This year’s production of rice is set to face the biggest global shortage in decades, according to a new report.
As the global rice market has been dropping, the industry is expected to log its largest deficit between supply and demand in 20 years, which means rice prices are expected to remain high until 2024.
According to finance and insurance company Fitch Solutions’ report, the price of rice averaged $17.30 per hundredweight (cwt) through 2023 year-to-date and is only expected to go down to $14.50 per cwt in 2024.
“At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices,” Charles Hart, the company’s commodities analyst, told CNBC.
The shortage is a result of Russia’s ongoing war in Ukraine and the bad weather in rice-producing countries, including China and Pakistan.
The war has increased the cost of major grains like wheat, which has then increased the demand for grain alternatives such as rice.
Moreover, Hart noted that the shortfall is due to “an annual deterioration in the Mainland Chinese harvest caused by intense heat and drought as well as the impact of severe flooding in Pakistan.”
China, which is the world’s largest producer of rice, and Pakistan, which produces around 7.6% of the world’s rice supply, has been greatly affected by severe monsoon rains and floods last year.
The falling rice production will significantly affect the Asia-Pacific region, which consumes 90% of the world’s rice.
The countries that have consumed the most rice from 2019 to 2022 include China, India, Bangladesh, Indonesia, Vietnam, Philippines, Thailand, Burma, Japan and Brazil.
“Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households,” Hart said.
Oscar Tjakra, a senior analyst at global food and agriculture bank Rabobank, told CNBC that the deficit is also set to “increase the cost of importing rice for major rice importers such as Indonesia, Philippines, Malaysia and African countries in 2023.”