us rice trade with mexico: integrated supply chain or just exports?
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US rice trade with Mexico: Integrated Supply Chain or Just Exports?. Eric Wailes University of Arkansas. US rice trade with Mexico. Mexico as an import market for US rice US as a competitive supplier to Mexico Development of an integrated supply chain. Source of rice in Mexico. - PowerPoint PPT PresentationTRANSCRIPT
US rice trade with Mexico:
Integrated Supply Chain
or Just Exports?
Eric WailesUniversity of
Arkansas
US rice trade with Mexico
• Mexico as an import market for US rice
• US as a competitive supplier to Mexico
• Development of an integrated supply chain
Mexico's share of US rice exports
0
2
4
6
8
10
12
14
16
18
20
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Pe
rce
nt
Total U.S. Rice Exports to Mexico, Milled Basis
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Met
ric
tons
Rough Milled
Source of rice in Mexico
0100200300400500600700800900
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Th
ou
san
d M
T
Production Imports
Drivers of growth in rice trade
• NAFTA preferences– Tariffs were eliminated on US rice compared to:– MFN rates:
• 9% paddy• 20% brown and milled• 10% brokens
• Decline in Mexican rice production– Switch to higher value fruit and vegetables
• Demand growth driven by GDP growth (2.9%)• Income elasticity of demand 0.46
Competitiveness of US paddy
• US is one of few exporters willing to export paddy (along with Argentina and Uruguay)
• Phytosanitary barriers maintained by Mexico against Asian rice
• Logistical advantages of US
Why paddy exports vs. milled?
• Tariff escalation and implicit subsidy for Mexico rice mills
• Previous research has suggested that there would be a switch to milled exports with harmonization/elimination of tariffs in NAFTA
• Mexican milling industry is competitive– Mexican mills have strong brands in retail market– By-product values are much higher in Mexico than
US, especially bran and brokens.– Continuation of countervailing duties on much of US
milled rice (all but 2 US mills)
Why the lack of supply chain integration?
• US mills viewed as a threat– countervailing duties imposed since 1999
• Mexican partners viewed as too risky• Dominance of few large Mexican mills in
branded rice with distribution advantages• Growth of supermarkets who limit SKUs makes
these brands valuable and competitive• Greater likelihood in the future that Mexican mills
will invest in the US
Summary/conclusions
• Yes. US rice is just exports (paddy)
• Lack of deeper supply chain integration a result of tension between the Mexican and US millers
• May well see integration come from Mexican side as in the case of the baking industry