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Current Coverage of the Rice Sector
See the ERS monthly newsletter for current coverage of the rice sector, Rice Outlook, which includes Monthly Tables containing the latest data on production, use, prices, and trade.
See below for perspective on the global rice situation.
More Data on Rice
Rice Yearbook Tables
Provide key historical data on U.S. and world rice acreage, supply, demand, and prices.
Rice Yearbook (annually in November)
Provides in-depth information and analysis of U.S. and international rice markets that include a recap of the previous market year and the outlook for the coming year. The domestic section focuses on U.S. production, export markets, and prices. The global section looks at major importers and describes factors driving international trends.
USDA Rice Projections, 2008-17 (April 2008)
Provides background on supply and demand trends for rice, underlying the long-term projections in USDA Agricultural Projections to 2017 (February 2008), and summarizes key results for the U.S. rice sector.
Production, Supply, and Distribution (PS&D)
Contains official data from USDA's Foreign Agricultural Service on production, supply, and distribution of agricultural commodities for the United States and major importing and exporting countries. The database provides projections for the coming year and historical data for more than 200 countries and major crop, livestock, fishery, and forest products.
Background on the Sector
Rice Backgrounder (December 2006)
Reports on market and policy developments in the rice sector. U.S. rice farming is a high-cost, large-scale operation that depends on global trade for about half its annual sales.
Perspective on the Global Rice Situation
I. The Issue
A. Since February, price quotes for Thailand’s high-quality long-grain rice have more than doubled to $993 per ton, the highest on record. In fact, in late March, Thailand’s prices exceeded the previous monthly record of $639 per ton set in April 1974. U.S. trading prices are at record levels as well, with southern long-grain milled rice for export quoted at about $975 per ton in late April, more than twice the level reported a year ago and up almost $400 since mid-February.
B. The recent price increase began in late October 2007, after India and Vietnam—two major exporters—placed partial bans on new sales early that fall restricting global supplies. The resulting price increases have accelerated since March, as the original export bans were extended and other rice exporting countries announced restrictions as well. The spike in global rice prices has followed recent price spikes for several other agricultural commodities, including wheat, soybeans, and corn.
C. The export bans and restrictions were primarily imposed to slow the rate of increase in food prices, which is largely due to rising demand and incomes in several major Asian developing countries, especially China and India. High fuel and fertilizer prices have boosted global food prices as well.
D. Rice prices have been further boosted by several major importers—most importantly the Philippines, the world’s largest rice importing country—attempting to purchase large amounts of rice to assure adequate supplies and limit food price increases.
E. In late April 2008, two U.S. bulk retail food outlets restricted sales of certain rices, mostly the imported premium Asian aromatics. These varieties—the jasmine from Thailand and basmati from India and Pakistan—are disproportionately consumed by Asian-Americans who have a very strong preference for these specific rices. Despite lower prices and abundant supplies of U.S. grown-rice, little substitution away from these aromatic varieties is likely, even in a high-priced, tight-supply market.
II. Factors Driving the Surge in Global Rice Prices
A. Export bans and restrictions. Since September 2007, several rice exporters—including two of the top five exporting countries—have banned or otherwise restricted rice exports. The objective of the bans and restrictions is to make more rice available in the domestic market and to stabilize domestic prices.
- Vietnam—In March 2008, Vietnam—the world’s second-largest rice exporting country—reimposed its ban on new sales until June 2008. In September 2007, Vietnam placed a partial ban on new sales because it had over-sold in the global market and the government was concerned about rising domestic food prices.
- India—In March 2008, India imposed an effective ban on exports of non-basmati rice—replacing a minimum export price imposed in October 2007. India announced a minimum export price in response to rapidly rising domestic food prices, a result of strong economic growth which supported diet diversification. India is the third-largest rice exporting country.
- China—In December 2007, China imposed a tax on rice exports, rescinded a VAT rebate on grain exports, and announced other export restrictions to slow the rise in domestic food prices resulting from years of strong economic growth. As in India, with a rapid rise in incomes, consumers were shifting to more diversified diets. China, once a major exporter, is mid-level exporter now.
- Egypt—In late March 2008, Egypt replaced a voluntary ban on rice exports that was announced in January, with an official ban on rice exports through September. The export ban was implemented in response to political unrest caused by rising domestic food prices, largely caused by high global food prices. Egypt is a mid-level rice exporter.
- Cambodia—In March 2008, Cambodia banned rice exports to offset rising food prices. Cambodia is a small exporter, with Vietnam its primary customer.
- Thailand—The world’s largest rice exporting country, Thailand is currently not banning or restricting sales. Thailand accounts for about a third of global exports. However, exporters in Thailand are currently making few new sales despite the earlier harvest of a record main-season crop and government warnings not to restrict sales. The harvest of Thailand’s second (or dry-season) crop will begin later this spring and continue into the summer.
B. High prices for other agricultural commodities. Higher prices—especially for wheat, corn, and soybeans—have contributed to higher global rice prices. In some producing areas, rice competes for acreage with these crops. Also, in some parts of the world, especially in India, Pakistan, and North Africa, consumers shift between wheat- and rice-based foods based on availability and prices, encouraging prices to move in the same direction. The overall rise in global food prices is largely due to rising incomes in Asia, which has caused many consumers to switch to more diversified diets, including meat which boosts demand for feed grains. This is likely a long-term factor for most commodities.
C. Record fuel and fertilizer prices. The high oil prices have boosted prices for agricultural commodities in the global market. Oil price movements impact both fuel and fertilizer prices. In the United States, the high fuel and fertilizer prices contributed to reduced rice plantings in 2006 and 2007. U.S.-grown rice uses much more fuel and fertilizer per acre than most other field crops, making rice growers especially vulnerable to rising oil costs.
D. Declining value of the U.S. dollar. Most rice traded globally is sold and bought in dollars. So a decline in the value of the dollar boosts foreign trading prices in dollars.
E. Adverse weather in local areas. Several consecutive years of severe drought have taken Australia—a mid-level exporter—out of the global rice export market. Severe flooding and cyclone damage last summer and autumn caused Bangladesh, a major rice importing country, to sharply boost imports in 2007.
III. Rice Market Fundamentals
A. The Global Rice Market
- Rice is a thinly traded commodity in the global market (i.e., only a small proportion of the crop is traded). Less than 8 percent of rice production enters global markets, well below 10-12 percent for corn, about 18 percent for wheat, and nearly 30 percent for soybeans. The thinness of the global rice market increases price volatility in the face of a supply or demand shock.
- Demand for rice is heavily stratified by class, type, and quality, with little substitution between categories by consumers. This enhances price volatility.
- Rice consumption worldwide is not very price-responsive. Thus, to reduce consumption even a little in the face of tight supplies, prices would have to rise considerably.
- In Asia, which accounts for about 90 percent of global rice consumption, rice consumption typically declines as incomes rise. Declining per capita consumption of rice in Asia is expected to continue for a long time.
B. The U.S. Rice Market
- Although producing less than 2 percent of global rice production, the United States is the fourth-largest rice exporting country, accounting for 11-12 percent of global shipments. The United States typically exports about half its crop each year. The March U.S. mid-month farm price was the highest since May 1981.
- Since the early 1980s, imports have increased almost every year. The Asian aromatics—jasmine from Thailand and basmati from India and Pakistan—account for the bulk of U.S. rice imports, with Thailand accounting for more than half of all U.S. imports of rice. India and Pakistan together account for more than 15 percent of U.S. rice imports. Shipments from China and Egypt to Puerto Rico account for most of the remaining U.S. imports.
- For more than 25 years, imports have increased their share of the U.S. domestic market. In 2006/07, imports accounted for almost 17 percent of total domestic disappearance (excluding seed use), the highest share on record. If non-food uses of rice—such as beer and pet foods—were excluded from total disappearance, the import share would be higher.
- Per capita U.S. disappearance of rice (including rice used in beer and pet food, but excluding seed use) currently exceeds 27 pounds. Disappearance is growing slightly faster than population growth, with imports accounting for a substantial share of the growth.
- U.S. production in 2007/08 was 2 percent above a year earlier, but still 15 percent below the 2004/05 record. Total supplies are virtually unchanged from 2006/07, but still 7 percent below record. Imports—about 8 percent of total supply—are projected to be the highest on record.
C. Long-Term Trends
- Declining Global Stocks. In the second half of the 1990s, global rice stocks had sharply increased—primarily due to bumper crops in China, depressing global prices for several years. Since, 2002, global rice prices have been on a slow rise, as consumption growth outpaced production and global stocks declined.
- Rising Global Trade. Strong trade growth since 2001 has steadily boosted global trading prices. Global trade in 2007 was a record high. Sub-Saharan Africa is the largest import market for rice; the region imports almost half its annual rice needs. The Middle East is even more dependent on imports. In contrast, imports account for a much smaller share of consumption in South, Southeast, and East Asia.
- Production Constraints. Global rice area remains below the 1999/00 record, a result of strong competition from other uses and environmental constraints. Global yield growth has been very small this decade, as the adoption—begun in the late 1960s—of the modern high-yielding varieties on irrigated fields is largely complete.
D. Current Situation
- The 2007/08 global rice crop is the largest on record, fractionally exceeding total disappearance, with global ending stocks expected to increase 1 percent.
- Global supplies are expected up 1 percent from a year ago, the third consecutive year of rising global rice supplies. Despite the increases, global supplies remain 8 percent below the 2001/02 record.
- Global disappearance is projected to be the highest on record. A rising global population is the main factor driving disappearance higher.
- A slight build-up in global ending stocks is projected. Since 2004/05, the levels of year-to-year changes in global ending stocks have been far more stable than estimated for the previous 20-year period.
- The global ending stocks-to-use ratio (a measure of supply relative to use) of 18.2 percent is about the same as calculated for 2004/05-2006/07.
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