More than 3.5 billion people around the world, especially in Asia-Pacific, which consumes 90% of the world’s rice, have been affected by rising rice prices. This is a result of declining production in countries like China, the U.S., and the European Union. According to Fitch Solutions, the world’s rice market will experience its biggest deficit in 2023.
Major importers will be harmed by such a large deficit for one of the most widely grown grains. According to a report published on April 4 by Fitch Solutions Country Risk & Industry Research, rice prices are predicted to hover around current highs until 2024. The price of rice will only decrease to $14.50 per cwt in 2024 from an average of $17.30 per cwt through 2023. (Cwt is a unit of measurement used for goods, including rice).
Given that rice is a staple food item, prices play a significant role in determining food price inflation and food security. The report predicted that there would be an 8.7 million tons global shortfall in 2022–2023. This would be the biggest global rice deficit since the global rice markets produced a deficit of 18.6 million tons in 2003–2004.
Because of the conflict in Ukraine and the unfavorable weather in nations that produce rice, there is a shortage of rice. Large areas of farmland in China were devastated by heavy summer monsoon rains and floods in the second half of last year.
Meanwhile, Pakistan, which accounts for 7.6% of global rice trade, saw annual production fall 31% year on year due to severe flooding last year, according to the US Department of Agriculture. Major rice importers like Indonesia, the Philippines, Malaysia, and African nations will pay more to import rice in 2023 due to the current global rice production deficit, according to Tjakra.
The domestic stockpiles of many nations will also need to be reduced, according to Kelly Goughary, the senior research analyst at Gro Intelligence. She predicted that the countries with the highest domestic food price inflation, like Pakistan, Turkey, Syria, and some African nations, would be the ones most impacted by the deficit.
India, the world’s leading rice exporter, banned broken rice exports in September. Additionally, New Delhi imposed a 20% duty on the export of some other varieties of rice. India’s Meteorological Department anticipates monsoon rainfall, and predictions for extreme heat and heat waves through the second and third quarters of 2023 continue to pose a threat to India’s wheat harvest.
China is currently experiencing the highest level of drought in its rice-growing regions in over two decades. The highest level of drought in 20 years has also affected major European rice-producing nations like France, Germany, and the UK.