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Despite declining global paddy production since 1999, weak import demand and abundant supplies in some major exporting countries have kept international rice prices below their long-term declining trend in 2000, 2001 and 2002. That depressed market environment influenced national rice policies, as many governments remain committed to stabilizing paddy and rice domestic prices.

Production Policies

Rice is a critical crop for food security and a mainstay for the rural population in many countries. Because only a relatively small volume of rice production is traded internationally[1], high levels of self-sufficiency are generally pursued as the preferred strategy to secure adequate supplies, especially in those countries relying on rice as the main staple. Governments have accordingly supported the sector, through research in new varieties and the provision of irrigation, subsidized credit, basic inputs and extension. In addition, as rice is one of the few commodities still widely subject to market stabilization measures, such as state procurement and minimum producer prices, governments intervened actively in 2001 and 2002 to prevent farm prices from deteriorating further, thereby limiting the transmission of depressed international prices on to domestic markets.

Table I-1: Paddy support prices in selected countries



Local currency per tonne

US$ per tonne

Nominal Prices

Real Prices
(deflated by CPI 1995/96=100

Nominal Prices













Semi-late crop











Late crop


































grade A



































5% broken













































Costa Rica

'000 Colón











'000 Rupiah










Iran, Rep. Of

'000 Rial










Korea, Rep. Of

'000 Won
































Sri Lanka












Million Lira
























'000 Yen










United States











p provisional ... not available
1/ Guaranteed price for medium grain paddy rice.
2/ Paddy long grain rice, South, Southeast, Northeast and Centre West Regions
3/ For variety Nemata and Neda
4/ Including a production subsidy of RM 250 per tonne of paddy delivered to a licensed mill or drying facility.
5/ Husked rice basis
6/ Marketing Assistance Loan Rate

Developing Countries

In Asia, Bangladesh has, in the past two years, increased the participation of the private sector in rice production, especially in irrigation and in the production, import and marketing of rice seeds, including hybrids. Regulations to diminish the negative impacts of fertilizer applications on the environment were also passed. For rainfed rice production the Government promoted supplementary irrigation in drought-prone areas and the development of high-yielding varieties suitable to rainfed conditions. Producer support prices were raised slightly in 2000/01 (Table I-1) and the level of procurement purchases by the Government rose markedly in the past three years.

Table I-2 Bangladesh Government Rice Procurement (000 tonnes, milled equivalent)















Under the Second Socio-Economic Development Plan (SEDP-II) for the 2001-2005 period, Cambodia[2] increased budgetary allocations to agriculture by 17 percent in 2002 and concentrated on the development of the rural and irrigation infrastructure, with the assistance of external donors. These measures will mainly have a bearing on rice, as the crop accounts for some 90 percent of cultivated area. The Government plans to extend by some 200 000 hectares the irrigated rice area.

In the face of the large surplus stocks that were accumulated in previous bumper crop years, China started reducing its support to the sector in 1999. In 2000, "protective purchase" prices, which set the floor for state procurement, were eliminated for early rice and lowered further in 2001 and 2002 for the semi-late and late rice crops. Under the WTO accession agreement in December 2001, China accepted a de minimis exemption for product-specific support of 8.5 percent of the value of that product output (less than the general 10 percent granted to developing countries under the Agreement on Agriculture) and forfeited the right to exclude investment and input subsidies to poor farmers from domestic support reduction commitments. Nonetheless, the country remained committed to a high degree of rice self-sufficiency, with much emphasis placed on the development and promotion of high-yielding hybrids varieties, especially focused on quality production.

Upon accession to WTO, in January 2002, the Taiwan Province of China announced its intention to cut rice plantings by 9 percent in 2002, a measure consistent with the opening of the country to imports and the new restrictions regarding the use of export subsidies. To limit the negative effects of these measures on paddy producers, the budgets associated with the Guaranteed Purchase and the Guidance Purchase Schemes, the two official programmes for procurement at guaranteed prices were increased.

Although India embarked on agricultural reforms in 2001 and 2002, it did not take production-limiting measures to ease the problem of excessive rice stocks. Moreover, support prices for rice were raised again in 2001 and 2002 (Table I-1) and state procurement levels increased from 17.3 million tonnes in 1999/00, to 19.1 million tonnes in 2000/01 and 20.9 million tonnes in 2001/02. Under its 2002/03 budget, however, the Government announced a 5 percent reduction in the fertilizer subsidy, which was reported to have entailed an expenditure of Rs 129 billion (US$ 2.8 billion) in 2000/01.

Under the 1999-2003 National Guidelines, Indonesia adopted an agriculture development strategy revolving around an agribusiness approach. Nonetheless, the country remained committed to raising paddy production through intensification and extensification programmes, the latter focusing on an expansion of cultivation in Kalimantan and Sumatra. Incentives to grow rice were provided through an 8 percent increase in support prices in 2001, (Table I-1), partly to compensate for the higher production costs associated with a withdrawal of input subsidies, in particular fertilizers, as of mid 2001. Support prices were left unchanged in 2002, but a 14 percent increase was announced for 2003.

Under the 2001-2005 Development Plan, the Islamic Republic of Iran decided to cut State intervention in agriculture while encouraging the private sector to play a greater role in the distribution of fertilizers and pesticides and in the commercialization of the final products. However, recurrent drought in 1999-2001 prompted the Government to heighten its support to the sector. Accordingly, public investments in water management and irrigation infrastructure were substantially stepped up and paddy support prices raised by some 45 percent in 2001 and by 48 percent in 2002 (Table I-1).

In view of the build-up of large rice inventories and the preparation of the new round of trade negotiations, the Government of the Republic of Korea released in April 2002 a "Comprehensive Plan for the Development of the Rice Industry" for the stabilization of rice supply and demand from 2002. The Plan aims to (i) narrow the difference between production and consumption, (ii) improve the efficiency of the sector, (iii) stabilize producer incomes and (iv) diminish intervention by the Government in the sector. The Plan envisaged a cut in the area under rice of 166 000 hectares in 2002, to be increased to 212 000 hectares by 2005. In addition, yields are to be curtailed by requiring that farmers diminish nitrogen applications. Some of proposed strategies were already implemented in 2001, when the Government started to promote a diversification out of paddy production. At the same time, however, it raised producer prices by 4 percent in 2001 and left them unchanged in 2002, while procurement was downscaled to keep support to the rice sector and to overall agriculture within the WTO ceilings. As of 2002, state procurement was restricted to high quality rice, following the setting of new standards for government purchasing programmes. Rice producers started to receive direct payments of Won 200 000-250 000 (US$ 150 - 195) per hectare in 2001 and twice that level in 2002.

Malaysia's current rice strategies sprang from the Third National Agricultural Policy programme, covering 1998-2010, which set the objective to achieve 65 percent self-sufficiency in rice by 2010, down from 70 percent in 2002. With such an aim, the Government has provided direct technical assistance and supported research into varietal improvements using both conventional and bio-technologies. It also implemented a reform of the rice supply chain based on the enlargement of production units, the development of commercially viable rice farms and a programme to enhance the sector's productivity and competitiveness. In particular, the Government has designated eight special zones or "granaries" in Peninsular Malaysia, where paddy production is to be enhanced by raising yields to 5.5 tonnes per hectare and crop intensity to 185 percent by 2010. The country is set to identify suitable areas in Sabah and Sarawak, in East Malaysia, for large-scale commercial paddy production by the private sector. Such moves should coincide with the phasing out of unproductive paddy areas and their conversion to other agricultural activities. In addition, the country has engaged in an ambitious infrastructural investment programme to entice the private sector to play an active role in upstream (input deliveries, mechanization services, etc.) and downstream (milling, storage, packaging etc.) activities. Meanwhile, producers have continued to benefit from subsidies on fertilizers, estimated at US$ 52 per hectare in 2002 and from minimum producer prices. These, however, have been unchanged since 1998 at RM. 550.0 per tonne for long grain paddy and at RM. 516.9 per tonne for medium grain, plus a supplement payment of RM.250 per tonne for paddy delivered to licensed mills or drying facilities (Table I-1).

Myanmar's agricultural development strategy is to boost paddy production to generate surpluses for export by promoting the reclamation of forests and multiple cropping.[3] Producers continued to be subject to a compulsory paddy delivery to the state procurement agency of 12 baskets of paddy per acre (about 620 kg per hectare), at prices well below prevailing market levels. In 2002, farmers were reportedly paid Kyat 380 per basket of paddy (around Kyat 18.2 per kg), compared with market prices of Kyat 1400 per basket.

Nepal's rice marketing is almost entirely privately run. The Nepal Food Corporation now procures only for distribution in the deficit zones in the hilly and mountainous parts of the country and for reserves.

Table I-3: Rice Domestic Procurement by the Nepal Food Corporation

Fiscal Year





31 442

17 912


16 628

1 715


4 771

19 442


10 550

22 789


5 478

2 134


2 776

10 264

Source: Nepal Food Corporation

In Pakistan increased finance was provided for the installation of tube wells and improved quality IRRI seeds were made available to rice producers facing drought in 2001. The Government also allowed duty exempt imports of equipment and machinery for the modernization and development of irrigation and water management. Rice remains subject to the support price mechanism, managed by the Pakistan Agricultural Storage and Services Corporation Limited, although no paddy intervention purchases by this organization have been reported since 1995/96. Nonetheless, paddy support prices, which provide a floor for market transactions, were raised in 2000-01 by 10.8 percent for IRRI rice and by 10.0 percent for Basmati rice, but both were left unchanged in 2001-02 (Table I-1).

Under the Medium-Term 2001-2004 Development Plan, the Philippines allocated Pesos 20 billion (US$ 392 million) to the agriculture sector for irrigation development and rehabilitation, post-harvest facilities, rural infrastructure, agricultural credit, and research and development. In addition, fearing a recurrence of "El Niño" by mid-2002, Pesos 51 million (US$ 1 million) were assigned to emergency operations. In December 2001 the Government announced a plan to raise yields through hybrid rice technology on 135 000 hectares in 2002, progressively rising to 300 000 hectares by 2004.[4] Paddy support prices under the two tiered price mechanism operated by the National Food Authority were left unchanged in 2002 at Pesos 9 000 (US$ 175) per tonne for the wet season paddy and at Pesos 10 000 (US$ 194) per tonne for dry season paddy, with an additional Pesos 500 (US$ 10) per tonne granted to members of farmer cooperatives.

Assistance to agriculture in Sri Lanka has been channelled through government investment in irrigation, subsidized fertilizer distribution and concessionary credits to producers. Minimum producer prices have remained unchanged in nominal terms since 1993 (Table I-1), and intervention has been limited since the demise of the Paddy Marketing Board in 1996. Since then, the Cooperative Wholesale Establishment (CWE) and District Secretaries have been responsible for paddy purchases at guaranteed prices. In 2002, Rs 990 million (US$ 10.6 million) were reportedly provided as a revolving fund for paddy purchases. In addition, farmer production loans granted for the 1999/00 Maha and the 2001 Yala crops below Rs 20 000 were written off to provide relief to farmers affected by drought.

In both 2001 and 2002, Thailand supported paddy producer prices through large-scale market intervention programmes, based on the paddy pledging scheme, operated by the Bank for Agriculture and Agricultural Co-operatives (BAAC), in collaboration with the Public Warehouse Organization (PWO) and the Marketing Organization for Farmers (MOF). In 2001/02, the procurement scheme was extended to the highest-grade fragrant rice and the overall quantities targeted for intervention were substantially increased. Guaranteed prices were kept unchanged between 1999 and 2001, and raised marginally in 2002 (Table I-1). However, as market prices fell below the guaranteed levels, the volume of paddy pledged rose considerably in 2001, reaching 6.1 million tonnes, of which only 973 000 tonnes were redeemed. As a result, 5.1 million tonnes, equivalent to some 2.7 million tonnes of milled rice, were added to government stocks in that year. Also in 2001, the Government announced a new five-year national rice strategy (2002-2006), aimed at lifting producer household incomes, through yield increases of 20 percent over the period. Of the Baht 90 billion (US$ 2 billion) budget, three-quarters of which should be granted in the form of loans, 44 percent are for market price stabilization, 38 percent for the construction of silos and 13 percent for research, development and promotion.

In Turkey rice is a controlled commodity, subject to government minimum purchase prices. Although these have been raised in the past two years, they have stagnated in real terms (Table I.1). Furthermore, the volume purchased by the procurement agency dropped from some 40 000 tonnes in 2000 to 19 000 tonnes in 2001. Government subsidies on credits and fertilizers were abolished in 2001.

In Viet Nam, concern over falling producer prices warranted the introduction of a 1 million tonne procurement scheme in 2001, at a minimum paddy procurement price of VND 1.3 million (US$ 89) per tonne. Low returns also induced the Government to reduce irrigated paddy cultivation in 2001 from 4.3 million to 4.0 million hectares by encouraging producers to shift to more remunerative crops and aquaculture, especially in the Mekong River Delta. This measure contributed to a contraction in overall paddy area from 7.7 million hectares in 2000 to 7.5 million hectares in 2001. In order to overcome some quality problems it faced on export markets, the country also launched in 2001 a plan to develop about 1.3 million hectares for production of high quality rice for export. As prices were still low in 2002, poor farmers were exempted from paying either all or half the agricultural land use tax in 2002, while intervention at guaranteed prices was stepped up. Yet the objective of a medium-term expansion in output, based on large gains in productivity remains. Indeed, under the 2000-2005 Agricultural Development Programme, emphasis was placed on the dissemination of high quality rice varieties, including hybrid seeds, and related technologies. The plan also called for the establishment of closer relationships between producers and agri-business and for improvements in market information.

Many countries in Africa have identified lowlands and inland valleys as potential areas for extension of paddy cultivation. Others have also concentrated on the rehabilitation of irrigation schemes. However, although most governments in the region pursue high rates of rice self-sufficiency to reduce import dependency, there was little specific support to the sector in the past two years. Furthermore, a general drive towards privatization dominated, notwithstanding growing recognition that the private sector in the region had not succeeded in taking over the functions that had been under the general responsibility of state marketing boards.

Benin currently concentrates on the rehabilitation of existing rice lands to enhance the production potential and reduce import dependency, with the goal to raise rice self-sufficiency from the current 30 percent to 54 percent in 2012 and 100 percent by 2017.

The Democratic Republic of the Congo's National Rice Programme hinges on productivity enhancement, area expansion and on improvements in post-harvest activities. The first relied on the seed multiplication programme, supplemented with the distribution of improved seeds to farmers on credit terms. The expansion in cultivation mainly targets the lowlands, where most of the country's potential lies. The country is also focusing on the rehabilitation of drying, milling and storage infrastructure and encouraging local authorities to repair and maintain roads.

In 1997, the Côte d'Ivoire launched a new Rice Development Programme aimed at stimulating production and reducing imports by 80 percent by 2005. The increase in production was planned to stem from a 40 percent expansion of rainfed rice and from a four-fold increase in irrigated paddy cultivation between 1996 and 2005. Yields were also set to rise from 1.50 tonne to 1.94 tonne of paddy per hectare over the period.

Egypt's rice production policy concentrates on the development of short duration, high yielding varieties and on the distribution of seeds and provision of the associated technologies to producers. Irrigation water is provided free of charge. Although usually not enforced, cultivation remains subject to a ceiling of 450 000 - 500 000 hectares, to save water. In the period under review, paddy producers benefited from credits at a preferential rate of 5.5 percent per annum and from a strong increase in guaranteed paddy prices. In 2001/02, these were set at LE 500 (US$ 111) per tonne for medium grain rice and LE 450 (US$ 100) per tonne for long grain, up 47 percent and 50 percent, respectively, from their 2000/01 levels.

Although the Government of Ghana aims to reduce rice imports, the commodity was not included among the 10 priority crops selected for accelerated growth in the country's Agricultural Services, Sector Investment Programme. Currently, the strategy to sustain paddy production relies mainly on improving farmer access to quality seeds and on promoting paddy cultivation in low valley bottoms and under irrigation. Although the private sector was encouraged to provide mechanization services following the withdrawal of government subsidies on mechanization, the response has not met expectations.

In the past few years, Mali has largely focused on the rehabilitation of the irrigated schemes and on the promotion of small milling equipment through the "Office du Niger", which administers about 60 000 hectares under irrigation. In 2001, the Government launched a special programme to boost secondary rice crop production.

In 2001, Mauritania announced a new development strategy to 2015, which enhanced the role of the private sector. Accordingly, in the past two years, the country concentrated in transferring to producers the responsibilities for the management and maintenance of large irrigated schemes previously held by Sonader. Priority was also given to rehabilitating existing irrigated schemes with the Government contributing 50 percent of the costs, if units were operated by cooperatives, and 25 percent in the case of individual farmers. This rehabilitation has been accompanied with the publication, in 2000, of norms for the re-organization of the consolidation of the small plots into larger, more competitive units.

In January 2001, the Niger launched a project for the construction of 100 small dams, the first of which was constructed in Bankor. In 2002, the country also started a programme to promote simple irrigation technologies for implementation by the private sector.

In Nigeria, fertilizer subsidies were removed in February 2000, when the Government completely liberalized procurement, trade and distribution of agricultural inputs. As a result, assistance to paddy producers is now largely limited to the provision of extension services under the "Special Rice Project", which is executed jointly by the Federal and all of the 36 State governments, and of micro-credits at concessional interest rates of below 10 percent. The "Special Rice Project" aims at disseminating improved rice technologies and upgrading rice processing capacity. In 2002, the general stance towards market liberalization of the sector was softened and the Government set up a Presidential Committee on Rice to explore the strategies to make the country self-sufficient by 2005 and a net exporter by 2007.

Under the 2001 Action Plan, Senegal extended the "Quality Rice" programme, which aims at promoting local rice by improving the competitiveness of production through the dissemination of improved technological packages and land plot consolidation.

The policy environment in Latin America and the Caribbean region varies substantially, with a number countries relying almost exclusively on market forces, especially in the southern cone, while elsewhere governments have continued to play an active role to support the sector.

Rice producers in Argentina were affected by the financial crisis that beset the country in 2002. In April, the Government decided that, following the devaluation of the national currency, debts incurred by farmers with the suppliers of basic inputs in US$ equivalent would be converted into national currency at the new free market exchange rate, increasing the debt burden faced by producers.

Paddy producers in Brazil benefit from a number of institutional programmes, including pledging schemes, which enhanced their access to rural credit. These programmes provide a floor price to producers, which was in the range of R$ 7.61 to R$ 8.37 per 60 kg bags (US$ 53.7 - 59.2 per tonne) for long grain paddy rice in 2000/01. It was cut by 5 percent to R$ 7.95 and R$ 7.23 per 60 kg bags in 2001/02 and left unchanged in 2002/03.

Costa Rica raised the guaranteed producer price by 6 percent in 2000 to Colón 85 000 (US$ 275) per tonne, but the rise was marginal in 2001. In November 2002, the Government agreed to use earnings from import duties to support minimum prices at US$ 260 per tonne for producers cultivating up to 200 hectares, including the payment of US$ 20 per tonne to millers buying paddy locally. The plan was estimated to entail a transfer of US$ 9 million per season to producers.

In the past two years, the Dominican Republic made progress in implementing an agrarian reform, with the provision of legal ownership titles to the beneficiaries, to facilitate the development of a land market and improve producer access to credits and other services. In 2001, RD$ 947.2 million (US$ 55.9 million) were made available to producers in the form of short term credits for the seeding of 44 985 hectares, which compares with RD$ 663.4 million (US$ 40.4 million) and 44 843 hectares in 2000. Until 2000, the National Committee on Rice Policy fixed minimum purchase and maximum selling prices for rice, as a way of keeping prices stable. A paddy-pledging scheme was introduced in 2001 to help producers to fetch better prices for their rice and to get immediate payment from millers upon delivery of their product. On the other hand, millers were given access to loans for up to 70 percent of the value of the product, with the government bearing the costs.

Guatemala implemented a plan for land registry and territory codification. It also launched a campaign to reduce agricultural producer vulnerability through an insurance programme and sales on market futures. In addition, the Ministry of Agriculture made fertilizers available at 50 percent of market price to rice producers.

Honduras instituted a National Fund for complementary loan guarantee, to give producers larger access to credit, especially in the aftermath of the Hurricane Mitch, which had caused damage to rice production infrastructure.

Since 1993, Mexico has provided fixed payments per hectares at planting time to producers of rice and other crops, under the Procampo Programme, which is scheduled to last until 2007/08. Payments were raised from Pesos 708 for the spring/summer crop in 1999 and for the autumn/winter crop in 2000/01 to Pesos 778 per hectare for the following two crops. In 2002 and 2002/03, the rate was reported at Pesos 873 per hectare. Since August 2002, producers have also been allowed to use their entitlements to future payments as a guarantee to obtain loans from banks. In November 2002, before the prospect of a complete removal of tariffs on trade with the United States as of January 2003, the Government announced its intention of reintroducing price support to basic grains and launched a very ambitious farm programme to help producers stand competition from subsidized US farmers.

Like other countries in the region, Panama proceeded with a land proprietorship programme. In June 2001, the country granted subsidized loans to assist farmers who were affected by adverse weather conditions. Direct financial assistance and credits were also earmarked for rice processing through the establishment of a new fund for agro-processing in June 2001.

Venezuela launched a new Agricultural Development Plan in 2000, which designates rice as a strategic product. The plan set a five year production growth objective of 137 percent by 2004, as a means of curbing the country's dependence on wheat imports.

Developed Countries

Rice remains a highly protected commodity in most developed countries. Since the completion of their WTO obligations in 2000, there has been little progress in reducing overall support to producers. During the period, there was, however, an intense process of review of national policies and several proposals of reforms were made within the context of the new round of multilateral trade negotiations.

Rice production in the European Union (EU) is subject to area ceilings established at the national level, as a condition for receiving compensatory payments. Such payments are made on the basis of an historic[5] national base area and yield. The payment per hectare was raised between 1997/98 and 1999/2000, to compensate for the 15 percent reduction of minimum support prices implemented over the period. Since then, the minimum paddy procurement price has been kept at € 298.35 per tonne and payments have been unchanged, averaging € 329 per hectare, equivalent to about € 52 per tonne. However, overshooting of the area ceiling by Spain resulted in a reduction in the per unit payments to Spanish producers of 44 percent in 1999/00, 45 percent in 2001/02 and 35 percent in 2001/02 respectively.

Table I-4: EU - Compensatory Rice Payments

Historic yield

Base Area

Payments per hectare









239 259






104 973






24 891






24 500






33 000




French Guiana


5 500




EU - Total


432 123




On 10 July 2002, the EU Commission submitted a new reform proposal of the Rice Common Market Regime, which envisages a once-for-all cut of 50 percent in the intervention price to € 150 per tonne in 2004/05. Compensation for 88 percent of the drop would be provided through an increase in the direct payment to producers from € 52 per tonne to € 177 per tonne, inclusive of a single farm payment of € 102 per tonne, paid on the basis of historical rights and subject to the current maximum guaranteed areas, and a crop specific aid of € 75 per tonne. Aids to private storage are planned whenever market prices fall below the intervention level for two consecutive weeks, while safety net purchases would be triggered when they fall to € 120 per tonne.

Although rice production in Hungary has dwindled in recent years, producers were eligible for a fixed payment, which in both 2001 and 2002 was set at Ft 35 000 (US$ 125 - US$ 127) per hectare. In addition, due to serious drought, a subsidy for sprinkling water of up to 400 cubic meters per hectare was given at a rate of FT 13 per cubic meter in 2001. This was withdrawn in 2002.

Since the implementation of the "Basic Law on Food, Agriculture and Rural Areas, in July 1999, there have been few changes in Japan's rice policies, which have continued to rely on a production adjustment programme, to balance the country's rice production with falling domestic demand. In both 2001 and 2002, the target for diversion of paddy land was set at 1.01 million hectares, or 40 percent of the total paddy area, and further raised to 1.06 million hectares for 2003. In November 2001, additional incentives were offered to farms surpassing their production diversion targets. Guaranteed rice producer prices were reduced by 2.7 percent in 2001 and by a further 2.8 percent in 2002. However, failure to solve the rice surplus problem led to the proposal for a new adjustment programme for implementation in 2003, which would divide the targeted production volume, rather than the targeted area, among participating producers. In August 2001, Japan also announced a "Priority Plan for a Stable Food Supply and Aesthetic Land Development", which called for a structural reform of agriculture and an expansion in farm size, with the aim of raising the competitiveness of the sector. Under the plan, specialized rice farms accredited as target management units will be the main farms responsible for supplying rice to the market, while the other farms will mainly focus on the maintenance and management of agricultural resources. The Plan also suggests introducing an insurance-type scheme as a new instrument for income stabilization.

During 2001 and most of 2002, the rice sector in the United States was regulated under the 1996 legislation of the FAIR Act. As a result, producers holding rice production flexibility contracts (PFC) were eligible for (decreasing) fixed payments. In addition, under the Market Loss Assistance Programme (MLA), they received supplementary payments to help them weather the impact of low market prices (Table I-5). It is estimated that some US$ 119 per tonne in 2000 and US$ 99 per tonne in 2001[6] were transferred as decoupled payments to farmers holding rice base production entitlement rights under the PFC and the MLA, independently of whether they grew rice during the season or didn't. In addition to these fixed payments, producers actually growing rice benefited from a minimum price under the Marketing Assistance Loan and the Loan Deficiency Payment programmes, of US$ 143.3 per tonne of paddy, unchanged since 1989. In the aggregate, direct support under the rice commodity programme was reported to have entailed an outlay of US$ 1 774 million in 2000, US$ 1 423 million in 2001. Preliminary estimates for 2002 and 2003 indicate somewhat lower expenditures, at US$ 1 058 million of US$ 1 029 million, respectively.

Table I-5: United States: Rice Production Flexibility Contracts and Marketing Loan Programmes

Average market

Season paddy price

Paddy loan rate

Marketing loan/ certificates

Direct Payments 1/

(...Per unit of paddy...)

Total payment

US$/ tonne


US$ Million

PFC US$/tonne

MLA 2/ US$/tonne

US$ Million



































897 3/




670 3/



350 3/








2003/04 4/





31 5/


Source: USDA

1/ Includes payments under the Production Flexibility Contracts and Market Loss Assistance Programmes.

2/ Counter Cyclical Payments in 2003/4

3/ Forecast as of 12 June 2001

4/ Under the 2002 Farm Bill

5/ If world price remains below the loan rate (in milled equivalent)

On 13 May 2002, the United States passed "The Farm Security and Rural Investment Act of 2002", the new Farm Bill which establishes the bases of federal farm programmes from 2002 to 2007. Under the new bill, the rice loan rate[7] remained at US$ 143.3 per tonne but the rice direct payment rate for production flexibility contracts (DP or PFCs) was raised from US$ 45.2 to US$ 51.8 per tonne. One major difference from the FAIR Act is the re-introduction of target prices, fixed at US$ 231.5 per tonne, which will be used to calculate counter-cyclical payments (CCPs) to producers whenever the effective[8] producer price falls below the target level. The introduction of target prices has been estimated to provide an additional US$ 31 per tonne to rice PFCs holders[9]. CCPs replace the emergency transfers that were made to eligible farmers under the Market Loss Assistance Programme. The counter cyclical programme has been fixed for the next 6 years, providing a reliable income guarantee to producers that did not formally exist under the ad hoc Market Loss Assistance Programme. The Bill gives producers the possibility of updating their base area for the purpose of calculating the subsidies under the direct and counter cyclical payments. For the purpose of calculating counter cyclical payments, farmers that updated the base area are also entitled to update yields for part of the increase experienced between the early 1980s and 1998-2001. However, producers are subject to payment ceilings per person, per year of (i) US$ 40 000 for loan deficiency payments, (ii) US$ 65 000 for counter cyclical payments and (iii) US$ 75 000 for marketing loan gains and loan deficiency payments. Producers with gross proceeds exceeding US$ 2.5 million will forfeit their loan deficiency payments.

Consumption, Marketing and Stock Policies

Rice is one of the few food commodities still subject to widespread domestic marketing restrictions and to government wholesale or retail price controls. Over the past two years, there was a tendency to further deregulate post-harvest activities and efforts made to shift some functions traditionally carried out by government organizations, such as stock holding, to the private sector. Furthermore, governments moved to concentrate their food distribution programmes on vulnerable and special population groups.

Bangladesh abolished the official distribution of rice in July 1993 when it dismantled the Rural Rationing and Statutory Rationing Channels. However, the Government continued to distribute rice under poverty alleviation programmes and to maintain food security reserves of about 1 million tonnes. Under the public food distribution system (PDFS), the open market sale prices in rural and urban areas have been kept unchanged at Taka 12 000 (US$ 236) per tonne since 1999/00. In 2000/01, the volume of rice channelled through the PDFS reached its highest level in 10 years, at close to 1 million tonnes, but has declined since then. Moreover, in 2002/03, there was a marked shift in the distribution channels, which saw the share of rice distributed under the monetized system rise to 34 percent of the total, compared with 20 percent in 2001/02 and 13 percent in 2000/01.

Figure I-1: Bangladesh: Rice channelled through the Public Food Distribution System

China relaxed controls over domestic grain marketing in the past two years. In particular, in 2001, the country liberalized grain procurement and distribution in six grain-deficit southern provinces and developed areas[10], which were classified as "Consumption Provinces". The deregulation of grain markets was also extended to all grain-deficit provinces in 2002, while provincial governments in "surplus" or "producing" provinces retained control over rice procurement and distribution. In the past three seasons, the country has drawn down its grain reserves to bridge the gap between consumption and production. Unofficial sources in China estimated the release from stocks from all sources (farmers and public reserves) since 2000/01 at close to 30 million tonnes, in milled equivalent. The cut in rice inventories coincided with the implementation of an ambitious grain warehouse construction programme launched in 1998, for completion by the end of 2002, to increase the grain storage capacity by 50 million tonnes. In addition to the central state grain reserves, China continued to require provincial government to hold grain stocks for food security, equivalent to three month consumption in grain-surplus provinces and to 6 month consumption in grain-deficit provinces.

Hong Kong SAR continued to apply a "rice control scheme" which imposes a minimum holding by importers, proportional to their import entitlements. Since January 2000, the overall size of the stock has been set at 40 000 tonnes.

In India, the distribution and internal trade of rice have been regulated under the Essential Commodities Act since 1955. In February 2002, the Act's restrictions on inter-state grain movements were lifted, paving the way for the establishment of a single national cereal market. Requirements for trading licenses and limitations on cereal storage by private agents were also eliminated. On the other hand, India maintained its subsidized rice distribution system, but raised substantially the issue rice prices in 2000/01, by 30 percent in the case of rice sold to above poverty line (APL) customers, and by close to 69 percent in the case of below poverty line (BPL) consumers. However, in 2001/02, APL prices were lowered by 30 percent, while the reduction of BPL prices was much smaller, at only 4 percent.

Table I-6: India - Rice Central Issue Price

Above Poverty Line

Below Poverty line

Above Poverty Line

Below Poverty line

(................Rs per 100kg............)

(..............US$ per 100kg............)


























Source: Union Ministry of Consumer Affairs, Food and Public Distribution - Report on Long-Grain Policy

Although rice is considered a strategic commodity in Indonesia, various programmes were launched in 2002 to diversify consumption towards other domestically produced staples, such as sago, cassava and other roots and tubers, in an attempt to reduce the country's dependence on rice imports. Stabilization of domestic producer and consumer rice prices has constituted the principal mandate of Bulog, the Indonesia's National Logistic Agency since it underwent a major overhaul in 1998[11]. Since then, the private sector has been encouraged to engage in domestic rice marketing, while Bulog's responsibility for supplying rice to the whole domestic market has been discontinued and distribution of rice at subsidized prices become more targeted. In particular, under the Special Rice Market Operation Programme (SRMOP), 20 kg of rice per month were made available to poor families, at a subsidized price of Rupiah 1 000 (US$ 0.10) per kg, or less than 50 percent of market prices. In 2002, this programme was renamed "Rice for the Poor". Overall, Bulog targeted distribution benefited about 12.5 million families in 2002, up from 7.5 million in 2001, and absorbed 60 percent of the total volume marketed by that organization.

Japan reduced the price of rice sold to wholesalers, from Yen 289 (US$ 2.6) per kg in 2000 to Yen 286 (US$ 2.2) per kg in 2001 and Yen 283 per kg (US$ 2.4) in 2002. Faced with overhanging rice surpluses, the Government continued its programme for supply disposal and decided to remove 100 000 tonnes of old rice for use as feed grain in 2001. Japan's rice reserves, which are managed to fluctuate around 1.5 million tonnes, are in principle designed to be sufficient to cope with two consecutive years of shortfalls.

Under the "Comprehensive Plan for the Development of the Rice Industry", the Republic of Korea announced a series of initiatives to stimulate domestic rice consumption, in an attempt to slow down the long term declining trend in demand, through the launching of the "Rice for Breakfast" campaign, provision of rice for school lunches, distribution to military and public institutions and the establishment of a food stamp programme for vulnerable groups. In addition, the volume of rice targeted for processing into starch and alcohol, etc. was raised from 66 240 tonnes in 2001 to 115 200 in 2002, to be achieved by substituting rice for imported materials such as maize and dried cassava chips.

In Malaysia, rice procurement, distribution and stock management are under the responsibility of BERNAS, a privatized state trading company, which also holds a rice import monopoly. The Government continues to impose a ceiling on retail prices for Standard rice (US$ 0.26-0.27 per kg), Premium (US$ 0.27-0.29 per kg) and Local Super Grade rice (US$ 0.43-0.47 per kg), unchanged since 1993. However, retail prices for higher qualities, including Local Super Special Grade, specialty and fragrant rice were freed in 2001. Based on the special agreement between BERNAS and the Government, the trading organization has the obligation to maintain a minimum rice stockpile of 92 000 tonnes.

Since June 2002, Pakistan has been committed to enhance private sector participation in the marketing of agricultural commodities, including storage. Accordingly, incentives for the private sector to invest in post-harvest activities were given through tax exemptions and reduced import duties on equipment and installation of facilities for grain handling and storage.

Under its 2002-2006 five-year Rice Strategic Plan, Thailand earmarked Baht 34.5 billion for infrastructural work, including silos, 17 percent of which will be provided through public funding, and the rest under loans to the private sector.

Further to the 1999 reforms giving full rights of land use to farmers, Viet Nam lifted the requirement for farmers to sell a contracted amount of rice to the state. As part of its efforts to reduce public sector involvement in rice marketing, the country promoted the establishment of direct contracts between producers and trading firms in 2001. In 2002, this initiative was extended to contracts between producers and agro-processing firms. In both cases, partner firms were expected to provide a secure outlet for producers, but also to facilitate their access to capital, basic equipment and technical assistance. Traders holding such contracts with producers were granted preferential access to meet government export deals while for processing firms, the incentive was in the form of financial assistance and tax rebates. In 2002, the authorities in key producing regions let farmers use state-owned storage facilities to keep their paddy. In addition, farmers were allowed to use their stocks as collateral for borrowing from banks.

In Africa, retail prices are subject to government stabilization measures in Egypt, where the target consumer price was set at about US$ 0.25 per kg in 2001. Since 2000, Ghana has made available, through the Agricultural Development Bank, a special loan facility to private traders, to purchase paddy, mill it and distribute it on local markets. The volume of purchases that used this facility was reported to be small. In 1999, Mauritania embarked on the liberalization of paddy procurement and domestic marketing. In particular, the Government eliminated the fixing of official paddy prices, suspended the provision of subsidized credits for paddy procurement and supported the empowering of cooperatives to take over marketing functions.

In Latin America and the Caribbean, Brazil's National Supply Company, CONAB, which is responsible for distributing, storing and setting minimum prices for major food commodities, initiated a restructuring process in 2002 aimed at reducing its storage capacity by two thirds. The restructuring did not diminish the company's responsibility to set producer prices and to run policy programmes. Colombia continued to grant subsidies for storage of rice for up to 6 months, which were reported to amount to Pesos 16 000 (US$ 7.2) per tonne of milled rice in early 2001. These were lowered to pesos 13 340 per tonne (US$ 5.6) in the September 2001 to February 2002 period. Rice is the last food still subject to wholesale and retail price ceilings in Costa Rica. In November 2000, the maximum consumer prices for rice with 21-25 percent broken were set at Colon 190 per kg and lowered to Colon 172 per kg as of October 2002. St Lucia still controls the prices of a number of basic commodities. For rice, the price ceiling was reduced between 2000 and 2001 by 7 percent in the case of parboiled rice and by 8 percent for raw white rice. The Government of Venezuela undertook to promote rice consumption in the past two years, as rice was classified as a strategic product under the new Agricultural Plan. For instance, rice had to be blended with maize flour for government food programmes. Campaigns to promote rice consumption were also carried out in public schools.

International Trade Policies

The year 2000 marked the conclusion of the implementation of the AoA by the developed countries and the middle point of the process for the developing countries, which should meet their full commitments by 2004. The past two years also saw the accession of China and the Taiwan Province of China to WTO and the launching, in November 2001, of a new Round of Multilateral Trade Negotiation, the "Doha Round". In parallel, many countries moved forward to strengthen trade links under bilateral and regional agreements. For instance, in 2001, free trade agreements (FTAs) were signed between Canada and Costa Rica, between Egypt and Iraq, between The Syrian Arab Republic and several other Arab countries. ASEAN members also signed a Closer Economic Partnership with Australia and New Zealand. The process did not lose momentum in 2002, with Chile signing FTA with the EU, the Republic of Korea and United States, and Japan with Singapore. In addition, a large number of FTA negotiations were launched, often involving trading blocs, e.g. Mercosur with the Andean Community. A number of countries belonging to the South Asian Association for Regional Cooperation (SAARC) also pledged in January 2002 to prepare a draft treaty for the formation of a free trade area.

Import Measures

Global rice imports in the past three years remained high compared to the pre-1998 levels, reflecting production shortfalls but also the openness of trade regimes, especially in Africa. However, low international prices prompted several governments to raise protection to protect farmers and to delay the planned liberalization of their import regimes. Although a very important development for the world rice market, China's accession to WTO failed to give the expected boost to global imports.

Asia remains the main destination of rice trade, with about half of global imports in 2000-2002. Major importers in the region, however, maintained a high degree of external protection. State trading enterprises, in particular, continued to play an important role, although a move toward privatization of rice trade gained momentum in several important countries.

Bangladesh liberalized trade in rice and lifted all import restrictions on rice as per import policy order 1997-2002. By 2000/01, 69 percent of the total imports were in private hands. However, the Government also continued to import to meet the quantity targeted for rice distribution under safety-net programmes and for emergency reserves. Trade policies have been widely used in recent years, to stabilize domestic prices. More specifically, ad-valorem duties on all rice types except seed passed from zero in 1999 to 5 percent in 2000. In 2001 they were further raised to 25 percent for husked and milled rice. A further 10 percent regulatory tax was applied on imported rice as of August 2001. In addition, in May 2001 the country imposed a temporary ban on rice imported from India at all but one entry point.

Under China's accession agreement with the WTO in December 2001, tariffs on rice products were bound at 65 percent by the end of the implementation period, in 2004. However, the country granted a 1 percent duty preferential tariff quota, for 4 million tonnes of rice in 2002, half of which for long grain Indica rice and the other half for short and medium grain rice. The country retained the right to let the China National Cereals, Oil & Foodstuff Import and Export Co, a state trading enterprise import directly 50 percent of the preferential quota, with the other half reserved for private traders. In addition, provisions were taken to reallocate to them the unused part of the quota held by the state trading agency.

Table I-7: China's WTO Market Access Commitments for Rice





Tariff rate quota, total

000 tonnes

3 990

4 657

5 320

Long grain

000 tonnes

1 995

2 328

2 660

Short and medium grain

000 tonnes

1 995

2 328

2 660

In-quota tariff





Over-quota tariff





Share of quota under non-state trading





The Taiwan Province of China formally joined WTO on 1 January 2002. Under its accession agreement, it was allowed to keep non-tariff barriers on rice in exchange for a wider opening of its market under the WTO special treatment provisions of market access. It, accordingly, lifted the ban on rice imports and opened a 144 720 tonnes free-of-duty quota in husked rice equivalent in 2002. For subsequent years, the rice preferential access will be re-negotiated.

In January, the SAR of Hong Kong relaxed existing restrictions on the private sector from carrying out simultaneously rice import and wholesale activities. In 2002, the Government announced the full liberalization of its rice trade regime from 1 January 2003. By that date, all quantitative restrictions on imports and entry requirements would be eliminated.

In Indonesia, import tariffs have been kept at Rupiah 430 per kilo since 2000 (equivalent to some 30 percent[12] of the import unit value). Although imports are subject to tariffs, weak enforcement of tariff payment induced the Government to introduce additional import requirements as of May 2002. From that date, only traders registered at the Ministry of Industry and Trade have been granted import licenses.

Rice imports by the Republic of Korea are also subject to the WTO special treatment provisions of market access and are all made under a 5 percent tariff quota, the volume of which has been progressively increased from 102 614 tonnes in 1999 to 153 921 tonnes in 2002, in line with the WTO commitments.

Under the Philippines' WTO obligations, private traders may import special, fancy or glutinous rice subject to a 50 percent duty under a tariff quota. In 2001, however, only 20 000 tonnes out of a total 134 395 minimum access volume were authorized and, practically, all rice imports were made by the National Food Agency, either through government-to-government deals or through public tenders. However, the Government announced in March 2002 it would authorize producer groups and cooperatives to be responsible for rice imports as of 2003.

For several years, imports of rice by Sri Lanka have been subject to a 35 percent tariff, which the Government waived when supply shortages occurred. In July 2001, however, the Government reacted to an import surge by banning further imports. By 1 November 2001, the Cooperative Wholesale Establishment, a government-sponsored enterprise, and private traders were allowed to import 60 000 tonnes of rice free of duty. In the light of continued high domestic prices, further imports were authorized until the end of the 2001 at half of the normal 35 percent duty. Early in 2002, the ad valorem duty was converted into a specific duty of Rs 7 000 (US$ 75) per tonne.

In October 2001, faced with a surge in rice shipments, Turkey raised the rate of the import duty from 27 percent to 39 percent, in the case of paddy, and from 35 percent to 46.5 percent for milled rice.

Similarly, in an attempt to arrest an inflow of rice from neighbouring countries, Viet Nam increased tariffs from 30 percent to 40 percent on all rice, except seeds, in November 2001. In 2002, however, the country allowed the import of 5 000 tonnes of glutinous rice from The Lao People's Democratic Republic at half the 40 percent duty.

Africa has been a major growth market for rice in the past decade, absorbing some 28 percent of world trade in 2000-2002. Rice imports into the region rose by one million tonnes, or 16 percent, over that period, spurred by a strong growth in domestic demand, which outpaced gains in production. The rice inflow to the region was also facilitated by the openness of the markets.

For instance, eight countries in western Africa, Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, the Niger, Senegal and Togo, implemented in January 2000 the Common External Tariff (CET) of the West African Economic and Monetary Union (UEMOA), which for several of them entailed a substantial reduction in border tariffs. Under CET, milled rice imports from third countries are subject to a 10 percent import duty. Under the UEMOA provisions, two additional duties could be added on a temporary basis to ease the impact of the lowering of external tariffs on local producers and to shield the market from excessive low prices. According to the original schedule, however, the maximum additional duty could not exceed 15 percent in 2000, 10 percent in 2001 and 5 percent in 2002 and was to be abolished as of 1 January 2003.

Table I-8: UEMOA common external tariff and other duties1/


Ad-valorem Tariff

Statistical Tax

Solidarity Tax

1. Essential social products




2. Basic consumption products (paddy/seeds)




3. Intermediate consumption products (all other rice)




4. Final consumption products




Source: UEMOA
1/ Applicable to c.i.f. value

In 2000, Kenya set the duty it applied on rice imports at 25 percent or Kenyan Shilling 7.50 per kg (US$ 98 per tonne), whichever the higher, and changed it to 35 percent or Kenyan Shilling 4.20 per kg (US$ 53 per tonne) in 2001.

Consistent with the general liberalization of the rice sector ongoing in Mauritania since 1999, the country abolished the "pool system", which obliged agents to purchase paddy domestically in order to get import licenses.

Nigeria, one of the world's leading rice importers, raised rice import duties from 50 percent to 75 percent in January 2001[13]. In 2002, further increases brought the rate first to 100 percent and, by the end of the year, to 110 percent.

Table I-9: Nigeria's Rice Import tariff










General Import Ban









Imports into Latin American and Caribbean countries have stagnated in the past decade, accounting for less than 11 percent of total trade in 2000-2002. The stagnation reflected a slowing down in demand and increases in production especially in the southern part of the continent. In addition, import barriers such as discretionary import licensing, variable duties arising from price band import mechanisms or phytosanitary bans also dampened import growth. As a result, a large part of rice imports into the region were made under preferential access conditions, such as WTO tariff quotas, or from partners of regional agreements, such as the Andean Pact, Caricom, Mercosur or NAFTA.

For instance, Brazil imports rice mainly from other Mercosur members (Argentina, Paraguay and Uruguay) free of duty. Purchases from non-members were charged, under the Mercosur Common External Tariff, between 11.5 percent and 13.5 percent in 2002, 1 percent less than in 2001. However, in 2002, the country introduced new phytosanitary requirements on the imports of rice and other agricultural products, obliging non-Mercosur suppliers to submit pest risk assessments.

Under the Andean Pact, which comprises Bolivia, Colombia, Ecuador, Peru and Venezuela, imports from non-members are authorized when supplies are not available from other Andean countries. Purchases from non-members are subject to the Andean Community Price Band Mechanism, which is based on a floor and ceiling prices, established by the Andean Board of Directors every year, and on an external reference price, adjusted every two weeks by the Board. In April 2002, the floor price was set at US$ 278 per tonne and the ceiling at US$ 352 per tonne, lower than the US$ 319 per tonne floor and at US$ 387 per tonne ceiling that were applied in 2001.

Although rice imports within the Andean Community are free from licenses and duties, Colombia has tagged rice as an exception and made rice imports from other members subject to quotas. In addition, the country has resorted to an Andean Pact safeguard to regulate the flow of rice from Ecuador and Venezuela. In November 2002, although the Andean Pact ruled that Colombia's restrictions on imports from Ecuador were not warranted, they were not lifted. Imports by Columbia from third countries, on the other hand, are subject a "crop absorption" system, under which licenses are granted only to traders demonstrating they had purchased two tonnes of paddy on the local market for each tonne requested for import. Since 2001, licenses have been also issued to importers buying local rice on futures market at predetermined prices. Although, under the Colombia's agreement with WTO, the crop absorption system was to be discontinued in January 2000, the country was allowed to extend it for another four years.

From December 1999 to February 2002, Costa Rica applied a WTO price-based Special Safeguard of 19 percent on husked rice imports bringing the overall rate of duty to 54 percent. In February 2002, the country replaced it with a safeguard based on Article 19 of GATT 94[14], which raised the overall rate of tariff to 71 percent until 26 September 2002. In October 2002, a 22.5 percent price-based safeguard was again invoked, which brought the tariff down to 57.5 percent. Simultaneously, however, the phytosanitary charges on rice imports were raised from US$ 10 to US$ 19 per tonne.

Following the passage, in the United States, of legislation allowing food sales to Cuba in 2000, Alimport, Cuba's state food agency, started to import rice from the United States in 2002.

Imports by the Dominican Republic are mostly carried out by producer organizations and cooperatives under a tariff quota. This is subject to a 20 percent duty and was equal to 13.0 thousand tonnes in 2001 and 13.6 thousand tonnes in 2002.

Decisions on the volume to be imported in Guatemala are made in consultation with a multi-sectorial committee. In 2000, the tariff quota was set 33.4 thousand tonnes. It was raised to 43.2 thousand tonnes in 2001. In-quota tariffs were reduced from 18 percent to 16.2 percent for milled rice but remained at zero percent for paddy, which constitutes the bulk of imports. The duty applied on out-of-quota rice imports was also lowered from 36.0 percent to 32.4 percent between 2000 and 2001.

Imports by Mexico from the United States were subject, under the North American Free Trade Agreement (NAFTA) to tariffs ranging from 2 percent to 4 percent in 2001. They were halved in 2002 and are to be eliminated in 2003. In June 2002, NAFTA ruled on an anti-dumping complaint made by the Mexican Rice Council (originally filed in October 1999) against a number of United States' exporters of long-grain white rice to the country. The ruling allowed the imposition of a 10.18 percent compensatory duty on rice supplied by most exporting companies from the United States. Mexico also suspended in 2001 a ban on imports from Thailand that had been introduced in 1993 on phytosanitary grounds. In late 2002, however, Mexico, along with several countries in Central America[15], re-introduced the prohibition on rice from China, India, Myanmar, the Philippines, Thailand and Viet Nam, again for phytosanitary reasons.

In Nicaragua, import duties were raised between 2000 and 2001 from 55 percent to 62 percent for milled rice sourced in WTO member countries and from 65 percent to 72 percent for non-WTO- members. The higher duties in 2001 were compensated by the opening of a 100 000 tonnes tariff quota for paddy, established after an agreement was clinched between rice producers and millers, which committed the latter to purchase paddy domestically at a pre-determined price. As a result, while all paddy imports faced a 20 percent duty in 2000, the following year only those imported within the quota were subject to this rate, while those exceeding the quota paid 45 percent. The tariff quotas was extended to 2002 for the same quantity.

After consultation with WTO, Panama agreed to open a 5 000 tonnes (in milled equivalent) tariff quota in 1997 and to increase it by 523.5 tonnes a year until 2006. Accordingly, the quota increased from 6 047 tonnes in 1999 to 7 618 tonnes in 2002, in milled equivalent. While the in-quota tariff was set at 15 percent, out-of-quota imports were charged an ad-valorem duty of 130 percent in 2000, subsequently lowered to 123 percent in 2001 and to 116 percent in 2002.

Imports of rice in Peru face a 20 percent tariff plus a supplementary tax of 5 percent. In June 2001, however, the country introduced a price band mechanism on the imports of various products, including rice, which resulted in a variable duty system. The variable duty is calculated based on an external reference price and on a basic floor price, set twice a year, on 1 January and 30 June. The resulting levy on imports was reported to be of the order of US$ 220 per tonne in the first quarter of 2002. The country continues to apply a phytosanitary ban on rice originating from several Asian countries.

Rice in St Lucia is mainly imported directly by the Ministry of Commerce, which sources it principally from other Caricom country members free of tariff and consumer taxes. Rice from other origins is subject to a 25 percent duty and to a 5 percent consumer tax. Imports of rice packaged in bags of less than 25 pounds are subject to an import license.

Developed countries account for less than 15 percent of world imports. Since they had already completed their commitments on market access, there were few changes in access in the past three years, although the EU offered some limited opening under preferential schemes.

Since the implementation of the AoA, EU's rice imports have been subject to variable tariffs that were tied to the official level of procurement prices[16]. While between 1997/98 to 1999/2000, the reduction of these prices led to a fall of the rice variable tariffs, that influence ceased in 2001. Other factors affected tariffs, including the steady slide in external reference prices and variations in the US$/€ exchange rates, which made them fluctuate widely, around € 200- € 270. The tariffs applied on rice imports under the ACP preferential scheme were much lower, of the order of € 80 - € 90 per tonne between end-1999 and end-2002. In addition to the preferential access schemes, which already account for about 40 percent of its rice imports, the EU opened in 2001 an additional free-of-duty quota for least developed countries[17] under the "Everything but Arms" (EBA) programme. The amounts allowed for import under the scheme will be restricted until access becomes unlimited (except for rules of origin, etc.) in 2009/2010.

Table I-10: EC duty-free rice import quotas under the EBA Preferential Access Scheme (tonnes)









2 517

2 895

3 329

3 829

4 403


5 823

6 696

Consistent with its WTO obligations, Hungary reduced tariffs on rice imports in 2001. The country also opened a 25 percent tariff quota of 19 433 tonnes in 2001 and 2002. In addition, under an agreement with the EU, paddy rice seeds from the EU have been allowed to enter the country duty-free since 1 July 2000, with no limitation on the volume. Hungary also opened a 40 000 tonnes import quota free-of-duty, for imports from the EU, between 1 July 2000 and 30 June 2001.

Since 1999, Japan has discontinued the special treatment it had applied on market access and implemented a tariff system on imported rice, with the duty originally set at Yen 351.17 per kg (US$ 2 900 per tonne), falling to Yen 341.0 per kg (US$ 2 850 per tonne) in 2000, the last year scheduled for reductions. Following this tariffication, the import permit system and the obligation to sell all imports to the Food Agency were eliminated. In accordance with its new WTO obligations, Japan established minimum access quota at 770 000 tonnes (husked equivalent) in 2001 and 2002. However, in 2001, the country cut the import volume channelled through the simultaneous buy-and-sell system by 20 000 tonnes to 100 000 tonnes, for the first time since 1995. Japan also invoked the volume-based safeguard for pellets of rice from 1 July 2001 to 31 March 2002, and the price-based safeguard on milled rice on 31 May 2002.

Export Measures

The world rice market is relatively concentrated, since five countries[18] account for about three quarters of world exports. Competition for market share intensified in the period under review as depressed market conditions generally prevailed. For instance, governments played a growing role in securing rice export deals, with several of them granting special sale conditions and price subsidies to boost sales. At the same time, a number of governments promoted sales of higher quality rice, as a means to arrest the contraction in rice export earnings.

In Asia under the terms of China's accession to WTO, the Government retained its authority to decide over cereal exports, which remained under state trading control. At the same time, however, the country agreed to eliminate all export subsidies.

In India, exports of grains, including rice, are subject to export restrictions under the Essential Commodities Act. Faced with excess supplies, in May 2001 the Government lowered the FCI selling price of rice for export from Rs 6750 (US$ 144) per tonne to Rs 5650 (US$ 120) per tonne, the same level as the FCI issue price to Below Poverty Line consumers. Although FCI prices of rice for export have been subsequently raised in 2002 and 2003, they remained highly competitive[19], enabling the country to position itself as the second largest rice supplier to the world market in 2002.

In March 2002, India announced a new five-year Export/Import (EXIM) policy covering the 2002-2007 period and lifted quantitative restrictions on the export of non-Basmati rice. Basmati rice exports, however, became subject to advisory minimum prices set by major Basmati exporters under the aegis of the Export Development Authority (APEDA). Under the new policy, Basmati rice exported at price below the minimum established level became subject to compulsory inspection. The advised minimum Basmati prices hovered around US$ 450 -500 per tonne FOB in the first half of 2002.

Table I-11: India - FCI Rice1/ Sale Prices for Export

Date of

Raw Rice

Parboiled Rice

Rs/ tonne

US$/ tonne

Rs/ tonne

US$/ tonne

April 2001



6 750


May 2001



6 000


April 2002



6 115


August 2002



6 265


January 2003

6 260 (old crop)


6 615


6 510 (new crop)


6 865


1/ Non-Basmati rice, with 25 percent broken

In November 2000, Pakistan eliminated the minimum export price for IRRI rice. In May 2001, it allowed the private sector to issue quality and grading specifications as a way of improving the quality of rice, especially Basmati, and boost exports. The Government also played an active role in promoting rice export deals with Indonesia, the Islamic Republic of Iran, Iraq, the Philippines, Kenya, Zimbabwe and South Africa.

Under the proposed 2002-2006 rice strategic plan, Thailand set the country's export target at 7.5 million tonnes in 2006, a level already achieved in 2001. However, the plan also aimed at increasing the share of premium grade rice in the total, from 23 percent in 2001 to 60 percent by 2006. To that end, the country tightened the specifications and standards of the high quality and fragrant rice for export. In view of the depressed international market conditions, Thailand made various attempts in 2001 and 2002 to clinch an agreement for co-operation among major rice exporters to stabilize world prices. Eventually, a ministerial meeting was held in Thailand on 9 October 2002, with the participation of China, India, Pakistan, Thailand and Viet Nam. Thailand's Government also intensified its direct involvement in export activities through the promotion of Government-to-Government deals. In 2002, this was achieved by allowing credit sales to major importers (e.g. Indonesia, the Philippines and the Islamic Republic of Iran) and through the implementation of a counter trade mechanism (e.g., with the Philippines and Indonesia) and of an account trade system with Malaysia. In addition, sales of rice from public stocks to the private sector through the Public Warehouse Organization and the Market Organization for Farmers were allowed for determined quantities at a special price, for exclusive sale abroad. Exports of paddy rice from the country continue to be forbidden.

In April 2001, Viet Nam lifted most restrictions on rice exports under the new Export-Import Management Mechanism for 2001-2005. This removes quantitative limits on exports and allows all economic agents holding agricultural commodity trade licenses to engage in rice exports. However, provisions were made to ensure that state-trading enterprises would remain responsible to negotiate export deals with the most important trade partners. In an attempt to boost sales, the Government also intensified its attempts to establish barter trade arrangements with importers such as Malaysia and promoted Government-to-Government contracts with Indonesia, Iraq and Cuba. It also established offices in potential growth markets in The Russian Federation and Iraq. Furthermore, it allowed exporting agencies to grant credit of up to 720 days on sales of at least 30 000 tonnes and launched in 2001 an exporter bonus programme, which set a premium of Vietnemese dong 180 (US$ 0.012) for each dollar of export value, excluding, shipments made on barter terms, foreign assistance and government deals. These exceptions were lifted in 2002 to help exporters cover losses incurred on government-to-government contracts. By the end of 2001, however, in the wake of production shortfalls, supplies were released from public stocks and exporters urged to suspend rice shipments until February 2002.

In Africa, the only country with a sizeable export record is Egypt. The country was reported to have made use of export subsidies between July and September 2001 to bolster sales abroad, to a tune of LE 100 (US$ 22) per tonne, for medium grain, and LE 200 (US$ 45) per tonne, for long grain rice.

In Latin America and the Caribbean, Argentina introduced a 10 percent export tax on rice exports and other agricultural products in March 2002, following the devaluation of the national currency. Unlike for wheat and coarse grains and other agricultural products for which the rate was increased to 20 percent in April 2002, the rice export tax remained at 10 percent. Although exporters continued to be eligible to the refund of indirect taxes paid on exported rice, these were halved in the wake of the currency devaluation. Bolivia undertook to update its norms and standards for rice as a measure to promote rice exports. Although Ecuador has turned out as a net rice exporter in recent years, in 2002 exports were hindered by the safeguard applied by Colombia under the Andean Pact, which limited the rice inflow from Ecuador to 18 000 tonnes, in paddy equivalent[20]. Under its WTO agreement, Colombia was allowed to subsidize rice exports in 2002 for close to 17 000 tonnes and US$ 96 million. However, following a correction in its notification where the country informed that it had included tax rebates in its calculation of the base subsidies, Colombia forgeited its export subsidy rights on rice.

Exports accounted for about 17 percent of world trade in 2000-01. With the exception of the EU, which continued to make use of its export subsidy entitlements, most exports from those countries were made on commercial terms or under food aid programmes.

Among Developed countries, the United States, promoted rice exports essentially under export credit guaranteed programmes since direct export price subsidies granted under the Export Enhancement Programme have not been used since 1996. Assistance to rice exporters was conveyed through export credit guarantee Programmes (GSM-102 for credit of up to three years and GSM-103 for credits of up to 10 years). In 1999 and 2000, more than 200 000 tonnes were reported to have benefited from such guarantees. This information was not available for the latest period. In addition, the level of rice shipped under Food Aid programmes fell in 2001 and 2002 compared with the previous two years, representing 8 percent and 11 percent of country's rice exports

Table I-12: United States - Volume of rice export shipped under special programmes







(.........................'000 tonnes....................)

PL 480







Other Food aid







Total Food aid







Share of Food aid in total exports







* provisional
Source: USDA - Rice Situation and Outlook Yearbook, November 2002

Under the WTO Agreement, the EU committed to cut in 1999/2000 the volume and budgetary expenditure on rice subsidized exports to a maximum of 139.3 thousand tonnes (milled equivalent) and € 40.4 million, respectively. In 2000/01, the last year due for reduction, the ceilings were set at 133.4 thousand tonnes and € 36.8 million. According to EU's notification to WTO, in 1999/2000, 140.4 thousand tonnes were effectively exported with subsidies, entailing an expenditure of € 26.4 million. In addition 63.5 thousand tonnes were shipped under food aid programmes. In 2000/01, the level of rice exports with refunds fell to 132.3 thousand tonnes but the expenditure rose to € 32.3 million. The level of food aid shipments, on the other hand, dropped substantially to 21.2 thousand tonnes.

Based on its notification to WTO, Japan increased substantially the volume of rice it granted as food aid in 2000/01, when it reached 706 830 tonnes, up from 218 928 tonnes in the preceding year.


In 2001 and 2002, governments reacted to low international rice prices by adopting less expansionary production policies, departing from the stance generally maintained in the preceding two years. This shift coincided with greater emphasis on better quality rice cultivation, especially in major exporting countries in Asia.

Although a number of governments promoted the opening of new lands to boost rice production, much support has been channelled through yield-enhancing measures, such as varietal improvements and extension, subsidies on basic inputs, irrigation and credit. Particular efforts continued to be made to disseminate high-yielding varieties, especially hybrids, but a growing number of governments also showed interest in the development of genetically-modified rice. Large public investments in irrigation appear to have lost appeal, except in a few selected countries where rice is still predominantly grown under rainfed conditions. In Africa, emphasis was on inland valley rice cultivation, with partial water control, but most of the region remained dependent on external assistance for the realization of land development projects and for the rehabilitation of existing irrigation schemes. In Africa and, especially in Latin America and the Caribbean, several countries made inroads in the consolidation of land reforms and provision of ownership titles.

Concerns over the impact of lingering low prices on producer incomes prompted governments to implement market stabilization measures, for instance by activating large procurement schemes, and to adopt debt alleviation programmes. However, direct price support to producers was minimal in Africa and much of Latin America and the Caribbean, where market protection was mostly conveyed indirectly through border measures. In general, although many developing countries had large scope for increasing domestic support to rice producers within their WTO commitments, the provision of additional assistance to the sector was constrained by a lack of budgetary resources. The situation was different for the developed and middle-income countries and several of them raised compensatory or emergency payments to assist their farmers to weather the impact of depressed market conditions. As a result, production in those countries remained fairly stable.

Although rice remains subject to domestic marketing restrictions or retail price controls in several countries, distribution of rice at preferential prices was often scaled down and targeted to special population groups. The responsibility of state marketing enterprises in rice distribution also tended to be reduced and several incentives were introduced to entice the private sector to play a greater role in the various phases of the rice commodity chain. The thrust towards privatization persisted in Africa despite past evidence that the private sector did not succeed in taking over the functions previously fulfilled by public agencies.

Regarding stocks, the two major rice producers engaged in a large scale reduction of public rice inventories. However, while China adopted production-cutting measures and released reserves domestically to bridge the gap with consumption, India reduced its stock overhang by boosting exports. Many countries, especially in Asia, remained committed to maintain a minimum level of stocks for food security and market stabilization purposes.

As to rice trade, developing countries continued to lower their WTO bound import tariffs and to increase the size of their tariff quotas in compliance with their WTO commitments. In several instances, the private sector was also allowed to play a more active role in rice imports. The prevalence of low international prices, however, encouraged several importing countries to raise tariff and non-tariff barriers to protect domestic producers. Recourse to safeguard clauses also seems to have increased in 2001 and 2002. Some countries also resorted to phytosanitary measures.

In the field of exports, government interventions intensified as international competition for markets stiffened. As a result, a large number of transactions were conducted under government-to-government or barter trade deals in the past two years. Several among the major exporting countries tried to form a coalition to sustain rice quotations, an initiative that was already launched in 2000. The major trade development over the past two years, however, was the surge of exports from India, boosted by low priced sales from government stocks. Finally, many countries and country grouping made progress in the negotiation of free trade agreements, either on a bilateral basis or with major trading blocs.

Thus, overall, while there has been evidence that national rice policies have evolved in 2001 and 2002 towards reduced government intervention and more open trade regimes, the rice sector still appears to be very much protected and highly subject to market stabilization measures, reflecting the special role rice continues to play for food security and income generation.

[1] World rice trade accounts for about 6 percent of global rice production, against 12 percent for coarse grains and 18 percent for wheat.
[2] Cambodia liberalised domestic rice procurement and marketing in 1989
[3] Cropping intensity was officially reported to have risen from 133 percent in 1996-97 to 147 percent in 2000-01.
[4] Paddy area in the Philippines was of the order of 4 million hectares by 2000.
[5] Average in 1992/93 - 1994/95 for Spain and Portugal, 1993/94 - 1995/96 for the others.
[6] PFC and DP are made on 85 percent of the producer's rice contract area times the rice programme yield on the farm.
[7] Base for the calculation of marketing loan benefits, defined as the difference between the loan rate and the loan repayment rate (for rice the US-defined prevailing world price) times actual production of each farm. Payable only when the world price falls below the loan rate.
[8] defined for rice as: the sum of 1) the higher of the US defined world price level or commodity loan rate plus 2) the direct payment rate;
[9] CCP = 0.85 {target price- [Max (world price, loan rate) + direct payment rate]} (base contract prod.) Thus, producers with rice production flexibility contracts will receive counter cyclical payments of up to: 0.85 x [231.5 - (143.3 + 51.8)] = US$ 30.94 per tonne of their base contract production.
[10] Zhejiang, Jiangsu, Shanghai, Fujian, Guangdong, Hainan, Beijing and Tianjin.
[11] In 1998, Bulog lost its State Trading Enterprise status, its rice import monopoly and the tax exemption privileges on rice imports it had enjoyed till then.
[12] This is substantially below the WTO ceiling of 160 percent.
[13] Nigeria maintained a rice import ban between 1986 and 1995
[14] Emergency Action on Imports of Particular Products
[15] Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.
[16] For a more detailed description of the EU rice import regime, see the Review of Basic Food Policies, 2001
[17] All ACPs, plus Afghanistan, Bangladesh, Bhutan, Cambodia, Laos, Maldives, Mauritania, Myanmar, Nepal and Yemen.
[18] Thailand, Viet Nam, India, Mainland China and the United States.
[19] Although India is not entitled to use export subsidies on rice under its agreement with WTO, it appears to have resorted to the developing countries exception under Article 9 of the AoA, which allows them to subsidize internal transportation and processing.
[20] The application of the safeguard by Colombia was ruled to be illegal by the Board of the Andean Pact.

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