China opens domestic rice market to more importers to satisfy growing demand

By Huang Ge Source:Global Times Published: 2016-2-17 19:53:01

China, the world's largest rice producer and importer, plans to start importing rice from South Korea and the US in early 2016. The grain has long been a staple of Chinese diets, and the country's gigantic market offers a great opportunity to foreign exporters. Experts attributed the large amount of imports to the low cost and high quality of imported rice. They advised that China needs to make its agricultural production more advanced if it wants its rice industry to become more competitive.

Two bags of rice marked with Thailand as the country of origin lay on display at a shopping mall in Yichang, Central China's Hubei Province. Photo: CFP

A salesman at a supermarket in Chaoyang district in Beijing spent part of Monday sorting more than 100 packages of imported rice at the sales counter.

"Rice imported from Southeast Asian countries has been selling quite well. I have sold almost 20 packages of them today," said the salesman, who declined to be identified.

"Imported rice is growing in popularity among Chinese consumers," he told the Global Times on Monday.

To meet the country's demand for rice, China will allow rice to be imported from South Korea and the US in early 2016, according to media reports.

The country is the world's largest producer and was once one of the world's major exporters of the grain.

However, when the country began to import rice from some Southeast Asian countries in 2011, its rice imports exceeded exports for the first time.

China's imports have grown ever since, rising from 569,000 tons in 2011 to 3.35 million tons in 2015, according to a report released by industry news portal on Sunday.

Vietnam, Thailand, Myanmar, Pakistan and Cambodia are the countries that have supplied China with the most rice over the last three years.

As Southeast Asian rice has gradually taken a greater share in China, why would rice produced by South Korea and the US enter the Chinese market?

Massive market

Rice, wheat and corn are the three staples of the Chinese diet. Rice output was larger than the other two before 2012, though it fell to the second place once potato output was included in 2015, according to the report.

Citing data from the US Department of Agriculture, the report noted that global rice consumption for 2015-16 hit a record 483.7 million tons, with China accounting for more than 90 percent of the growth in global rice consumption.

China consumes about 100 million tons of rice each year, said Li Guoxiang, a research fellow at the Rural Development Institute of the Chinese Academy of Social Sciences (CASS).

"China imports rice from other countries mainly because imported rice costs less than domestic rice," Li told the Global Times on Monday.

There is also demand for different types of rice that are produced in China, he said. For instance, some types of rice produced in South Korea differ from those produced by China.

However, he noted that only a small amount of rice produced in South Korea gets exported to China because the prices aren't very competitive.

As for the US, it's not a major rice producer. Li expressed some concerns about whether rice grown in the US could satisfy Chinese tastes, though it is priced competitively.

China is a large and diverse rice market. It consumes rice from all over the world, so the countries that have access to the Chinese market can seize the initiative for marketing, experts noted.

Growing price gap

Thanks to rising personal incomes and numerous choices in the marketplace, Chinese consumers are just as likely to buy imported food as food produced domestically.

"I prefer to buy rice imported from Thailand because it tastes good and the quality is guaranteed," Cai Jie, a consumer from Southwest China's Chongqing, said on Monday.

After China joined the World Trade Organization, food, especially imported grain, began to enter the Chinese market, according to the report.

The change offered foreign grain dealers a great business opportunity.

The gap between the price of domestic and foreign rice reached 745 yuan ($114.48) per ton.

Because China imported 3.35 million tons of rice in 2015, the total price gap amounted to 2.53 billion yuan during the period, according to the report, which cited data from the State Administration of Grain.

The low price of imported rice from some Southeast Asian countries did have an effect on the domestic rice market, said Li, the research fellow. The situation is something that authorities need to pay close attention to.

As for foreign companies that run a good rice business in China, Li suggested that domestic firms should be open to learn from them, such as how to plant, process and market products.

Struggling to compete

Although China is the largest rice producer in the world, it is not a high-quality rice producer, media reports said.

"For high-quality rice, my family and friends are likely to choose Jasmine rice [a long-grain variety of fragrant rice], from Thailand and Cambodia first,"  Cai, the consumer from Chongqing, told the Global Times.

"Jasmine rice is moist and soft in texture when cooked, with a slightly sweet flavor. We cannot find such a good type in the domestic rice market," Cai noted.

Although ordinary rice produced in countries like Thailand, Vietnam and Myanmar may not taste as good as Chinese rice, its price is much lower, according to media reports.

For instance, rice produced in Vietnam costs almost 50 percent less than  rice produced in China, the domestic news portal reported on January 20.

"China's rice market is less competitive than foreign rice markets. The basic reason lies in the country's poor agricultural production system," said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant.

In China, a lot of rice production is small-scale, Ma told the Global Times on Monday. Production costs are high and quality control is often difficult to ensure.

Li, the research fellow from CASS, said that the domestic rice industry is enduring a hard time due to overcapacity and poor technology in the rice growing industry. The key to improving the domestic rice industry's competitiveness is to make agricultural production more advanced and encourage more specialized farming, Ma said.
Newspaper headline: Grain expectations

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