Policy Documents

Grain Drain: The Hidden Cost of U.S. Rice Subsidies

Daniel Griswold –
November 16, 2006

Rice is the world's most important food commodity and also the most pro¬tected and subsidized. Tariffs, tariff-rate quotas, escalating barriers to processed rice, production and export subsidies, and state monopoly trading enterprises are common. Worldwide, tariffs on rice imports average 43 percent, and border protection and production subsidies account for three-quarters of income for rice farmers in wealthier countries.

The U.S. rice program is no exception. The U.S. government supports domestic rice production through tariffs on import¬ed rice and direct taxpayer subsidies based on production, prices, and historical acreage. Those programs make rice one of the most heavily supported commodities in the United States, with ramifications for U.S. taxpayers and consumers and rice producers abroad.

Americans pay for the rice program three times over—as taxpayers, as con¬sumers, and as workers. Direct taxpayer subsidies to the rice sector have averaged $1 billion a year since 1998 and are projected to average $700 million a year through 2015. Tariffs on imported rice drive up prices for consumers, and the rice program imposes a drag on the U.S. economy gener¬ally through a misallocation of resources. Rice payments tend to be concentrated among a small number of large producers.