1. US rice trade with Mexico: Integrated Supply Chain or Just
Exports? Eric Wailes University of Arkansas
2. 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 3. 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 Percent 4. Total U.S. Rice Exports to
Mexico, Milled Basis 0 100,000 200,000 300,000 400,000 500,000
600,000 700,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
2002 2003 2004 2005 Metrictons Rough Milled 5. Source of rice in
Mexico 0 100 200 300 400 500 600 700 800 900 1992 1993 1994 1995
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ThousandMT
Production Imports 6. 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
7. 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 8. 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) 9. 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 10.
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
