Us case-study

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. 2005/06 2006/07 2007/08 2008/09
Beginning
Stocks
37.7 43 39.3 29.4
Production 222.8 194.6 198.4 203.7
Imports 17.1 20.6 23.9 19.2
Total Supply 277.7 258.2 261.6 252.4
Domestic
Use
119.9 128.1 127.4 128.4
Exports 114.8 90.8 104.7 93.6
Total Use 234.7 218.8 232.2 222
Ending
Stocks
43.0 39.3 29.4 30.4
Exports/Prod
uction
51.5 46.7 52.8 45.9

Major US rice import markets
1 6 %
1 0 %
9 %
8 %
5 %5 %
3 %
3 %
4 %
3 %
2 %
1 %
3 0 %
V a lu e
M e x ic o
Ja p a n
H a iti
C a n a d a
Ir a q
S a u d i A r a b ia
N ic a r a g u a
C o s ta R ic a
E u r o p e a n U n io n- 2 7
K o r e a , S o u th
T u r k e y
T a iw a n
R O W

Major US rice import markets
2 2 %
8 %
8 %
7 %
6 %3 %
4 %
4 %
4 %
2 %
1 %
1 %
3 0 %
Q u a n t it y
M e x ic o
Ja p a n
H a iti
C a n a d a
Ir a q
S a u d i A r a b ia
N ic a r a g u a
C o s ta R ic a
E u r o p e a n U n io n- 2 7
K o r e a , S o u th
T u r k e y
T a iw a n
R O W

US rice exports by type
R o u g h , 3 1 %
B r o w n
M e d / S h o r t, 6 %
B r o w n L o n g , 3 %M ille d
M e d / S h r t, 1 9 %
M ille d
L o n g , 3 8 %
B r o k e n , 2 %
V a lu e

US rice exports by type
R o u g h , 3 4 %
B r o w n
M e d / S h o r t, 5 %
B r o w n L o n g , 3 %
M ille d
M e d / S h o r t, 1 5
%
M ille d
L o n g , 3 9 %
B r o k e n , 3 %
Q u a n t it y

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
It e m 2 0 0 6 2 0 0 7 2 0 0 8
U S D / m t U S D / m t U S D / m t
L o n g 1 8 0 .8 7 2 3 5 .6 9 2 9 7 .2 6
M e d iu m 2 3 3 .1 9 2 8 9 .7 2 4 0 5 .4 7
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 $ 29.39 / 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)
 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)
 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

M e x ic o p r i c e la d d e r 2 0 0 6 2 0 0 7 2 0 0 8
H S c o d e 1 0 0 6 1 0 1 0 0 6 1 0 1 0 0 6 1 0
C o s t o f p r o d u c t i o n C O P 1 9 1 1 9 7 2 0 2
T A X ( s u b s i d y i f P L C < $ 1 4 3 .3 0 , e q u a l t o $ 1 4 3 .3 0 - P L C ) T A X 0 0 0
P r i c e r e c e i v e d b y f a r m e r s 1 8 0 .8 7 2 3 5 .6 9 2 9 7 .2 6
C o s t o f m e e t i n g p r i v a t e s t a n d a r d s P L C
C o s t s o f m e e t i n g h e a lt h a n d s a f e t y s t a n d a r d s S P C 1 .7 6 1 .7 6 1 .7 6
P r i c e p a i d b y m i l l
P r o c e s s i n g c o s t s ( D r y a n d s t o r e 6 m o n t h s ) P R C 2 9 .3 9 2 9 .3 9 2 9 .3 9
F r e i g h t f r o m f a r m / d r i e r t o b a r g e 9 .9 2 9 .9 2 9 .9 2
P r o c e s s o r p r ic e ( R i v e r E l e v a t o r F O B ) 2 2 1 .9 4 2 7 6 .7 6 3 3 8 .3 3
D o m e s t i c c o s t t o p o r t O M C 1 2 .1 3 1 2 .1 3 1 2 .1 3
C o s t s o f m e e t i n g h e a lt h a n d s a f e t y s t a n d a r d s S P C 3 .3 1 3 .3 1 3 .3 1
M a r g i n 1 .0 9 - 1 7 .3 5 6 6 .1 8
E x p o r t e r p r ic e ( F O B p o r t ) 2 3 8 .4 6 2 7 4 .8 5 4 1 9 .9 5
T r a n s p o r t c o s t s , s h i p p i n g , in s u r a n c e , e t c T R A 3 0 3 0 3 0
E x p o r t e r p r ic e ( C IF p o r t ) P R X 2 6 8 .4 6 3 0 4 .8 5 4 4 9 .9 5
Im p o r t d u t ie s a n d o t h e r c h a r g e s M T D 0 0 0
E x c i s e t a x e s i n i m p o r t i n g c o u n t r y E D T 0 0 0
Im p o r t e r P r i c e P R M 2 6 8 .4 6 3 0 4 .8 5 4 4 9 .9 5
B a r r i e r M a r k e t A c c e s s B M A 3 .3 1 3 .3 1 3 .3 1
B a r r i e r M a r k e t A c c e s s P e r c e n t a g e B M A P 1 % 1 % 1 %
C o m p o s i t e In d e x M a r k e t A c c e s s C IM A 9 9 % 9 9 % 9 9 %

E U p r i c e l a d d e r IT E M 2 0 0 6 2 0 0 7 2 0 0 8
H S C o d e 1 0 0 6 2 0 1 0 0 6 2 0 1 0 0 6 2 0
C o s t o f p r o d u c t i o n ( p r e v i o u s y e a r ) C O P 1 9 1 1 9 7 2 0 2
T A X ( s u b s i d y i f P L C < $ 1 4 3 . 3 0 , e q u a l t o $ 1 4 3 . 3 0 - P L C ) T A X 0 0 0
P r i c e r e c e i v e d b y f a r m e r s ( c a l e n d a r y e a r ) 1 8 0 . 8 7 2 3 5 . 6 9 2 9 7 . 2 6
C o s t o f m e e t i n g p r i v a t e s t a n d a r d s P L C 0 0 0
C o s t s o f m e e t i n g h e a l t h a n d s a f e t y s t a n d a r d s S P C 1 . 7 6 4 1 . 7 6 4 1 . 7 6 4
P r o c e s s i n g c o s t s ( D r y a n d s t o r e 6 m o n t h s ) P R C 2 9 . 3 9 2 9 . 3 9 2 9 . 3 9
F r e i g h t f r o m f a r m / d r i e r t o m i l l 9 . 9 2 9 . 9 2 9 . 9 2
P a d d y p r i c e a t m i l l 2 2 1 . 9 4 2 7 6 . 7 6 3 3 8 . 3 3
B r o w n r i c e p r i c e a t m i l l ( c o n v e r s i o n 0 . 8 0 ) 2 7 7 . 4 3 3 4 5 . 9 6 4 2 2 . 9 2
P r o c e s s i n g c o s t s ( H u s k e d r i c e ) 4 5 . 4 5 4 5 . 4 5 4 5 . 4 5
B r o w n r i c e p r i c e a t m i l l ( F O B ) 3 2 2 . 8 9 3 9 1 . 4 1 4 6 8 . 3 7
D o m e s t i c c o s t t o p o r t O M C 1 2 . 1 3 1 2 . 1 3 1 2 . 1 3
C o s t s o f m e e t i n g h e a l t h a n d s a f e t y s t a n d a r d s S P C 3 . 3 1 3 . 3 1 3 . 3 1
C o s t s o f m e e t i n g G M O c e r t i f i c a t i o n S P C 0 . 0 0 1 0 . 0 0 1 0 . 0 0
M a r g i n - 6 7 . 7 2 - 7 4 . 9 4 1 7 4 . 9 9
E x p o r t e r p r i c e ( F O B p o r t ) 2 7 0 . 6 3 3 1 . 9 6 5 8 . 8
T r a n s p o r t c o s t s , s h i p p i n g , i n s u r a n c e , e t c T R A 8 7 8 7 8 7
E x p o r t e r p r i c e ( C I F p o r t ) P R X 3 5 7 . 6 4 1 8 . 9 7 4 5 . 8
I m p o r t d u t i e s a n d o t h e r c h a r g e s M T D 8 1 . 6 3 8 9 . 0 2 9 5 . 0 8
E x c i s e t a x e s i n i m p o r t i n g c o u n t r y E D T 1 7 . 5 7 2 0 . 3 2 3 3 . 6 4
I m p o r t e r P r i c e P R M 4 5 6 . 8 0 5 2 8 . 2 4 8 7 4 . 5 2
B a r r i e r M a r k e t A c c e s s B M A 1 0 2 . 5 1 1 2 2 . 6 5 1 4 2 . 0 2
B a r r i e r M a r k e t A c c e s s P e r c e n t a g e B M A P 2 9 % 2 9 % 1 9 %
C o m p o s i t e I n d e x M a r k e t A c c e s s C I M A 7 1 % 7 1 % 8 1 %

T u r k e y p r i c e l a d d e r 2 0 0 6 2 0 0 7 2 0 0 8
H S C o d e 1 0 0 6 1 0 1 0 0 6 1 0 1 0 0 6 1 0
C o s t o f p r o d u c t i o n C O P 1 9 1 1 9 7 2 0 2
P r i c e r e c e i v e d b y f a r m e r s 1 8 0 .8 7 2 3 5 . 6 9 2 9 7 .2 6
C o s t s o f m e e t i n g h e a l t h a n d s a f e t y s t a n d a r d s S P C 1 .7 6 1 . 7 6 1 .7 6
P r o c e s s i n g c o s t s ( D r y a n d s t o r e 6 m o n t h s ) P R C 2 9 .3 9 2 9 . 3 9 2 9 .3 9
F r e i g h t f r o m f a r m / d r i e r t o b a r g e 9 .9 2 9 . 9 2 9 .9 2
P r o c e s s o r p r i c e ( R i v e r E l e v a t o r F O B ) 2 2 1 .9 4 2 7 6 . 7 6 3 3 8 .3 3
D o m e s t i c c o s t t o p o r t O M C 1 2 .1 3 1 2 . 1 3 1 2 .1 3
C o s t s o f m e e t i n g h e a l t h a n d s a f e t y s t a n d a r d s S P C 3 .3 1 3 . 3 1 3 .3 1
M a r g i n - 8 .9 1 - 1 7 . 3 5 2 8 .8 1
E x p o r t e r p r i c e ( F O B p o r t ) 2 2 8 .4 7 2 7 4 . 8 4 9 4 3 8 2 .5 8
E x p o r t e r p r i c e ( C I F p o r t ) P R X 3 2 3 .4 7 3 6 9 . 8 4 9 4 4 7 7 .5 8
C o s t s o f m e e t i n g T u r k i s h F o o d C o d e x s t a n d a r d s S P C
Im p o r t d u t i e s a n d o t h e r c h a r g e s M T D 1 0 9 .9 8 1 2 5 . 7 5 1 6 2 .3 8
Im p o r t e r P r i c e P R M 4 3 3 .4 5 4 9 5 . 6 0 6 3 9 .9 6
B a r r i e r M a r k e t A c c e s s B M A 1 0 1 .0 7 1 0 8 . 4 0 1 9 1 .1 9
B a r r i e r M a r k e t A c c e s s P e r c e n t a g e B M A P 3 1 % 2 9 % 4 0 %
C o m p o s i t e I n d e x M a r k e t A c c e s s C I M A 6 9 % 7 1 % 6 0 %

J a p a n p r i c e l a d d e r 2 0 0 6 2 0 0 7 2 0 0 8
H S C o d e 1 0 0 6 3 0 9 0 2 0 1 0 0 6 3 0 9 0 2 0 1 0 0 6 3 0 9 0 2 0
C o s t o f p r o d u c t i o n ( p r e v i o u s y e a r ) C O P 2 7 3 2 4 9 2 6 7
P r i c e r e c e i v e d b y f a r m e r s ( c a l e n d a r y e a r ) 2 3 3 . 1 9 2 8 9 . 7 2 4 0 5 . 4 7
P r o c e s s i n g c o s t s ( D r y a n d s t o r e 6 m o n t h s ) P R C 2 9 . 3 9 2 9 . 3 9 2 9 . 3 9
F r e i g h t f r o m f a r m / d r i e r t o m i l l 9 . 9 2 9 . 9 2 9 . 9 2
P a d d y p r i c e a t m i l l 2 7 4 . 2 6 3 3 0 . 7 9 4 4 6 . 5 4
M i l l e d r i c e p r i c e a t m i l l ( c o n v e r s i o n 0 . 6 ) 4 5 7 . 1 1 5 5 1 . 3 2 7 4 4 . 2 4
P r o c e s s i n g c o s t s ( H u s k e d r i c e ) 5 4 . 5 5 5 4 . 5 5 5 4 . 5 5
M i l l e d r i c e p r i c e a t m i l l ( F O B ) 5 1 1 . 6 5 6 0 5 . 8 7 7 9 8 . 7 9
D o m e s t i c c o s t t o p o r t O M C 1 2 . 1 3 1 2 . 1 3 1 2 . 1 3
C o s t s o f m e e t i n g G M O c e r t i f i c a t i o n S P C 0 . 0 0 1 0 . 0 0 1 0 . 0 0
M a r g i n - 1 7 . 2 5 - 7 1 . 5 0 - 2 1 6 . 0 1
E x p o r t e r p r i c e ( F O B p o r t ) 5 0 9 . 8 4 5 4 9 . 8 5 9 8 . 2 1
E x p o r t e r p r i c e ( C I F p o r t ) P R X 5 9 5 . 8 4 6 3 5 . 8 6 8 4 . 2 1
M a r k e t A c c e s s m a r k u p M T D 2 5 1 0 . 7 7 2 4 7 9 . 7 5 2 7 7 4 . 8 3
O u t o f M a r k e t A c c e s s d u t y M T D ' 2 9 3 2 . 1 0 2 8 9 5 . 8 7 3 2 4 0 . 4 7
I m p o r t e r P r i c e P R M 3 1 0 6 . 6 1 3 1 1 5 . 5 5 3 4 5 9 . 0 4
B a r r i e r M a r k e t A c c e s s B M A 2 5 1 4 . 0 8 2 4 9 3 . 0 5 2 7 8 8 . 1 3
B a r r i e r M a r k e t A c c e s s P e r c e n t a g e B M A P 4 2 2 % 3 9 2 % 4 0 7 %
C o m p o s i t e I n d e x M a r k e t A c c e s s C I M A - 3 2 2 % - 2 9 2 % - 3 0 7 %
B a r r i e r o v e r M i n i m u m M a r k e t A c c e s s B M M A 2 9 3 5 . 4 0 2 9 0 9 . 1 7 3 2 5 3 . 7 7
B a r r i e r o v e r M i n i m u m M a r k e t A c c e s s P e r c e n t a g e B M M A P 4 9 3 % 4 5 8 % 4 7 6 %
C o m p o s i t e I n d e x o v e r M i n i m u m M a r k e t A c c e s s C I M M A - 3 9 3 % - 3 5 8 % - 3 7 6 %

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.

Us case-study

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