for U.S. milled rice, 61 percent for U.S. brown rice, and 59 percent for U.S. paddy rice.

“Rice imports in Turkey already face tariffs of 45 percent for milled, 36 percent for brown, and 34 percent for paddy.  The additional 50 percent retaliatory tariff on U.S. rice has been in place since August 2018, and has seriously affected U.S. rice sales to the country,” said Sarah Moran, USA Rice vice president international.  “Import volumes were down from 58,000 MT in 2017 to just over 1,000 MT in 2018, and totaled just 600 MT in the first quarter of 2019.”

Turkey used to be a major buyer for U.S. medium grain with sales volumes of more than 240,000 MT in 2014.   

Currently, the Turkish rice market is heavily affected by a difficult economic environment, the deteriorating purchasing power of local consumers, and the weak Turkish lira that drives up the price of imported products.
 
Importing of rice and other grains is currently dominated by the Turkish Grain Board (TMO) that received authorization from the Turkish government to import rice of any origin with zero import duty in August 2018 (as opposed to commercial imports that are subject to duty).  The TMO has held three tenders over the past nine months, the most recent one in mid-April, mostly buying rice of European, Russian, and South American origin, and none from the United States.  Private importers, who had dominated the market prior to last August, have recently been sourcing from China, Greece, Italy, and others.  

The TMO is importing and packaging the rice in their own product packs and selling these at low prices at local retailers and through their own distribution system to ensure sufficient supply of rice in the country for food security.

“In-country political tensions continue to affect the local economy and consequently the rice market, but this reduction in tariffs on U.S. rice is a step in the right direction,” said Moran.

USA Rice continues to work together with local trade and monitors market developments, as well as supports sales of available U.S. rice on the market with promotional activities.