According to European market sources, the EU is expected to lower import tariffs on brown rice in March. This comes after the lower rate of imports due to the finalization of Brexit, UK’s departure from the European Union, at the end of 2020.
The EU Commission reviews brown rice imports twice a year, during March and September, under the current system. Import tariffs are set at either EUR 30/mt., EUR 42.50/mt., or at EUR 65/mt., depending on the import rate.
As an example, if brown rice imports are lower than 191.113 mt., the tariff will be positioned at the lowest rate. On the other hand, if imports go as high as 258.565 mt., the Commission will set the tariff at the highest rate. If the imports are around the middle, the tariff will be set at EUR 42.50/mt.
According to the EU Commission data, brown rice imports (excluding Basmati rice) from September 1 to February 9 only amounted to 136.448 mt, far below the 191.113 mt. threshold. The UK had been EU’s largest rice importer, accounting for about 23% of the Customs Union imports during the fire four months of 2020-2021.
As a result of Brexit, the EU will only include UK brown rice imports up until December 21, and will only include EU27 imports in January to February when discussing the brown rice tariff calculation.
Amid this, speculations regarding the Commission’s reduction of the threshold by using a historical average of UK brown rice imports began to rise. In response, a spokesperson from the Federation of European Rice Millers (FERM) assured that it would not be the case and the thresholds will remain unchanged for the tariff review.
The FERM spokesperson stated, “We will be heading for a change and most probably… EUR 30/mt.” Several European participants also share the same view and had expected tariff to be lowered at around EUR 42.50/mt.
From the Commission’s data during the September review, EU imports at the beginning of 2020-21 kept up with the data during 2019-20, however, the pace slowed down by December due to the impact of the global container shortage.
Up until February 7, brown rice imports (including Basmati), was as low as 13% year on year. Reductions were also recorder for broken rice, milled, and semi-milled rice. It’s been noted that the divergence from the previous year’s totals are due to importers struggling to acquire containers to ship cargo from Asia.
Container freight costs from Myanmar, Thailand, and other Asian origins have quadrupled in the last six months, as reported by European participants. The fees have gone from USD 1,000/TEU USD 4,000/TEU as a result of shipping lines withdrawing ships from their roster.
Major EU buyers are steadily considering breakbulk shipments to make up for the loss. Recently, a bulk shipment trade of 12,000 mt of Argentine 5% broken brown rice has been reported. Additionally, another EU buyer has stated that it was going to source a 10,000 mt breakbulk shipment of Myanmar rice for Europe.
Sources have mentioned that the last-minute bulk shipments at EU ports could change the course of tariff import rates to a higher one. However, it is highly likely that the EU will reduce its import tariff beginning March.