Global rice market seen to remain tight in 2009

MANILA, Philippines – Export restrictions by key producing nations, coupled with population growth, are expected to keep the global rice market tight for the second consecutive year, an international institute said yesterday.

Rapid hikes earlier this year in the price of rice – the staple food of 2.5 billion people – set off riots and protests from Africa to Asia to the Caribbean amid fears of a global food shortage.

From a record $1,000 per metric ton in May, the price of Thai 100 percent Grade B slipped to about $800 in June and $764 in September, according to a quarterly publication of the Philippine-based International Rice Research Institute and the Food and Agriculture Organization.

Global rice stocks, which were at a record low of 73 million tons in 2004-05, have been steadily rising and are projected to reach 82 million tons in 2008-09, up from 78.5 million tons in 2007-08, the IRRI said.

It said it expected a record production of 432 million metric tons of milled rice – up one percent over last year’s yield – based on the expected expansion of rice fields by almost 2.5 million acres (one million hectares), with India accounting for half of the increase.

But despite an increase in production, prices are likely to remain high, partly due to export restrictions imposed by key producers like Thailand and Vietnam.

People in developing countries also are increasingly turning to rice as a substitute for more expensive fruits, vegetables and livestock, the report said.

Making matters worse, already depleted stocks in the US – one of the few countries that resisted imposing export restrictions during the recent rice crisis – are expected to decline further.

That decline may further destabilize the market in the coming months, although prices may soften as the bulk of the 2008 crop enters the market this month, the report said.

“Despite some reassuring supply numbers for 2008-09, there are huge uncertainties regarding the source of future growth in global rice production,” the institute said.

It said the annual rice yield growth rate has dropped to less than one percent in recent years, compared with two percent to three percent during the 1960s.

The report blamed declining investment in rice research and infrastructure development, including irrigation, while population and economic growth in many Asian and African countries continue to drive up rice consumption.

Per capita consumption in the most populous nations, China and India, is projected to decline, but total consumption is still expected to rise by 18 million tons because of population growth, the report said. – AP