FAYETTEVILLE, AR – Economists at the University of Arkansas estimated the impact of brand and country of origin (COO) labeling on purchasing decisions by Puerto Rican consumers and found that it provides a premium of $0.28 per three-pound bag of medium-grain rice.
Drs. Lawton Lanier Nalley, Alvaro Durand-Morat, and Wei Yang
surveyed nearly 350 rice-eating consumers to determine the economic impacts of disjunctive marking in Puerto Rico. Disjunctive marking, which is illegal in the U.S., is the addition of “or” or “and/or” between country names in COO labels. What is in the bag must be clearly and non-deceptively stated.
“More than half of the respondents indicated that origin of rice was important to them and they strongly agreed that rice produced in the U.S. is safe for them to consume,” said Dr. Durand-Morat. “The majority of consumers believed the
Rico brand is sourced from Puerto Rico when in fact it has predominantly come from China over the last four years. Our modeling showed that if consumers knew that
Rico is sourcing its rice from China, the consumers’ willingness to pay (WTP) for the brand drops by 28 percent.”
This corresponds to feedback USA Rice received from a recently conducted influencer campaign in Puerto Rico that showed consumers were receptive to messages about U.S. rice’s safety and cooking consistency.
In 2019, USA Rice accused Puerto Rican importers of Chinese rice of violating U.S. Customs and Border Protection’s (CBP) COO labelling regulations. Ultimately, one of the main importers of Chinese rice was fined $10,000 by the Department of Consumer Affairs of Puerto Rico for violating the Deceptive Practices and Ads Regulation. After nearly four years, the investigation remains ongoing.
“This report gives economic credence to what we’ve been saying all along – that the U.S. rice industry has earned a premium in this market and
Rico is exploiting it with deceptive marketing to the detriment of Puerto Rican rice consumers,” said Peter Bachmann, USA Rice vice president of policy & government affairs. “We’d like to see COO labelling regulations more stringently enforced by CBP so that other brands cannot monetarily benefit from the good name and values of the United States without exclusively supporting our domestic industry.”
USA Rice continues to share examples of violations with CBP investigators and is working to educate consumers in Puerto Rico to understand which brands are utilizing rice actually grown in the U.S.