Colombia Rice TRQ Unfilled for the First Time

  |   International Agricultural Trade Report


Column chart showing U.S. agricultural exports to Colombia.  There has been a severe drop of between the first 9 months of 2020 and the first 9 months of 2021.

In 2021, despite advantages offered through the United States-Colombia Trade Promotion Agreement (TPA), U.S. rice exports to Colombia have declined to just $5 million through September. The significantly lower exports to this market are a result of a larger Colombian crop and lower domestic prices, plus increased competition from South American exporters. This is a significant development for U.S. rice exporters since 2020, when Colombia was the eighth-largest destination for U.S. rice by value.

Since the TPA was enacted on May 15, 2012, with shipments soaring upon implementation, U.S. exporters have consistently filled the tariff-rate quota (TRQ) at 100 percent until 2021. In 2011, before implementation, U.S. rice exports to Colombia were only $3 million. The TPA went into effect in 2012, allowing an initial 79,000 tons of U.S. rice exports to enter duty-free compared to out-of-quota tariff rates of 80 percent. As a result, exports jumped to roughly $57 million in 2012, rising twenty-fold.

When sales to Colombia began to rise under the TPA, the United States mainly exported milled rice. U.S. rough (unmilled) rice was restricted to entering Colombia through one port due to concerns about the plant pest Tilletia horrida. However, the Colombian Agricultural Institute released the phytosanitary certificate for rough rice outlining required fumigation measures in 2017. The certificate permitted the entry of U.S. rough rice into all maritime ports and enabled U.S. exporters to respond to pent-up market demand. Since 2018, U.S. rice exports have been primarily rough rice. In 2020, Colombia was the second-largest destination for U.S. rough rice.

Column chart showing U.S. rice exports to Colombia.  There was a severe decline between 2020 and 2021, with nearly no milled rice and very little rough rice.

The TPA enabled growth in U.S. rice exports to Colombia and provides incentives on both sides to fill the TRQs specified under the TPA. The agreement allows U.S. sellers to bid on a specific amount of the listed quota at auctions three times each year, awarding the quotas to the highest priced bidders. As motivation to fill the auction quotas, both U.S. and Colombian rice industries evenly divide and distribute the auction proceeds to their respective industries for rice research.

U.S. traders continue to face a tariff for out-of-quota exports. In 2012, out-of-quota duty rates were 80 percent, the same rate that other competitors faced. However, since 2018, tariff rates for U.S. rice have declined by 4.5 percentage points every year under the TPA. The current out-of-quota tariff rate is 55.4 percent. By 2030, tariff rates will fall to zero upon full implementation of the TPA.

Colombia Rice Export Quota (MT)
Auctions Jan/Feb June October Total Total Awarded
2012 N/A N/A 79,000 79,000 79,000
2013 53,000 12,000 17,555 82,555 82,555
2014 60,412 12,540 13,318 86,270 86,270
2015 63,131 13,104 13,917 90,152 90,152
2016 65,972 13,694 14,543 94,209 94,209
2017 68,940 14,311 15,197 98,448 98,448
2018 72,043 14,955 15,881 102,879 102,879
2019 75,284 15,628 16,596 107,508 107,508
2020 78,672 16,331 17,343 112,346 112,346
2021 82,213 17,066 18,123 117,402 7,480
2021 (awarded) 6,591 543 346 7,480 7,480

The table above reports the auctions and amounts awarded between the United States and Colombia since the agreement. The amounts awarded are then shipped to Colombia duty-free. The 2021 January auction was the first time a listed quota was not awarded in its entirety. Similarly, in the second and third 2021 auctions only a fraction was awarded from the listed allotments.

Line graph comparing Colombia's rice production and consumption.  In MY 2020/2021, production exceeded consumption, but that has sharply reversed course in MY 2021/22

There are a few reasons why the quota has not been filled in 2020/21. The primary reason is rising rice production in Colombia led to lower domestic prices. The record 2020/21 production was nearly one-third larger than the previous year, resulting from record harvested area and higher yields. Due to the record crop and the addition of ample carry-over stocks, domestic rice prices within Colombia have fallen.

Line graph comparing rice prices in the U.S. and Colombia.  Prices in Colombia have declined steadily since 2012, while  U.S. in and out of quota prices have remained relatively stable
Phase out Year TRQ (MT) Out-of-quota Duty
Year 1 2012 79,000 80.0%
Year 2 2013 82,555 80.0%
Year 3 2014 86,270 80.0%
Year 4 2015 90,152 80.0%
Year 5 2016 94,209 80.0%
Year 6 2017 98,448 80.0%
Year 7 2018 102,879 73.8%
Year 8 2019 107,508 67.7%
Year 9 2020 112,346 61.5%
Year 10 2021 117,402 55.4%
Year 11 2022 122,685 49.2%
Year 12 2023 128,205 43.1%
Year 13 2024 133,975 36.9%
Year 14 2025 140,003 30.8%
Year 15 2026 146,304 24.6%
Year 16 2027 152,887 18.5%
Year 17 2028 159,767 12.3%
Year 18 2029 166,957 6.2%
Year 19 2030 Unlimited 0.0%

Source: World Trade Organization

The price chart shows the differences between the Colombian national average retail prices for milled rice and the U.S. free on board (FOB) quotes for milled rice, with out-of-quota rates applied to the U.S. FOB milled rice export quotes based on the year. While U.S. exports to Colombia have been paddy rice exports, this gives the general sense of reduced competitiveness of U.S. rice in the market.

After the listed annual TRQ is filled, additional exports face tariffs listed in the chart. Despite the high tariff rates, U.S. rice has still been competitive for out of quota sales. However, Colombian domestic prices have trended downward over the past years and have begun to reach similar levels as the United States.

Not only have lower domestic prices in Colombia become a challenge to U.S. exporters, leading to unfilled quotas, but other competitors have also obtained duty-free access to the market due to their own free trade agreements with Colombia.

Stacked column chart showing Colombia's top rice suppliers.  The U.S. has been the number 1 supplier since the trade promotion agreement in 2012.

The most significant competitors for the United States are Peru and Ecuador. The two countries are members of the Andean Community of Nations (CAN),1  in addition to Colombia. Since 2018, CAN members have had access to a duty-free TRQ. Peru will have unlimited access in 2022 and Ecuador in 2027. U.S. market share has been decreasing over recent years as imports from CAN have grown. However, despite these gains, the United States still accounts for the largest share of Colombia rice imports. The exception was 2016, when Colombia imported rice from nontraditional suppliers due to severe impacts from El Niño.

In summary, Colombia has been a large market for U.S. rice, with exports increasing since the implementation of the TPA until recently; but it is currently not filling its TRQ with the United States. For the current April 2021-March 2022 harvest, a smaller crop is expected in Colombia, but large carryover stocks will continue to dampen import demand. Competition with other suppliers makes it challenging for the United States to boost sales. Even though the current 2021/22 USDA forecast assumes that Colombian imports will pick up pace towards to the end of the marketing year, prospects for U.S. sales this year remain highly uncertain.

1The group was initially referred to as the Andean Pact. The name changed in 1996 to the Andean Community (Comunidad Andina, CAN). This is a free trade bloc that trades in a wide variety of products, beyond rice. The full member countries are Colombia, Peru, Ecuador, and Bolivia.

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