Table of Contents

I. GUIDELINES FOR NATIONAL AND INTERNATIONAL ACTION ON RICE

A. GENERAL OBJECTIVES OF INTERNATIONAL COOPERATION

B. PRODUCTION POLICIES

C. TRADE POLICIES

D. INTERNATIONAL FOOD AID POLICIES

E. RICE RESERVES

F. GUIDELINES ON ENVIRONMENT

II. TABLES

Table I: Paddy support prices in selected countries in nominal and real terms

Table II: United States - Support to rice producers

Table III: EC - Support to rice producers

Table IV: EC import duties on long grain indica rice (1996-1998)

Table V: Rice food aid shipments (1996-1998)

I. GUIDELINES FOR NATIONAL AND INTERNATIONAL ACTION ON RICE¹

A. GENERAL OBJECTIVES OF INTERNATIONAL COOPERATION

(i) Close cooperation to ensure food security of developing countries, as well as substantial progressive reductions in market distortive interference and a reduction of distortions and restrictions in the world rice market.

(ii) The broad objective should be to achieve a balanced situation in production, consumption and trade in rice based on the following principles:

1. action should be beneficial to the world rice economy and should result in a stable world rice market, with supplies expanding at a sufficient pace to meet rising demand;
2. special consideration should be given both to the interests of developing and low-income food deficit countries, especially those where rice is a staple food and to those developing countries whose economies are heavily dependent on rice exports;
3. interference with normal commercial trade should be minimized, and importers' choice of source of supplies should not be restricted;
4. measures should aim at promoting consumption of rice, except in circumstances of rice shortages;
5. efforts of developing countries to develop their rice production potential should be supported.

B. PRODUCTION POLICIES

(i) Rice production policies should be sufficiently flexible to respond to new market situations. Domestic rice support policies should have minimal trade distortive effects and they should be harmonized with the Agriculture Agreement reached at the Uruguay Round.

(ii) Rice exporting countries should, during periods of over-supply of rice on world markets, avoid adopting measures which encourage an increase in the production in rice, unless a shortage of other grains occurs on the world market which warrants an increase in production of rice.

(iii) Developments in production policies and the measures taken to adjust supplies to demand on world markets should be subject to regular review by the Group so that if necessary, it may propose further remedial action.

(iv) International aid giving agencies and bilateral donors should in a manner consistent with the general objectives of international cooperation, assist developing countries in their efforts to raise their productivity and production of rice by providing increased technical and financial aid.

C. TRADE POLICIES

(i) Countries should not provide export subsidies to rice except in conformity with the Uruguay Round Agreement on Agriculture. Specifically, developed and developing countries should reduce the budgetary outlay on export subsidies on rice as well as the quantity of subsidized rice exports as stipulated by the Round.

(ii) Governments should provide information to the FAO Secretariat on the actual measures and reductions in rice subsidies undertaken so that these information could be consolidated and presented to the Group for its review and consultation for remedial action when any special difficulties arise.

(iii) With a view to improving international knowledge of current market trends, countries with a substantial interest in world trade should develop informal contacts and liaison between rice trade specialists.

(iv) In entering into longer term contracts for the exports and imports of rice, countries should consider that unforseen shortages can occur in exporting countries, which may make it difficult for a full compliance of the contract. When these situations occur, bilateral consultations should be undertaken to ensure that the needs of the contracting parties could be met to the extent possible within the terms agreed in the Uruguay Round Final Act.

(v) Governments are requested to use the opportunity offered in the Intergovernmental Group on Rice for the systematic exchange of information on trade policies, especially relating to the actions taken on improving market access and reducing export subsidies to enable the Group to keep developments in this field under regular review and to consult on proposals for remedial action when any special difficulties arise.

(vi) Developed countries should, where appropriate, make efforts to implement, improve and enlarge GSP schemes for rice and to focus in particular on the needs of low income food deficit countries.

(vii) Governments should consider assisting countries facing food, especially rice, shortages to obtain food aid in rice on grant terms or on highly concessional terms² and to obtain short term assistance from international financial institutions for financing some levels of commercial imports.

(viii) Within the framework of increased economic cooperation among developing countries and recognizing that the increase in import demand for rice in the coming years is likely to be mostly in the developing countries, governments concerned should make special efforts to encourage the expansion of trade among developing countries.

D. INTERNATIONAL FOOD AID POLICIES

(i) Countries engaging in concessional or food aid transactions should follow the FAO procedures for notification, consultation and establishment of usual marketing requirements within the context of the FAO Principles of Surplus Disposal. In order to facilitate such procedures, exporting and importing countries should provide, if possible, to the FAO Secretariat - by latest March each year - export and import statistics on rice on a calendar year basis, distinguishing between commercial and food aid exports and imports respectively, and stating their destination (in the case of exports) and origin (in the case of imports).

(ii) Countries should ensure that food aid should not be used to circumvent the commitments agreed in the Uruguay Round Final Act and to distort trade resulting in market displacement for developing exporting countries which do not have the means to finance similar concessional trade programmes. In this regard, food aid should not be tied and should, as far as possible, be on grant terms or on highly concessional terms.

(iii) The greater use of rice in multilateral food aid schemes is favoured and where possible, such food aid should be channelled through the WFP.

(iv) Multilateral aid-giving agencies, such as WFP, and bilateral donors, where possible and appropriate should increase food aid levels of rice and promote " triangular transactions" to the maximum extent possible while ensuring that the benefits of such transactions are equitably spread among developing exporting countries.

E. RICE RESERVES

(i) Countries should take the opportunity, whenever the rice supply situation warrants, to evolve a concerted approach to the building and the holding of rice stocks, keeping in view the overall objectives of market stability and food security, as well as national targets.

(ii) International aid-giving agencies and bilateral donors should help interested developing countries to increase their rice reserves and to secure the required financial and physical resources for this purpose, within the context of national policies, programmes and targets.

(iii) Developed countries, where rice stocks have accumulated, should consider earmarking larger quantities for meeting emergency requirements, keeping in view the minimum target of 500 000 tons of cereals for the International Emergency Food Reserves.

(iv) Countries where surplus stocks have accumulated should also consider applying a policy of reducing production and promoting the domestic use of the surplus rice.

F. GUIDELINES ON ENVIRONMENT

(i) Countries should give due regard to the environmental implications of their policy actions in areas relating to rice production, trade and consumption.

(ii) International financing institutions and bilateral donors should assist countries in their efforts to improve and expand upon the use and adoption of environmentally friendly policy measures.

(iii) In encouraging developing countries to adopt environmentally friendly production, consumption and trade measures, international financing institutions and bilateral donors should give due consideration to the economic impact of these measures, especially on countries' costs of production and, in consequence, their competitiveness. Where possible, therefore, rice project proposals on environmental concerns should be based inter alia on an economic assessment of their impact.

(iv) Countries should ensure that the pursuit of improved environmental practices should not be used to circumvent the agreements on reducing trade barriers reached in the Uruguay Round.

(v) With a view to enabling the FAO Secretariat to improve the exchange of information on different aspects of environmental problems and policy developments concerning rice and the monitoring and dissemination of related environmental technology, countries should develop close contacts with the FAO Secretariat and provide it with the necessary information.

II. TABLES

TABLE I: Paddy support prices in selected countries in nominal and real terms

- None . . . Not available p Preliminary

Source: USDA

1/ From 1996/97 eliminated under the FAIR Act.
2/ From 1996/97 contract payment rate; deficiency payments eliminated under the FAIR Act.
3/ From 1996/97 total contract payments.
4/ From August 1998 to May 1999.

Sources: EC
ONIC
n.a. - not applicable

TABLE II: United States – Support to rice producers

^1/ Starting in 1996/97; the buy-in price stays unchanged at 94% of the intervention price for Indica rice and 90% for Japonica rice.
^2/ In 1995/96 the ECU green rate was realigned with its financial rate. Previously the green rate was about 20 percent higher than the financial rate. This realignment has given rise to the apparent increase in intervention price in ECU terms. For example, the 1994/95 intervention price of 309.6 ECU/ton at the "switch-over" coefficient of 1.207509 is approximately equivalent to 373.84 ECU/ton in 1995/96.
^3/ If the quota area is exceeded by a member state, a penalty in the form of reduced compensatory aid, is to be imposed. The penalty will be progressive depending on the extent to which the maximum quota area is exceeded:
Excess Penalty
0 to < 1% 3 times the excess
1 to < 3% 4 times the excess
3 to < 5% 5 times the excess
5 to < 6% 6 times the excess

TABLE III:  EC - Support to rice producers

TABLE IV: EC import duties on long grain indica rice (1996-1998)