US, Philippines sign MOU to revive rice trade amid price hurdles

The US rice industry is targeting shipments of up to 200,000 metric tons to the Philippines annually from 2028 under a memorandum of understanding signed Oct. 8, as the Southeast Asian country seeks to diversify its rice import sources beyond Vietnam.

However, US rice exporters could face challenges competing on price with regional suppliers, as industry participants cite a cost disadvantage for US-origin rice despite its quality appeal in the Philippine market.

The USA Rice Federation and the Philippine Rice Industry Stakeholders Movement (PRISM) signed a memorandum of understanding (MOU) on Oct. 8 to reopen and expand the US rice trade with the Philippines.

"Under the MOU, the two organizations agree to supply and purchase 100,000 tons of bagged and/or bulk U.S.-origin rice per year beginning in 2027. That figure rises to 200,000 tons per year beginning in 2028. PRISM and USA Rice intend to work diligently with their full industry members and government to facilitate this potential trade flow in a timely manner," according to a joint press release issued by the two organizations.

The Philippines has been seeking to gradually diversify its rice import sources and reduce its reliance on Vietnam, which currently supplies most of the country's imported rice.

However, US exporters could face challenges competing with regional suppliers on price, despite the potential for US rice to appeal to buyers on quality.

"Price-wise, we're clearly not competitive given the quotes we see from their subsidy-heavy regional neighbors. The only way we stand a chance in this market is if purchases are made purely on a political basis. However, U.S. LG 5% is better quality than almost anything we saw on the shelves in the retail sector in Manila," Peter Bachmann, president and CEO of the USA Rice Federation, told Platts Oct. 9.

The US was a major rice supplier to the Philippines from 1999 to 2007, primarily through cooperation with the country's National Food Authority, according to the press release.

A Manila-based rice importer said US rice would struggle to compete on price and expressed skepticism that the MOU would translate into actual trade. "I don't believe US rice will be competitive. I think it's just an MOU."

As of Oct. 9, Platts assessed Thai 5% broken white rice at $463/mt FOB Bangkok, carrying a $44/mt premium over Vietnamese 5% broken white rice at $419/mt FOB. Myanmar 5% broken white rice was assessed at $459/mt FOB FCL, while Pakistan's and India 5% broken white rice were assessed at $399/mt and $382/mt FOB, respectively.

Platts assessed US long-grain white rice with 4% broken at $604/mt FOB Oct. 8.

The price differences highlight the competitive pressure US rice exporters could face from Asian suppliers.

Market participants will watch whether the MOU translates into actual purchases from 2027 and whether US suppliers can compete on price with regionally-sourced suppliers as the Philippines diversifies its import sources.