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Global rice sector developments

04 July 2014

According to the FAO’s May 2014 Food Outlook report, “world rice production in 2014 could reach 501.1 million tonnes… 0.8% above the 2013 level”, delivering a “third consecutive season of subdued growth”. This has occurred despite the Chinese government’s decision to maintain a rice support price that is “very high” by international standards.

The report notes that “International trade in rice in 2014 is anticipated to increase by 5.5%, to 39.3 million tonnes, in a context of “intensified competition for markets”, with these trade volumes due to continue into 2015. This is projected to lead to a decline in import prices.

However, rice prices follow different trends in different markets segments. Between 2008 and 2013, prices of japonica and indica rice varieties fell between 20 and 25%, but by 2013, prices of aromatic rice had risen by 6.3% in a more stable market, while prices of Pakistani basmati rice were fully 27% higher, having recovered since 2011 from earlier falls.

In Africa, FAO sees rice production prospects as “positive”, with a forecast 3% growth in production. A large part of this increase is attributable to Madagascar, where production is set to increase by 19% under better climatic and pest-control conditions. In mainland East Africa, Tanzania has had to cope with poor rainfall, which is projected to curb output by 5%, while in Mozambique production losses are likely as a result of excessive rain and associated flooding.

In West Africa, after an 8% increase in rice production in 2013, growth of a further 2% is projected, assuming normal weather conditions. The report says that “Increases are currently anticipated for Burkina Faso, Cote d’Ivoire, Ghana, Guinea, Mali and Sierra Leone, where most governments are running supportive rice policies.” In contrast, late and reduced rainfall in Nigeria is projected to lead to a fall in rice production.

Selected sub-Saharan Africa rice importers and producers (million tonnes milled equivalent)

  Production Imports
  2010/11–12/13 2013/2014 2014/15 2010/11–12/13 2013/2014 2014/15
  (average) (estimate) (forecast) (average) (estimate) (forecast)
Côte d’Ivoire 0.4 0.5 0.5 1.1 1.3 1.3
Nigeria 2.7 2.8 2.8 2.5 2.5 2.9
Senegal 0.3 0.3 0.4 0.9 1.0 1.0
South Africa - - - 1.0 1.4 1.4
Tanzania 1.5 1.3 1.2 0.1 0.2 0.2
Madagascar 3.0 2.4 2.9 0.2 0.4 0.4
World 482.6 496.9 501.1 35.3 37.2 39.3

Source: FAO, Food Outlook, May 2014

According to the report, “rice imports by African countries are currently anticipated to edge higher, mainly on larger purchases by Nigeria, Mali, Senegal and Tanzania, while Madagascar and Mozambique are foreseen to curb deliveries.”

In the ACP Caribbean, FAO highlights a sizeable expansion of projected rice production in Guyana, with larger rice imports into Haiti. Increased imports are also projected for Costa Rica, Colombia, Bolivia and Peru.

In the EU, 2014 will see the last year of ‘coupled’ rice sector payments, with a 3% recovery in EU rice production projected, following weather-affected production levels in 2013. EU rice imports are increasingly sourced from beneficiaries of the Everything But Arms (EBA) arrangement, notably Cambodia and Myanmar.

Global rice consumption is increasing more than twice as fast as production (+5.2% compared to +2.0%), and annual consumption is projected to exceed production by 2014/15. This will see the stocks-to-use ratio fall from 35.7% in 2012/13 to 35.1% in 2014/15. FAO is uncertain whether this represents a longer-term rebalancing of global supply and demand.

Editorial comment

Current rice price trends would appear to pose challenges both for ACP rice exporters (Guyana) and ACP countries seeking to boost rice production.

Expanding Guyanese production needs to be seen in the context of:

  • uncertainty over the country’s future rice trade with Venezuela;
  • the entry into force of a new Vietnam–Haiti rice supply agreement; and
  • growing exports of rice from Cambodia and Myanmar to Guyana’s traditional EU market.

Guyana is likely to face serious challenges in finding export outlets at prices capable of sustaining recent production increases (see Agritrade article ‘ Record Guyanese rice production and slight recovery in Haiti’, 3 February 2014).

In West Africa, lower rice prices will intensify competition for local producers, potentially undermining government efforts to boost local production. This is a delicate issue, for while domestic rice production has grown impressively, it is outpaced by the growth in consumption, with imports continuing to increase.

In Nigeria, with weather-related setbacks to production, a projected 16% increase in official rice imports in 2014/15, and the escalating challenge arising from systematic rice smuggling, there is likely to be increased pressure for a review of the country’s rice sector policy, in the light of the planned ban on rice imports scheduled for 2015 (see Agritrade article ‘ Uncertain movement on Nigeria’s rice trade policy’, 18 May 2014).

In the longer term, if the growth in global consumption exceeds production on a sustained basis, then a return to higher global prices may occur, changing the global context for current efforts to promote rice production in ACP countries. A key policy question would then be how to sustain ACP rice production during the current phase of declining prices.

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