Production

The MY 2015/16 (October to September) rice production is forecast at 240,000 MT, with harvested area estimated at 41,000 ha. This year's rough rice production level converts to 165,000 MT of milled rice. The Post/New total rice production estimate for MY 2014/15 has been revised slightly upward from USDA/Official estimates to 230,000 MT (rough production) reflecting the most recent data from SAGARPA. The increase in rough rice production is equivalent to 158,000 MT of milled rice. According to official and private industry sources, rice output increased due to higher planted area-than-previously estimated as well as better yields, due to favorable weather conditions. For the 2014 spring/summer crop cycle, for example, yields are expected to reach 5.477 MT/ha, which is just slightly higher than yields obtained for the same crop cycle last year (5.394 MT/ha).

On January 26, 2015, during the celebration of "National Rice Day", Mexico's Agriculture Secretary, Enrique Martinez, and members of the rice industry issued several statements and announced some measures to support rice production during this current administration (which will end in 2018). Highlights include:

  • Secretary Martinez stating that the Mexican Government, through SAGARPA and the Secretariat Economy (SE), has designed programs, incentives and funding schemes suitable to boost rice productivity and the restitution of tariffs on imported rice to strengthen competitiveness of domestic production.
  • Modification on import tariffs from all countries that Mexico does not have free trade agreements is up 20 percent, which should stimulate domestic rice production in the states such as Nayarit, Colima, Michoacán, Veracruz, Morelos and Jalisco.
  • Reinstated import duties additionally will allow a gradual reduction in rice imports, considered an important input in the consumer basic basket (fourth, after corn, wheat and beans).
  • Secretary Martinez presented two new varieties of long grain rice seeds. These varieties are reportedly of higher quality and durability. The Secretary indicated that it is expected these varieties can be an important tool to fulfill the commitment to double rice production over the next four years.
  • The two long-grain varieties were recently released by the National Institute of Forestry, Agriculture and Livestock (INIFAP) –a decentralized agency of SAGARPA-, and it is estimated that these varieties can obtain yields between 8 to 10 metric tons per hectare in the field.
  • Announcement of construction of main and secondary canals for irrigation and drainage in rice arable areas of Campeche, Veracruz, Tabasco and Nayarit, covering 40 hectares.
  • Announcement of electrification of irrigation systems for new rice areas in Campeche and Tabasco.
  • New program of specialized technical assistance, training and technology transfer to rice growers.
  • Based on these commitments established between rice producers, millers and the Mexican Government, rice production is expected to increase by approximately12 percent in 2015, with the goal of achieving 360,000 MT in 2018.

Meanwhile, the presidents of the National Committee of the Rice System Product; the Mexican Rice Council, and the National Council of Rice Producers of Mexico, expressed their appreciation to the Mexican Government for the actions taken to detonate more domestic rice productivity and revive the domestic rice market.

Moreover, the members of the rice millers industry announced their commitment to contract with rice farmers an agreement for price hedging, in accordance with the terms and conditions of international prices. Also, the industrial members pledged to first buy all domestic rice production and then turn to imports, in order to supply the domestic market, which currently exceed 1.0 MMT.

Lastly, the President of the National Committee of the Rice System Product announced that they are petitioning SAGARPA, asking for set support per metric ton for rice growers, which would decrease yearly until 2018. Reportedly, in 2015 the support requested would be 500 pesos/ MT (U.S. 33.34 dollar/MT), 400 pesos in 2016 (U.S. 26.67 dollars/MT); a year after 350 pesos/MT (U.S. 23.34 dollars/MT) and 300 pesos/MT in 2018 (U.S. 20 dollars/MT). It is unclear if SAGARPA will grant these support requests.

Consumption

The Post/New MY 2015/16 rice consumption forecast is 910,000 MT, a 2.2 percent increase from the previous marketing year. Affordable prices, due to expected higher domestic production and population growth, are the two main factors driving consumption of rice in MY 2015/16. Private analysts noted that although Mexico's per capita rice consumption is quite low (around 7.3 kilograms) compared with other countries in Latin America, it has continued to grow at a slightly higher rate than the population rate growth (1.1 percent) and thus the potential to increase further. According to industry sources, Mexican consumers increasingly demand higher rice quality although the market is largely price driven.

Trade

The Post/New import forecast for MY 2015/16 is estimated to increase only 10,000 MT, to 785,000 MT because of the expected increase of domestic production. As already mentioned, on December 2014 the SE published in the Diario Oficial (Mexico's Federal Register) a decree that modifies the Tariff of the General Import and Export Tax Law for imported rice. The decree imposes a 9 percent tariff on imported paddy rice and a 20 percent tariff on husked, long grain and other imported rice. The United States is exempt from the announced tariffs because of NAFTA. This measure was a result of intense lobbying from the Mexican Rice Council with SAGARPA and SE in an effort to protect Mexican rice growers and milling industries, from what was considered undervalue, low quality imported rice that was detrimental to their businesses. At the same time, trade sources estimated that this measure could allow for more U.S. rice to be exported to Mexico.

It should be noted that the U.S. rice cooperators have continued with aggressive trade servicing and promotional activities in Mexico. The cooperators have demonstrated that they are committed to ensuring that the United States retains a dominant share of Mexico's rice import market and will continue to highlight that the U.S. is a consistent, reliable, and timely supplier of high-quality rice, both in paddy and milled forms.

Stocks

The forecast for ending stocks in MY 2015/16 is 228,000 MT, an increase of approximately 19.4 percent over the previous marketing year due to higher domestic production and because the trend of higher imports continues. On the back of a 10,000 MT forecasted hike in Mexico's imports as well as 10,000 MT on domestic production, the stocks-to-use ratio for MY2015/16 is set at 25.1 percent, up from 21.5 percent recorded in previous marketing year.

Mexico Rice Production, Supply and Demand for MY2013/14 to MY2015/16

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

35

35

39

40

0

41

Beginning Stocks

189

189

151

151

0

191

Milled Production

131

131

155

158

0

165

Rough Production

191

191

226

230

0

240

Milling Rate (.9999)

6,870

6,870

6,870

6,870

0

6,870

MY Imports

693

693

775

775

0

785

TY Imports

700

700

775

775

0

785

TY Imp. from U.S.

0

514

0

590

0

690

Total Supply

1,013

1013

1,081

1,084

0

1,141

MY Exports

2

2

3

3

0

3

TY Exports

2

2

5

5

0

5

Consumption and Residual

860

860

890

890

0

910

Ending Stocks

151

151

188

191

0

228

Total Distribution

1,013

1,013

1,081

1,084

0

1,141

1000 HA, 1000 MT, MT/HA