Fitch Solutions says that rice production in 2023 will be at its lowest level in two decades. Due to the ongoing conflict in Ukraine and adverse weather conditions in countries that produce rice, such as China and Pakistan, there is a limited supply of rice.
Over 3.5 billion people worldwide are experiencing price increases as a result of falling rice production, particularly in Asia-Pacific, which consumes 90% of the world’s rice.
Analysts have discovered that major importers will suffer as a result of a deficit of this magnitude for one of the most cultivated grains on the planet.
According to a report released on April 4 by Fitch Solutions Country Risk & Industry Research, rice prices are anticipated to continue hovering around their current highs until 2024.
As per the same report, the price of rice will only decrease to $14.50 per cwt in 2024 from its current average of $17.30 per cwt in 2023. The Cwt is a unit of weight for certain goods, like rice.
Rice prices are a major factor in food price inflation and food security, particularly for the poorest households, as it is the staple food commodity in numerous Asian markets.
The report predicted that there would be a global shortage of 8.7 million tonnes in 2022 and 2023.
That would be the world’s largest rice deficit since the global rice markets had a deficit of 18.6 million tonnes in 2003-2004.
Due to the ongoing conflict in Ukraine and bad weather in countries that produce rice, like China and Pakistan, there is a shortage of rice.
In the final part of last year, areas of farmland on the world’s biggest rice producer China were tormented by weighty summer storm rains and floods.
According to the agriculture analytics company Gro Intelligence, the cumulative rainfall in China’s Guangxi and Guangdong provinces, which are the primary centers for rice production, was the second highest in at least 20 years.
Similarly, the U.S. Department of Agriculture (USDA) stated that severe flooding in Pakistan, which accounts for 7.6% of global rice trade, resulted in a 31% decrease in annual production year over year last year. The USDA described the impact as “even worse than initially expected.”
Experts noted that “an annual deterioration in the Mainland Chinese harvest caused by intense heat and drought as well as the impact of severe flooding in Pakistan” is partially to blame for the shortfall.
According to a scientific study, rice is a vulnerable crop with the highest probability of simultaneous crop loss during an El Nino event.
Notwithstanding more tight stock difficulties, rice became an undeniably alluring elective following the flood in cost of other significant grains since Russia’s attack of Ukraine in February 2022. Demand has increased as a result of the substitution of rice.
Oscar Tjakra, senior analyst at Rabobank, claims that other nations, such as the United States and the European Union, have also contributed to the deficit through lower rice production over the previous year.
In 2023, major rice importers like Indonesia, the Philippines, Malaysia, and African nations will face an increase in the cost of importing rice as a result of the global rice production deficit, according to reports.
Additionally, many countries will be compelled to reduce their own stockpiles. Countries like Pakistan, Turkey, Syria, and some African nations that are already experiencing high domestic food price inflation would be most affected by the deficit.
China, the world’s largest rice and wheat producer, is currently experiencing its highest drought level in over two decades in its rice-growing regions.
In addition, according to Fitch’s projections, the cost of rice could fall by almost 10% to $15.50 per hundredweight in 2024.
Meanwhile, major rice-growing nations in Europe, including France, Germany, and the United Kingdom, have experienced the worst drought in 20 years.