In Effort to Curb Inflation, Mexico Removes Duty on U.S. Rice Competitors

Shopping cart in grocery aisle
Trying to keep the lid on food prices
May 25, 2022
MEXICO CITY, MEXICO – Last week, Mexican President López Obrador announced a series of measures to help soften the impact of inflation on Mexico’s economy, including a one-year suspension of import tariffs for 66 tariff lines, including paddy rice, among other basic food and household products.

The tariff suspension was first announced as part of the government’s Program to Combat Food Price Inflation and Scarcity (PACIC), which also includes steps to support increased local production.  Additionally, the government has announced plans to maintain “fair prices” for the basic food basket through a voluntary agreement with the private sector to refrain from price gouging and to offer goods, such as rice, at fair prices for consumers.

“What this essentially means is that the U.S. will see some increased competition for paddy sales to Mexico, primarily out of markets in South America where there are already phytosanitary protocols for rough rice,” said Sarah Moran, USA Rice vice president of international.  “As the crop in South America has just come out of the fields, it’s a key marketing period for those exporters anyway.  Uruguayan rice, another regular U.S. competitor, already had duty-free access to the Mexican market, so we shouldn’t see any substantial changes there.”

Mexico is not alone in taking regulatory measures to help combat inflation and rising food costs.  El Salvador announced a one-year suspension of duties on rice from all origins in March (see USA Rice Daily, March 14, 2022) and Costa Rica has recently proposed to abolish its minimum prices and adjust the maximum milled rice prices to lower prices for consumers.  Brazil has also reduced their tariffs by an additional 10 percent (after making a similar cut in November 2021) through the end of 2023, bringing the tariff for milled rice down to 9.6 percent and rough rice down to 8 percent.

“While we’d like to continue to have the advantage of preferential access to the Mexican market, U.S. paddy rice exporters will continue to have logistical advantages to supply Mexico’s needs,” Moran said.  “We are also thankful that with the help of the Mexican Rice Council, the temporary provision does not extend to milled rice imports.”

The move comes after months of staggering inflation levels, now exceeding 7.5 percent, which have taken a toll on food prices throughout the country.