A Composite Index of Market Access for the Export of Rice from the U.S Eric Wailes, University of Arkansas

Overview  Study approach  US rice sector structure  Price Ladder  Prices  Costs  Subsidies/Taxes  Assessment of CIMA

Study approach  US export a wide variety of rice types to 160 countries  Composite Index of Market Access (CIMA)  Used similar methods as Uruguay and Thailand case studies  Period of study: 2006, 2007 and 2008

Data sources  Trade data  USDA FAS GATS online (10 digit HS schedule)  UN COMTRADE  Price data  USDA  Cost data  Industry sources and cost models  Subsidies and tax data  WTO, USDA

Data on the U.S. Rice Sector Item m. cwt.2005/062006/072007/082008/09 Beginning Stocks Production Imports Total Supply Domestic Use Exports Total Use Ending Stocks Exports/Prod uction

Major US rice import markets

US rice exports by type

US rice industry product flow

US rice product process flow

Market structure of US Rice  ~ 10,000 farms  ~2,000 on-farm drying/storage facilities  ~ 300 commercial elevators (attached/unattached to mills)  ~ 40 rice mills (cooperatives are dominant in Arkansas and California)  Major export ports: New Orleans, San Francisco, Houston

Price Ladder 1. Prices received by farmers 2. Elevator/mill paddy price 3. Processed price at mill 4. Port price (FOB) 5. Destination price (CIF) 6. Final price at importer

Prices received by farmers Source: USDA, ERS, Rice Outlook, 2008

Prices at elevator/mills Source: Industry sources  Rough rice price  Equals Farm price  Plus:  Transport cost farm to elevator/mill $9.92/mt  Drying/storage costs $ / mt  Assume average storage 6 months  Inspection/grading costs $ 1.76 / mt

Prices at elevator/mills Source: Industry sources and cost models  Processed price  Rough rice price at mill  Converted to milled equivalent  Brown rice (conversion factor 0.8)  Milled rice (converstion factor 0.55 (long), and 0.6 (medium))  Plus:  Milling costs:  Brown $45.45/mt;  White $54.54/mt

Prices at ports (FOB) Source: Industry sources and cost models  Elevator rough rice price or mill processed price Plus:  Transport cost to port from elevator or mill  Inspection and certification fees  Inspection fees $3.31/mt  GM certification $10/mt

Prices at importer (CIF) Source: Industry sources and cost models  Export price (FOB)  Plus:  Ocean freight rates and insurance  Mexico: $30/mt  EU: $87/mt  Turkey: $95/mt  Japan: $86/mt

Prices at importer (with taxes/subsidies) Source: WTO, USDA, EU Commission  Import price (CIF)  Plus:  Duties and taxes  Mexico: $0/mt  EU: 65 euro/mt plus 4% VAT  Turkey: 34% ad valorem/mt  Japan: Markup 292 Yen/kg for MA and 341 Yen/kg for over MA

Calculation of CIMA Source: WTO, USDA, EU Commission  Barriers to Market Access (BMA) equals  Import duties + Excise taxes + health/safety standard costs  Barrier to market access percentage (BMAP) equals  BMA/Import price (CIF) * 100  CIMA = 1 – BMAP

Comments/questions about CIMA  Are all forms of protection quantifiable?  Licensing, TRQs, etc.  Why aggregate?  Value as a benchmark?  Value in negotiations?  Value in dispute resolution?

Data issues for CIMA  More difficult for more differentiated products  Easier for countries with strong information/data systems about production, processing and marketing costs  To extent that data relies on private sector, it invites strategic behavior in terms of access to and quality of information provided.