California company will be first US business to export rice to China
In the midst of the escalating trade war between the United States and China, one California rice company is bridging the divide.
In July 2019, Sun Valley Rice won a contract with a Chinese importer, making it the first US rice producer to sell rice to China.
“China has been tough to get into because for many years it was illegal to sell our rice there,” said Betsy Ward, president of USA Rice, a national trade association. But, in 2018, the US and China came to an agreement, making it legal to export American rice to China. As a result, more than two dozen US companies were approved to export rice to China. But Sun Valley was the first to land a deal.
Sun Valley, a family-owned company based in Sacramento, California, had been trying to break into the Chinese market for close to 15 years.
“We would travel regularly to China to research [the market], attend trade shows and meet the industry players,” said Ken LaGrande, who founded Sun Valley Rice with his father Michael in 2000. “It was a commitment we made as a family to persist. So when the opportunity opened up, we were ready.”
“California’s rice growing regions are the same latitude as Korea and Japan. So we all grow the same kind of rice — medium grain and short grain — that’s popular in Chinese, Japanese and Korean cuisine,” said LaGrande.
“But Chinese consumers, who eat rice every day, will now have more choice with our rice,” he said. “It is of the highest quality, grown and packaged under strict labor protocols and environmental and safety standards.”
Sun Valley annually sells 250 million pounds of rice under half a dozen varieties. Beginning in the fall, the company will export roughly 88,000 pounds of its Calrose rice to Shenzhen Yintuo, a subsidiary of the Dragon Ocean Hing Group, in China.
Five generations of farmers
The LaGrande family has been producing rice in the Sacramento Valley, starting with LaGrande’s great-grandfather in the 1920s.
“He recognized that the climate, soil and water supply in the region was the correct balance to successfully grow rice,” said LaGrande.
Over the decades, the family integrated other aspects of rice production into the business, such as drying and milling. Eventually, it grew to become LaGrande Family Foods Group. “Now it’s a couple of dozen different operations,” he said. Those include farming, sprouting rice and sake milling.
In 2000, LaGrande and his father Michael identified a growing market demand for high quality, specialized sushi-grade rice, and launched Sun Valley Rice.
“Sun Valley Rice now is a fully integrated arm of the family business, ‘from farm to fork’ if you will,” said LaGrande. “We source rice from 200 farms, or about 10% of the rice crop gown in California. And we handle drying, milling, packaging and marketing of the rice.”
LaGrande is mindful of the business risks involved with entering new markets. “Anytime we export to a foreign country, there are risks we think about,” he said. “But we also develop strategies to help is mitigate those risks.”
Sun Valley exports its rice to the European Union, for example, where the ongoing trade negotiations with the US has resulted in extra tariffs on rice, said LaGrande.
And entering a new market can surface additional layers of protocol and red tape. “We have to deal with inspectors. What if our cargo gets tied up at customs as part of the inspection process? We have to be prepared for it,” he said.
The US rice industry has also experienced trade disruptions due to measures designed to protect humans, animals and plants from diseases or contamination.
“These were not necessarily based on sound science, but more political,” said USA Rice’s Ward. “Although we are happy that this sale was made, and we expect it to be successful, there is always a risk that future sales could be disrupted. It is the name of the game in the rice trade.”
Still, LaGrande is hopeful that Sun Valley Rice’s entry into China opens the gate for other American rice brands.
“We have the first sale. But we really hope there will be strong continuing demand for American rice in China, and that allows, in turn, more opportunity for farmers back in California,” he said.