Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 25, 1994 TAG: 9501170014
SECTION: BUSINESS PAGE: F5 EDITION: METRO
SOURCE: PETER M. TIRSCHWELL JOURNAL OF COMMERCE
DATELINE: SAN FRANCISCO LENGTH: Long
And Japan is not expected to resume large-scale imports until new world trade rules go into effect sometime next year.
Moreover, even if the new trade rules under the General Agreement on Tariffs and Trade do take effect before the current rice season is over next summer, Japan probably will buy only what it agreed to under GATT, and no more because its farmers overplanted to make up for last year's disastrous harvest. GATT is the international body that governs trade throughout much of the world.
``Any rice purchases the Japanese will be making will be from the perspective of an obligatory commitment as opposed to needing the rice,'' said Ralph S. Newman Jr., chief executive of the 1,350-grower Farmers' Rice Cooperative.
``And frankly, we don't know how they will play that hand,'' said Newman, who like many U.S. officials and rice growers is concerned that the proven high quality of U.S. rice will be hidden from Japanese consumers through what critics say is a protectionist distribution system.
``The GATT agreement was for access at the border. We continue to hope that we will see U.S. rice in high quality form on the (Japanese kitchen) table,'' said Cindy Tough, vice president for international policy at the USA Rice Federation.
Under the GATT agriculture accords struck early this year, Japan agreed to import 4 percent of its roughly 10 million ton a year rice needs in 1995, and to increase its imports to 8 percent by 2000. But with Europe yet to ratify the accord, the date it will take effect, and thus trigger Japan's obligations to import rice, is still uncertain.
U.S. rice growers this year experienced the awesome buying power of an affluent nation in need. With the 1993 harvest of its cherished crop off 25 percent, Japan had no choice but to turn to foreign suppliers late in the year.
From November 1993 through July of this year, U.S. growers - almost exclusively from California - shipped 509,000 tons of rice to Japan valued at about $250 million, instantaneously making Japan the United States' largest customer.
But since August, U.S. shipments to Japan have slowed to the insignificant levels that existed before Japan's shortage. After shipping between 47,000 and 103,000 tons per month from January through July, U.S. producers shipped just 111 tons in August, 148 tons in September and 198 tons in October, according to PIERS, the Port Import/Export Reporting Service of The Journal of Commerce.
And earlier this week, Japan reported that its farmers will harvest 11.98 million tons of rice this year, compared with 7.83 million tons last year. With the 1994 bumper crop, the government will try to sell 950,000 tons of leftover foreign rice to processors; if that doesn't work a government official said it may be used as livestock feed.
The most optimistic estimates call for 200,000 tons of U.S. rice to be shipped to Japan next year, but the amount could be significantly less if Japan's import requirements are reduced for the months in 1995 that the accord is not in effect. Still, that kind of volume is far more than the 1,046 tons shipped in 1992 or the 31,141 tons shipped in 1993, PIERS' statistics show.
Japan reportedly said over the summer that under GATT it will limit its foreign rice purchases to Australia, China and the United States. While that is a hopeful sign for U.S. rice growers, they still emphasize that convincing the Japanese government to buy U.S. rice, and establishing its credibility in the minds of Japanese consumers who have been told for years that foreign rice is inferior, are two completely different matters.
Under the emergency government-controlled distribution system that was in place last year, a portion of the imported U.S. rice was blended with foreign rice ``to reduce its apparent quality,'' Newman said. When the U.S. rice - a medium-grade Japonica variety that is similar to Japanese varieties - was sold for what it was, in unblended form, ``it was off the shelves in 30 minutes,'' he said.
It is not known how much U.S. rice was blended, but an official with the U.S. Department of Agriculture said that most of what was shipped was sold as U.S. rice.
``It sold very well, and from a comparative taste standpoint, there was a favorable reaction to the California Calrose,'' the Japonica variety that accounted for more than 90 percent of what U.S. growers shipped, said Bill Ludwig, president of the 250-farmer Rice Growers Association of California, a 75-year-old cooperative.
U.S. concern about the Japanese distribution system could subside, however, for two reasons.
First, the government this summer proposed major changes that would allow the system to function more like a free market. Second, U.S. growers are aggressively seeking markets for profitable value-added rice products that mix rice with freeze-dried vegetables and meat.
``If we wanted to send in container loads of precooked rice blended with fish or other protein, they will encourage that,'' said Ludwig, who is leading his cooperative's efforts to establish markets for such products. ``Over time, there will be more and more of the value added shipped to Japan, and less and less in bulk.''
by CNB