Ban on US rice by the European Union and Cuba is turning out to be detrimental for the American rice sector as the commodity may found it tough to get buyers now.

According to a report published by Rabobank, apart from the ban, a number of global and local challenges like higher fuel and fertiliser costs, rise in competitive pressure from low-cost Asian rice, and 2007 US Farm Bill are likely to add to worries of the rice sector.

In August 2006, EU had banned long-grain rice imports from the US after they were found contaminated with traces of genetically modified grain. Cuba has quantitative restrictions on food imports from the US. EU accounts for 10 per cent of the US long-grain rice exports.

Rice output in the US is forecast to fall 13 per cent from a year ago to 8.8 million tonnes 2006-07 marketing year, owing to higher cost of fertilisers and fuel, Rabobank said.

The acreage is expected to decline further in 2007-08 owing to high prices for other crops such as soybean and corn, and non-availability of rice seed, which could produce exportable rice.

Although producing only around 1.5 per cent of the world's rice, the US accounts for as much as 12 per cent of international rice trade.

The proposed cap on payments to rice farms in the 2007-Farm Bill would lead to decline in rice acreage and rise in prices.

GM contamination issue has also restricted or held exports to other countries such as Japan, South Korea, Mexico, Iraq, and Philippines among others.

The situation may help big rice producing Asian nations like Thailand. India is also likely to benefit from the situation as rice from the subcontinent may find new buyers in EU region.