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GLOBAL RICE MARKET PRIMER SUMMARY Rice is a major world staple that is important to countries across the globe; Most rice that is consumed is grown domestically, and governments actively protect most major domestic rice production industries from exposure to lower global pricing; Rice trade totals only around 8 percent of total production, and is currently at its highest level since WWII; Demand is projected to rise over the next decade due to population growth, mostly in Southeast Asia; Total production of rice is expected to rise, but not at the same pace as demand; Nearly all gains in production will be achieved through higher yields resulting from technological developments; Most of the world’s arable land suitable for rice is already under cultivation, and the potential for expanding land use for rice production is limited; Region-specific data is included in the body of the document. EXPOSURE Although a great number of countries rely on imports for the vast majority of their consumption, these country as also low per capita rice consumers. Countries that consume a great deal of rice as a percentage of their daily basket are also suitable for rice production. Exceptions to this rule include Singapore, Cuba, and DPRK. Countries that import 90-100% of rice consumption: Israel, South Africa, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Canada, Croatia, Djibouti Afars-Issas, Hong Kong, Jamaica and Dep, Kuwait, Lebanon, Libya, Mauritius, Oman, Papua New Guinea, Reunion, Singapore, Syria, United Arab Emirates, Yemen, Somalia, Algeria, Brunei, Switzerland, Angola, Trinidad and Tobago, Senegal and Jordan Countries that import 50-90% of rice consumption: Saudi Arabia, Cameroon, Iraq, El Salvador, Mexico, Honduras, Niger, Sudan, Benin, Gambia, Kenya, Ghana, Cuba, Haiti, Guatemala, Togo, Australia, Mozambique, Burkina, Kyrgyzstan, Chile and Ukraine Countries that import 25-50% of rice consumption: Morocco, Cote d'Ivoire, Mauritania, Liberia, Costa Rica, EU-27, Zambia, Nicaragua, Malaysia, Russian Federation, Nigeria, Turkey, Afghanistan, Guinea, Guinea-Bissau, Sierra Leone, Paraguay and Iran Top Importers Top Consumers (volume) Top Consumers (per capita) Top Producers Philippines China Colombia China Nigeria India India India EU-27 Indonesia Cambodia Indonesia Saudi Arabia Bangladesh Laos Bangladesh Bangladesh Vietnam Vietnam Vietnam Iran Philippines Burma, Union of Thailand Iraq Burma, Union of Bangladesh Philippines Malaysia Thailand Indonesia Myanmar South Africa Brazil Thailand Brazil Indonesia Japan Iraq Japan United States Nigeria Philippines United States Japan Korea, Republic of Madagascar Pakistan Senegal United States Sri Lanka ROK Cote d'Ivoire Cambodia Nepal Egypt Mexico Egypt China Cambodia Brazil Iran Malaysia Nigeria Cuba Nepal DPRK Nepal Vietnam EU-27 ROK Madagascar DPRK Pakistan Guinea Sri Lanka Singapore Madagascar Singapore Iran Main resources: http://www.ers.usda.gov/Briefing/Rice/2008baseline.htm http://www.ers.usda.gov/Briefing/Rice/background.htm#staple Data: http://www.fas.usda.gov/psdonline/psdQuery.aspx Rice as a staple: Rice is the primary staple for more than half the world's population, with Asia and Africa the largest consuming regions. Developing countries have long depended on its versatility and high caloric value. In recent decades, consumption has increased in developed Western countries. An ancient grain, rice is known to have been domesticated as early as the fifth millennium B.C. The species cultivated in Asia, believed to be where rice originated, is Oryza sativa from the Graminaceae (grass) family. It is also the species cultivated in most of today's rice-producing countries. Rice is produced worldwide and is the world's second- or third-largest staple crop, behind corn (maize) and, prior to milling, about the same as total wheat production. Although rice is produced over vast areas of the world, the physical requirements for growing rice (available water, soil types) are limited to certain areas. Economically sound production typically requires high average temperatures during the growing season, a plentiful supply of water applied in a timely fashion, a smooth land surface to facilitate uniform flooding and drainage, and a subsoil hardpan that inhibits the percolation of water. Four major types of rice are produced worldwide: Indica is grown mostly in tropical and subtropical regions and accounts for more than 75 percent of global trade. Indica rice cooks dry, with separate grains. Japonica rice, typically grown in regions with cooler climates, accounts for more than 10 percent of global rice trade. Aromatic rice, primarily jasmine from Thailand and basmati from India and Pakistan, accounts for more than 10 percent of global trade and typically sells at a premium in world markets. Glutinous rice, grown mostly in Southeast Asia and used in desserts and ceremonial dishes, accounts for most of the remainder. Pests, blights and floods: Major rice diseases include Rice Ragged Stunt, Sheath Blight and Tungro. Rice blast, caused by the fungus Magnaporthe grisea, is the most significant disease affecting rice cultivation. Rice crops can also be negatively impacted by weeds, insects, rodents, and birds. Floods are a major concern, as well as drought, although some drought and flood-resistant strains are under development. Marketing rice: For rice, care is necessary throughout the production, drying, storage, milling, and marketing phases to minimize the number of broken kernels, which sell at a considerable discount to whole-kernel rice. Five different products (or types of rice) can be produced from rough rice: hulls, bran, brown rice, whole-kernel milled rice, and brokens (broken-kernel milled rice). The first stage of milling removes the hull, producing brown rice that can be cooked and consumed. The next stage of milling removes the bran layer, leaving milled white rice. Or, prior to milling, rough rice may be parboiled, a process of soaking the rice in water and steaming it under intense pressure. Parboiling makes the rice less likely to break during milling and pushes nutrients from the bran layer into the kernel. Parboiled rice typically sells at a premium. On average, for every 100 pounds of rough rice produced, about 55 pounds of whole-kernel milled rice, 15 pounds of brokens, 8-9 pounds of bran, and 20 pounds of hull are produced. Global rice trade: International trade in rice is quite thin relative to total production. Only about 7 percent of global rice production is traded each year, well below the trade shares for other grains and oilseeds. Twenty years ago, the trade share for rice was barely 4 percent. Increased market access has accounted for much of the expansion. This has been especially true for much of Latin America, where countries began to open their markets to imports in the late 1980s. Despite greater market liberalization, many governments worldwide—especially in Northeast Asia—continue to severely limit rice imports and protect their producers. These policies limit the volume of world rice trade. In addition to being a relatively thin market, the global rice market is heavily segmented, with little substitution among types and qualities by producers or consumers. Long grain typically accounts for more than 75 percent of global rice trade. Medium- and short-grain rice combined account for about 12 percent of global trade. Fragrant or aromatic rice accounts for about 12 percent. Specialty rices— primarily glutinous rice—account for most of the remainder. Rice can also be traded in various degrees of milling: fully milled (or polished) rice, brown rice (sometimes referred to as cargo rice), or rough (paddy) rice. Land use not to expand: Global rice production is projected to increase about 7 percent over the next decade, almost entirely due to rising yields. Average yields are projected to increase less than 1 percent a year—about the same average gain achieved during the previous 10 years, but well below growth achieved from the late 1960s through the 1980s, when modern high-yielding varieties were adopted in much of Asia and Latin America. Nearly all available land that can grow modern highyielding varieties—primarily irrigated fields—has been switched to these varieties. High-yielding varieties for the less favorable ecosystems—dryland, flood-prone, and rainfed lowlands—have not been developed. Global rice area is projected to remain nearly flat over the projections period, about 1 percent below the 1999/2000 record. Most Asian countries have little, if any, ability to expand rice area. Over the next decade, smaller plantings in China are projected to be nearly offset by expanded rice acreage in Sub-Saharan Africa and the Western Hemisphere. India, Sub-Saharan Africa, Bangladesh, the Philippines, Argentina, Brazil, other South American countries, Thailand, and the United States account for most of the expected increase in global rice production. Growth in global rice demand: Global rice consumption is projected to increase almost 1 percent a year over the next decade, slightly outpacing production. Consumption growth is largely due to a rising population in Asia and a small increase in per capita rice disappearance in certain non-Asian rice-consuming countries, mostly in the Western Hemisphere and the Middle East. Many Asian countries— especially high- and medium-income countries—are experiencing declining per capita rice disappearance due to diet diversification resulting from higher incomes. Even in many low-income Asian countries, per capita rice disappearance is nearly stable. Total rice consumption in China—the world’s largest rice-consuming country—is projected to remain flat over the decade, as the impact of population growth is offset by declining per capita rice consumption. In contrast, India, Indonesia, and Bangladesh—the largest rice-consuming countries after China—are expected to consume larger quantities of rice each year. These three Asian countries, plus SubSaharan Africa, the Philippines, and Iran, account for most of the expected increase in global rice consumption over the next 10 years. Long-grain rice is expected to account for the bulk of the growth in global rice trade from 2008/09-2017/18. Long-grain rice is imported by a broad spectrum of countries in South and Southeast Asia, much of the Middle East, Sub-Saharan Africa, and Latin America. Medium/short-grain rice is primarily imported by Northeast Asia—Japan, South Korea, and Taiwan—and to a much lesser extent by several countries in the eastern Mediterranean, with Turkey the largest. Oceania imports smaller amounts of medium/short-grain rice. Expansion in the global medium/short-grain trade is projected to be much slower than for long grain. On balance, consumption growth is projected to slightly outstrip production increases, pulling ending stocks down about 5 percent by 2017/18. The Philippines accounts for most of the decrease in global ending stocks over the next decade. In contrast, China is projected to boost stocks slightly after nearly a decade of decline. The global stocks-to-use ratio is expected to fall from 17.4 percent in 2007/08 to 15.5 percent in 2017/18, the smallest since 1977/78. Global trade growth: Trade growth is projected to be slightly stronger in 2008/09 than in the rest of the projections. From 2009/10 until the end of the period, global rice trade is projected to increase 2.2-2.5 percent a year, reaching a record 37.4 million metric tons in 2017/18. Trade is expected to account for more than 8 percent of annual production by 2017/18, the highest share since before World War II. Increased global rice trade is primarily driven by rising import demand from Indonesia, the Philippines, Bangladesh, the Middle East, and Sub-Saharan Africa. Combined, these five markets account for about 70 percent of the increase in global rice imports over the projections period. Regional trade patterns South Asia/Asia: Asia is expected to continue to account for the bulk of rice exports over the projections period. Five countries—Thailand, Vietnam, India, Pakistan, and China— account for almost 75 percent of rice exports throughout the decade. Rising imports by Indonesia and Bangladesh are driven by growing populations, little ability to expand rice area, and competition for arable land from substitute crops and nonagricultural uses. For Indonesia, land constraints and an already-high crop intensity—especially on the island of Java—indicate little opportunity to significantly expand production. Yields are projected to continue rising in Bangladesh, as its high-yielding boro crop continues to account for a larger share of total rice area. Even with expanded area and higher yields, production growth is not expected to keep pace with rising demand in the Philippines. Much of the recent increase in Philippine rice production has been due to the adoption of high-yielding hybrid varieties. In contrast to Indonesia, per capita disappearance is projected to continue rising in the Philippines and Bangladesh. Even with rising imports, domestic production is still expected to account for the bulk of the rice consumed in Indonesia, the Philippines, and Bangladesh. Thailand and Vietnam, the world's largest rice-exporting countries, account for nearly half of all rice exports and nearly 75 percent of the projected increase. From 2007/08 to 2017/18, Thailand’s exports increase 47 percent to more than 13.0 million metric tons. During the same time, Vietnam’s exports increase 30 percent to 6.5 million metric tons. Rising production and declining per capita consumption account for the expansion in exports for both countries. Higher yields account for all of Vietnam’s production expansion. Both area and yield increase over the next decade in Thailand. Their combined share of global rice trade increases from 48 to 53 percent over the next 10 years. India’s exports slowly decline over the next decade, as consumption growth outstrips production. India’s exports decline from 3.6 million metric tons in 2008/09 to less than 3.3 million by 2017/18. India, currently the third largest exporter, drops to fourth in 2009/10. High internal price supports in the country continue to encourage large production and exportable supplies. Pakistan—currently, the fifth-largest rice exporting country—has little ability to expand rice area. Producers are facing a growing water shortage, antiquated infrastructure, and agriculture-related environmental problems. Pakistan’s exports are projected to increase just 100,000 metric tons over the decade, to 3.5 million metric tons by 2017/18, still below the 2005/06 record. Rice exports from China—currently, the world's sixth-largest exporter—increase from 1.7 million metric tons in 2008/09 to almost 2.5 million metric tons by 2017/18. Flat total consumption and a slight increase in production allow China to export a little more rice each year. Prior to 2003/04, China typically exported more than 2 million metric tons of rice a year. China reduced its exports in 2003/04 and 2004/05 due to tight supplies and high domestic prices. Only a slight recovery in exports is projected for Australia’s rice industry. Several years of severe drought have reduced Australia to a very minor rice exporter. The country was once a major second-tier exporter. In the projections, rice area slowly increases over the next decade as reservoirs refill. Area reaches 50,000 hectares by 2015/16, well below the record 186,000 hectares harvested in 2000/01 and about even with the 2004/05 area. Australia is projected to increase its rice exports each year over the next 10 years. However, by 2017/18, Australia’s exports will still be less than 40,000 metric tons, well below the 200,000 exported in 2006/07 and just a small fraction of the more than 600,000 metric tons shipped in the late-1990s. Australia will be a net importer throughout the period, although imports decline after 2008/09 as production shows some recovery. Middle East Strong consumption growth is behind import expansion by the Middle East. Except for Iran and Turkey, the Middle East grows very little rice and imports account for almost two-thirds of its annual rice needs. Most of the Middle East is a high-quality import market. Iran’s imports are projected flat over the next decade, as production growth offsets rising demand. Egypt’s exports are projected to decline almost 30 percent over the next 10 years, as strong consumption growth outstrips a slight increase in production. Egypt’s exports are currently at near-record levels. Little increase in area is projected, and Egypt’s yields are already the highest in the world. Africa: Despite increasing production, Sub-Saharan Africa is expected to import larger quantities of rice each year to meet rising consumption, driven by a rapidly expanding population. No decline in per capita disappearance is expected for SubSaharan Africa; even with stronger economic growth, incomes remain too low for the majority of consumers to shift away from rice to higher valued foods. Imports account for slightly less than half of the rice consumed in the region. Imports are projected to increase slightly for South Africa, a result of growth in consumption. South Africa does not produce rice. Eurasia: Rice shipments from the EU are projected to increase slightly from 2008/09 to 2017/18. The EU is not price competitive in most global markets. Most EU rice exports are shipped to former colonies in Africa and the Middle East, as well as to countries in Central Asia and other parts of Europe. The EU ships a small amount of its high-quality Arborio rice, grown in Italy, to higher income countries. Western Hemisphere: Imports: Among smaller import markets, Central America, the Caribbean, Mexico, and the United States are all expected to increase rice imports during the projections. Production cannot keep pace with consumption growth in Central America, the Caribbean, and Mexico. Also, in these three markets, rising incomes typically boost per capita rice consumption. In Central America and the Caribbean, this is primarily due to the income level of most consumers. Mexico, which has a higher average income than Central America or the Caribbean, has one of the lowest per capita rice consumption levels in the Western Hemisphere, indicating substantial room for growth. Aromatic varieties account for nearly all expansion in U.S. imports. In contrast to these expanding markets, imports are projected to decline over the decade for Brazil as per capita consumption declines—a result of rising incomes—and production increases. For many consumers in Brazil, income levels are high enough to slowly shift away from rice to higher valued foods. Exports: The United States accounts for about 11 percent of global rice exports over the next decade. Among the smaller exporting nations, Argentina is expected to increase exports over the projections period. Argentina’s rice exports are projected to expand 5 percent a year during 2008/09-2017/18, as strong production growth more than offsets growth in domestic consumption. By 2017/18, Argentina exports 700,000 metric tons of rice, up more than 55 percent from 2007/08. Exports from other South American countries (Uruguay, Guyana, and Suriname) are projected to remain nearly flat over the next 10 years. Expanded shipments from Uruguay—the largest exporter in the region—will be partially offset by weaker shipments from Guyana and Suriname. Both Argentina and Uruguay produce rice mostly for export. HARVEST CYCLE Rice China W Africa SE Asia S Asia January February March April early rice - planting early rice - planting single rice - planting May early rice - heading single rice - planting June early rice - maturing single rice - vegatative July early rice - harvesting single rice - heading late rice - planting August early rice - filling single rice - maturing late rice - vegatative September single rice - harvesting late rice - heading October November December single rice - harvesting late rice - maturing late rice - harvesting late rice - harvesting Coastal planting Coastal planting Coastal planting Sahel - planting Coastal planting Sahel - planting Coastal harvesting Sahel - planting Coastal harvesting Sahel flowering Coastal harvesting & 2nd planting Sahel flowering Coastal - 2nd vegatative Sahel Harvesting harvesting harvesting pre-planting planting vegatative Heading filling heading maturing maturing harvesting harvesting harvesting harvesting