Commodity in focus: Rice

Wed 12 Jul 2023
Posted by: Phillip Adnett
Trade News

Bags of different types of rice

The IOE&IT Daily Update's look at globally traded commodities continues as we examine a food grain relied upon the world over: rice.    

As a staple food of over half of the global population, rice is a source of nutrition for much of Asia, Latin America, Africa and the Caribbean. It is estimated that it provides more than a fifth of the calories consumed worldwide by humans.

Archaeologists have found rice dating as far back as 4350 BC in India, with the first recorded mention of rice in 2800 BC in China.

Rice cultivation requires very specific conditions, with large quantities of water in its early days, followed by a long and uninterrupted season of hot, dry weather. Farmers have to flood the fields and drain them at crucial periods.

For this reason, rice fields must be flat, whereas other cereal crops can grow on undulating ground.

There are more than 40,000 varieties of cultivated rice, although the exact figure is uncertain. More than 90,000 samples of cultivated rice and wild species are stored at the International Rice Gene Bank.

However, two major sub species of rice account for most cultivated varieties: Indica rice varieties are generally classified as long grain, while Japonica rice varieties can be either medium or short grain. 

Global basic

With 756m tonnes produced globally in 2019, rice is the world’s third-most produced agricultural crop, behind sugarcane and corn, which both also have a wide variety of non-consumption uses.

According to Mordor Intelligence, the rice market is expected to grow from $365.57bn in 2023 to $423.80bn by 2028, at a CAGR of 3%.

Around 84% of rice is harvested in just 10 countries, so many markets globally must rely on imports to meet domestic demand.

In 2019, India, Thailand, Pakistan and Vietnam were large net exporters of rice, shipping out nearly $16bn of rice combined. Other countries, including Iran, China, Saudi Arabia, and the Philippines consume above what they produce and rely on imports to meet their needs.

Globally, tastes change over time, reports the Guardian, with rice consumption in Japan now less than half its peak in 1962, when every person ate an average of 118kg a year. By 2020, per-capita consumption had more than halved to just under 51kg annually.

Million tons rice produced (2019)

China                    211.4                    28% of global total

India                     177.6                    23.5%

Indonesia             54.6                      7.2%

Bangladesh         54.6                      7.2%

Vietnam               43.4                      5.7%

Exports

Worldwide rice exports by country were worth a total $25.7bn in 2021, up by an average 5.5% for all exporting countries compared to 2020 when overall rice shipments were valued at $24.4bn.

The top five rice exporting countries generated almost three-quarters (74.2%) of the global value for rice exports during 2021.

India                     $9.6bn (37.5% of total rice exports)

Thailand              $3.4bn (13%)

Pakistan               $2.2bn (8.4%)

Vietnam               $2bn (7.7%)

US                         $1.9bn (7.5%)

China                    $933m (3.6%)

Italy                      $721.3m (2.8%)

Myanmar             $535.8m (2.1%)

Cambodia            $423.2 (1.6%)

Belgium                $397.8m (1.5%)

Imports

China                    $1.9bn (7.3% of total rice imports)

Philippines          $1.2bn (4.5%)

Saudi Arabia       $1.1 bn (4.1%)

US                         $1bn (3.8%)

Bangladesh         $939m (3.5%)

Iraq                       $716.5m (2.7%)

Ethiopia               $686.5m (2.6%)

Iran                       $667.5m (2.5%)

Benin                    $640.9m (2.4%)

Malaysia              $575.6m (2.2%)

Shortages

The global rice market is set to log a 8.7m tonne shortfall in 2023, its largest in two decades, according to CNBC.

Rice production is falling and driving up prices for more than 3.5bn people across the globe, with prices expected to remain high until 2024.

The price of rice averaged $17.30 per hundredweight (cwt) through 2023 and will only ease to $14.50 per cwt in 2024, according to a report by consultants Fitch Solutions.

The analyst blames the ongoing war in Ukraine, which has seen rice become an alternative to other major grains.

Bad weather in rice-producing economies, such as China and Pakistan, is also a factor. 

Production issues

Thailand is preparing contingency plans to deal with a potential drought that could last years and squeeze global supplies of sugar and rice.

The world’s second-biggest exporter of rice has seen rainfall down by as much as 10% below average due to the onset of the El Niño weather pattern, which could lower precipitation further over the next two years, according to government officials.

Other importers have been especially hard hit by rising food inflation caused by production shortages, reports Al Jazeera, with Ghana, Burkina Faso, Nigeria and Senegal amongst the nations hit hardest.

Climate effect

Although a meat-free diet is often promoted as helping the fight on climate change, rice production is responsible for 10% of global methane emissions, according to the World Bank. In Southeast Asia, rice cultivation accounts for as much as 25-33% of the region’s methane emissions. 

Rice is grown in flooded fields, which create the ideal anaerobic conditions for bacteria to thrive on decomposing organic matter (mainly rice straw residue) and release methane. Poor absorption by the rice plant of nitrogen-based fertilisers leads to nitrous oxide emissions. 

Climate-heating emissions from food production, dominated by meat, dairy and rice, will by themselves break the key international target of 1.5C if left unchecked, the Guardian reports.

A study showed that 75% of food-related heating was driven by foods that are high sources of methane, including rice paddy fields.