2012 MMA Rice Purchasing Plan Released

An Expert's View about Agriculture and Animal Husbandry in South Korea

Posted on: 15 Feb 2012

The Korean government recently released the 2012 Minimum Market Access (MMA) rice purchasing plan.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 1/31/2012 GAIN Report Number: KS1202 Korea - Republic of Grain and Feed Update 2012 MMA Rice Purchasing Plan Released Approved By: M. Kathryn Ting Prepared By: Sunchul Choi//Gerald Smith Report Highlights: The Korean government recently released the 2012 Minimum Market Access (MMA) rice purchasing plan. Under the MMA, Korea will purchase nearly 368,006 MT of rice, comprised of 162,778 MT under the global quota (GQ) and several country specific quotas (CSQ) totaling 205,228 MT. The United States is expected to receive around 100,000 MT, or 27 percent of the total MMA taking into account the U.S. CSQ and the medium grain allocation. Eighty percent of the US CSQ quota has been allocated to table rice this year, compared to 55 percent in 2011. Post: Seoul Author Defined: Overview: The Korean government announced the release of the 2012 Minimum Market Access (MMA) rice purchasing plan, which is included at the end of this report. [1] Under the 2012 MMA, Korea plans to purchase its commitment of 368,006 MT of rice, up 20,347 MT or about 6 percent from last year. The MMA is divided between the MFN global quota (GQ) of 162,778 MT and the country specific quotas (CSQ) totaling 205,228 MT. The GQ is further allocated by variety of rice: 25.1 percent to medium grain, 30.7 percent to short grain, 16 percent to long grain and the remainder to optional varieties. The United States is expected to receive 100,000 MT, or roughly 27 percent of the total MMA volume. The U.S. share is calculated by adding the 50,076 MT U.S. CSQ and the 50,000 MT GQ medium grain allocation. The United States portion could potentially increase up to several thousand tons depending on whether Australia fills its medium grain CSQ and if not how Australia’s quota is redistributed under the global quota. Despite repeated requests in the past that all of the Australian CSQ be retained as medium grain under the global quota, Korea has maintained only the table rice portion as medium grain. Korea is likely to adhere to this position, which means an additional amount of 4,858 MT of table rice out of the 9,030 MT Australian CSQ this year could be available to U.S. suppliers. This year’s announcement of the grain purchasing plan was released earlier than in years past in part because Korea is trying to expedite the tendering and delivering of rice to stabilize the domestic rice market. According to press reports, Korean farmers have been holding rice stocks in hopes of receiving higher prices later in the season. The tendering process is expected to be completed during the first half of the year. The delivery of most of the brown rice for processing is scheduled to be completed by the end of November 2012, while U.S. milled rice shipments are scheduled for delivery from June through July 2012, Chinese milled rice from July through September, Thai milled rice in July, and Australian milled rice in September, respectively. Looking at the 2012 MMA in its entirety, Korea will import 110,401 MT of table rice and 257,605 MT of processing rice. While both these amounts continue to grow each year, the percentage of table rice is fixed at 30 percent of the overall MMA. Refer to Table 1 to see how these volumes have changed over time. Global Quota This year’s GQ is 162,778 MT, up 20,348 MT from last year. The GQ is generally for processing rice and is usually divided based on type: small, medium, or long grain rice. This year, short grain (SG), medium grain (MG) and long grain (LG) will represent 31, 25, and 16 percent of the GQ respectively. The United States is the primary supplier of MG rice to the Korean market, while China supplies all the SG and Thailand supplies most of the LG. See table 2 for the historical GQ allocations. The remaining 28 percent is made-up of an optional variety allocation, which was first introduced in the 2008 MMA as a means of curbing government outlays on imported rice. Since that time this particular allocation, which includes traditional processing brown rice, broken rice and sweet rice, has grown each year and has doubled in size to 46,000 MT. The optional variety specification favors cost-competitive Southeast Asian suppliers, like Thailand and Vietnam. In addition, as this allocation increases in size it causes the GQ allocation for medium grain rice to grow at a slower rate, which limits opportunities that otherwise would have gone to U.S. suppliers. In fact, the MG allocation increased by 5,000 MT this year to 40,825 MT. O the other hand, the percentage of MG as part of the total GQ remains unchanged at 25 percent from last year. Country Specific Quotas Meanwhile, the aggregate CSQ volume remains fixed each year at 205,228 MT. The United States, Australia, Thailand and China each have CSQs. These quotas are comprised of both processing and table rice. Although the individual CSQs are fixed, the volume of table rice increases each year with an offsetting reduction in the volume of processing rice. Under the 2012 CSQ’s, Korea will purchase 110,401 MT of table rice and 94,827 MT of processing rice. See Table 3 for breakdown of CSQs. The 2012 U.S. CSQ, totaling 50,076, is made up of 40,056 MT of table rice and 10,020 MT for processing. The U.S. table rice allocation of 40,056 MT compares to 27,473 MT in 2011 - or a 45 percent increase. The percentage of the US CSQ allocated to processing has consequently been reduced from 22,603 MT in 2011. As a result, the U.S. share of total Korean table rice imports will be 36.3 percent in 2012, which is nearly 12 percentage points higher than last year. In years past, the U.S. share of table rice CSQs has fluctuated between 26 and 30 percent, depending on the redistribution of the Thai CSQ. The increased table rice allocation for the United States is due to a redistribution of reduced allocation of Chinese and Thai rice for table purpose. The rate for the latter is 24.4 percent based on historical trade patterns. The long grain Thai table rice has a very limited demand in Korea and as such has been re- allocated based on local market conditions. In recent years, Chinese table rice has also undergone slow auctioning. Due to the aforementioned market conditions, the U.S. table rice allocation under the 2012 MMA is 13,118 MT higher than it would have otherwise been. Please refer to Table 4. Korea continues to designate U.S. table rice by #1 and #3 grades, despite calls from both industry and USG for the entire allocation to be designated as #1. According to the U.S. rice industry, since #3 grade table rice is not produced in the United States, U.S. suppliers are reportedly selling #1 rice as if it were #3 grade rice. However, aT and MIFAFF, continue to maintain a 90-10 ratio to meet market demand for both #1 and #3 in Korea. This year, the Korean government has allocated all 10,020 MT of the US CSQ for processing to U.S. medium grain brown rice. For the past two consecutive years, the government tried to purchase 4,500 MT of U. S. long grain rice but was unsuccessful. Table 1. Korea: Rice Import Schedule (MT, Milled Rice) Calendar Year Total Processing Table Purpose Rate of Table Rice (%) 2005 225,575 203,018 22,557 10 2006 245,922 211,493 34,429 14 2007 266,270 218,342 47,928 18 2008 286,617 223,562 63,055 22 2009 306,964 227,154 79,810 26 2010 327,311 229,118 98,193 30 2011 347,658 243,361 104,297 30 2012 368,006 257,605 110,401 30 2013 388,353 271,848 116,505 30 2014 408,700 286,090 122,610 30 Source: Ministry of Food, Agriculture, Forestry & Fisheries (MIFAFF) Table 2. Korea: Global Quota Allocation per Rice Variety (MT, Milled rice) Year Medium Grain Short Grain Long Grain Optional Variety Total Unbroken Broken Sweet 2005 6,104 11,192 3,052 na na na 20,347 % 30 55 15 na na na 100 2006 13,022 21,568 6,104 na na na 40,694 % 32 53 15 na na na 100 2007 19,534 32,351 9,156 na na na 61,041 % 32.0 53 15 na na na 100 2008 19,534 32,352 9,156 20,347 a/ na na 81,389 % 24.0 39.8 11.2 25.0 na na 100 2009 31,270 40,119 9,000 na 20,347 b/ 1,000 c/ 101,736 % 30.7 39.4 8.9 na 20.0 1.0 100 2010 33,325 42,411 15,347 5,000 d/ 25,000 b/ 1,000 c/ 122,083 % 27.3 34.7 12.6 4.1 20.5 0.8 100 2011 35,825 44,911 20,694 10,000 d/ 30,000 b/ 1,000 c/ 142,430 % 25.2 31.5 14.5 7 21.1 0.7 100 2012plan 40,825 49,911 26,042 10,000 d/ 35,000 1,000 162,778 % 25.1 30.7 16.0 6.1 21.5 0.6 100 Source: MIFAFF 1/ MIFAFF introduced an optional variety allocation in the 2008 MMA in order to minimize outlays due to rising international grain prices. a/ Optional Variety among medium, short and long grain b/ Broken rice with an optional variety c/ Sweet rice with an optional variety d/ Optional Variety between medium and short grain Table 3 Korea: Import Schedule of Table Rice (Milled Rice, MT) (Col 3) C (Col 2) US US CSQ alendar Total (Col. 1) Total Table Rate of Table Year CSQ for MMA R U.S. Share of Total ice CSQs Rice (%) Table Rice CSQs (%) for Processing Table 2005 225,575 22,557 10 24.4 5,504 44,572 2006 245,922 a/ 34,429 14 30.3 10,414 39,662 2007 266,270 47,928 18 29.6 a/ 14,193 35,883 2008 286,617 63,055b/ 22 30.1 a/ 18,989 31,087 2009 306,964 79,810 c/ 26 29.8 a/ 23,760 26,316 2010 327,311 98,193 30 26.7 a/ 26,219 23,857 2011 347,658 104,297 30 26.3 a/ 27,473 22,603 2012 / 368,006 110,401 30 36.3 d 40,056 10,020 2013 388,353 116,505 30 24.4 28,427 21,649 2014 408,700 122,610 30 24.4 29,917 20,159 Source: Ministry for Food, Agriculture, Forestry & Fisheries (MIFAFF) Note: Estimates for 2012-14 are calculated using the following formula: Total CSQ table rice CSQs (col. 1) X U.S. share of total table rice CSQs (col. 2) = US Table Rice Allocation (col. 3) a/ include reallocation of Thai table rice allocation b/ 24,934MT of Chinese rice was diverted to the processing purpose c/ 33,303 MT of Chinese rice and 1,500 MT of Thai rice are diverted to the processing purpose d/ include reallocation of Chinese and Thai table rice allocation that were slow in selling auctions Table 4 Korea: CSQ Table Rice Allocation (MT, Milled rice) Year USA China Thailand Australia Total 2005 5,504 12,767 3,293 993 22,557 % 24.4 56.6 14.6 4.4 100 2006 10,414 21,500 1,000 1,515 34,429 % 30.3 62.4 2.9 4.4 100 2007 14,193 29,626 2,000 2,109a/ 47,928 % 29.6 61.8 4.2 4.4 100 2008 18,989 39,292 2,000 2,774b/ 63,055 % 30.1 62.3 3.2 4.4 100 2009 23,760 49,462 3,078 c/ 3,510b/ 79,810 % 29.8 62.0 3.8 4.4 100 2010 26,219 65,556 2,100 c/ 4,318a/ 98,193 % 26.7 66.8 2.1 4.4 100 2011 27,473 67,135 5,100c/ 4,589a/ 104,297 % 26.3 64.4 4.9 4.4 100 2012 plan 40,056 62,487 3,000c/ 4,858 110,401 % 36.3 56.6 2.7 4.4 100 Source: MIFAFF a/ USA won the Australian CSQ allocation converted to MFN due to Australia’s inability to fulfill quota due to drought conditions. b/ China won the Australian CSQ allocation converted to MFN due to Australia’s inability to fulfill quota due to drought conditions. c/ included 90MT of Jasmin rice Table 5. Korea: U.S. #1 vs #3 Table Rice Allocation (MT, Milled rice) Year #1 #3 Total 2005 2,752 2,752 5,504 % 50 50 100 2006 6,248 4,166 10,414 % 60 40 100 2007 9,935 4,258 14,193 % 70 30 100 2008 15,191 3,798 18,989 % 80 20 100 2009 21,384 2,379 23,760 % 90 10 100 2010 23,597 2,622 26,219 % 90 10 100 2011 24,726 2,747 27,473 % 90 10 100 2012 plan 36,050 4,006 40,056 % 90 10 100 Source: MIFAFF Table 6. Korea: Processing Rice Allocation Based on CSQ (MT, Milled rice) Year USA China Thailand Australia Total 2005 44,572 103,392 26,670 8,037 182,671 % 24.4 56.6 14.6 4.4 100 2006 39,662 94,659 28,963 7,515 170,799 % 23.2 55.4 17 4.4 100 2007 35,883 86,533 27,963 6,921a/ 157,300 % 22.8 55.0 17.8 4.4 100 2008 31,087 76,867 27,963 6,256a/b/ 142,173 % 21.9 54.1 19.6 4.4 100 2009 26,316 66,697 26,885 5,520c/ 125,418 % 21.0 53.2 21.4 4.4 100 2010 23,857 50,603 27,863 4,712c/ 107,035 % 22.3 47.3 26.0 4.4 100 2011 22,603 49,024 24,863 4,441b/d/ 100,931 % 22.4 48.6 24.6 4.4 100 2012 plan 10,020 53,672 26,963 4,172 94,827 % 10.6 56.6 28.4 4.4 100 Source: MIFAFF a/ Thailand won the Australian CSQ allocation converted to MFN due Australia’s inability to fulfill quota due to drought conditions. b/ broken rice c/ Pakistan won the Australian CSQ allocation converted to MFN due to Australia’s inability to fulfill quota due to drought conditions. d/ Vietnam won the Australian CSQ allocation converted to MFN due to Australia’s inability to fulfill quota due to drought conditions. Plan for 2012 MMA Quota allocation for 2012 MMA (Unit : M/T, milled rice basis) Allocation by Grade Item Type Non Table rice Table rice US.No.1 US.No.3 Total China Short 53,672 37,492 24,995 62,487 (116,159) Long 0 - - - US Medium 10,020 36,050 4,006 40,056 (50,076) Long 0 - - - CSQ Thailand (205,228) Long 26,963 3,000 0 3,000 (29,963) Australia Medium 4,172 2,429 2,429 4,858 (9,030) Total 94,827 78,971 31,430 110,401 MFN (Short)49,911; (Medium)40,825; (Long)26,042; (Short/Medium)10,000; (Broken)35,000; (Glutinous) (162 1,000 ,778) [1] All statistics are reported on a milled basis.
Posted: 15 February 2012

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