A £1 billion ($1.2 billion) sector of the UK economy is apprehensive about its prospects as the UK and India draw nearer to a much-anticipated free-trade agreement.
British rice millers like Tilda and Veetee Rice have prospered over the years by importing low-tariff unmilled brown rice from countries such as India and Pakistan, then refining the grains into the white product that UK consumers adore.
However, as India pushes for a significant reduction in tariffs on white rice, and with minimal communication from British trade authorities, the industry, which sustains over 3,000 jobs across 16 mills and processing facilities spanning from Kent in southern England to Yorkshire in the north, is increasingly anxious about its future.
“It is crucial that existing tariffs on milled (white) rice are maintained,” Alex Waugh, outgoing director of The Rice Association, said at a private event in the House of Commons last month attended by rice industry leaders and government officials. “If access on milled rice is conceded, the basis of operations will be undermined, the incentive for future investment in the UK will be lost and ultimately jobs will go.”
A spokesperson for the UK Department for Business and Trade said officials were working towards an “ambitious trade deal.”
“We have always been clear we will only sign a deal that is fair, balanced and ultimately in the best interests of the British people and the economy,” the spokesperson said.
An individual familiar with the UK discussions stated that the matter of rice tariffs had not yet been thoroughly resolved. They mentioned that it remained a contentious issue, and both sides were still some distance away from resolving the more “challenging” aspects of a trade agreement.
Another source, who was informed about the Indian negotiating team, verified that the issue of rice tariffs was highly sensitive and that no agreement had been reached on this matter as of now.
At present, the UK imports significant quantities of brown rice from India, with approximately 150,000 metric tons, which accounts for a quarter of its overall rice imports, originating from India. Import tariffs play a crucial role in making this economically viable. The tariff on brown basmati rice is £25 per ton, or zero if it falls under a list of special varieties. This stands in stark contrast to the tariff on white basmati rice, which is around £121 per ton.
According to industry leaders, a significant reduction in tariffs on white rice could render UK mills obsolete. This move is anticipated to provide minimal cost advantages for consumers, potentially jeopardizing the reliability of rice supply and posing a risk of decreased product quality.
Waugh argues that India wouldn’t reap significant benefits from reduced UK tariffs. He noted that farmers in India typically receive better prices from UK mills for their brown rice compared to local buyers. This is because UK mills prioritize pesticide compliance and increasingly seek out rice with enhanced sustainability credentials.
On the other hand, Indian millers are expected to export relatively small quantities of their milled rice to the UK, which may have a limited impact on their overall profits.
Waugh further emphasized that the negative consequences for the UK go beyond mere job losses and reduced production.