Rice, Rice, Baby!
The U.S. Department of Agriculture (USDA) announced a landmark trade agreement with China—a major victory for U.S. farmers and for the Trump administration.
The deal “allow[s] the United States to begin exporting rice to China for the first time ever.” America already exports half of the rice it produces, but prior trade barriers have kept U.S. rice farmers from reaching their full export potential.
Having access to the Chinese market is a huge opportunity for U.S. farmers, as China is, by far, the world’s largest consumer of rice. According to USA Rice, “China consumes the equivalent of the entire U.S. rice crop about every two weeks.”
This deal is especially valuable considering Americans don’t eat very much rice, and are showing no signs of increasing rice consumption.
The futures market has shown the deal is already helping American farmers. Chicago Mercantile Exchange rice futures have steadily increased since the announcement of the deal on July 20, and rice has climbed to its highest value since 2015, suggesting investors are confident global demand for American rice will grow decreasing the financial risk for domestic rice farmers.
Removing agricultural trade barriers has a proven history of success. According to the USDA, American farmers raked in $100 million during the first season they could export apples to China. The popularity of rice in China suggests opening the rice trade will be even more fruitful for the U.S.
States are already taking notice of this deal’s potential benefit. Arkansas Governor Asa Hutchinson, whose state produces more rice than all other states combined, trumpeted the deal as one which will “boost our economy and create more jobs for Arkansans.” After widespread crop damage from flooding this spring, Arkansas is looking forward to a lucrative 2018. Capitalizing on the Chinese rice appetite can make that possible.
The United States should continue to find ways to open international commodity markets. Freer international markets prove profitable for U.S. states and businesses, and breaking barriers to agricultural trade is among the best ways the federal government can help American farmers.