Rice prices and market

  • About

  • Need for stable and affordable rice prices

  • Causes of rice price increase

  • What IRRI is doing

  • Related items

rice in the market

Seven hundred million of the world’s 1.1 billion poor people reside in countries in Asia where rice is the staple food. These people can spend as much as 40% of their income on rice. Keeping rice prices stable and affordable for them, is therefore a major factor in reducing poverty because if they spend less on rice then they have more to spend on other nutritious foods, health care, education, housing, and other basics. Moreover if the price of rice is stable, then they can more easily budget for it and save and invest in other ways to improve their lives.

We now know how precarious the rice price trend is after the 2007/2008 rice price crisis, which the World Bank said have plunged millions more further down poverty.

rice in the market

We need to watch rice prices, with the intention to keep it low and reasonable, to make sure that rice becomes easily available to the world's poor.

Because of the high concentration of exports coming from only a few countries, the international rice market is vulnerable to disruptions in supply from major exporting countries, leading to higher world prices. This means that a sudden change in supply, demand or policy in one or more of these countries could have a major impact on world market flows and prices, such as occurred in the price crisis of 2007 to 2008.

Unlike maize and wheat, most rice tends to be eaten where it is produced and so does not enter international markets. Yet, the volume of international rice trade has increased almost fourfold, from 7.5 million tonnes annually in the 1960s to an average of 28.5 million tonnes during 2000 to 2009.

In the international rice trade, a relatively small number of exporting countries must interact with a large number of importing countries. In the first decade of the 2000s, the top five exporters had 81% of the world market (up from 69% in the 1960s). Since the 1980s, Thailand has consistently been the world’s largest exporter of rice, followed by Vietnam and India.

In contrast to exports, imports of rice are widely dispersed across countries. The five main rice-importing countries in the first decade of the 2000s (Philippines, Nigeria, Iran, Indonesia, and the European Union) accounted for only 27% of total global rice imports; and the share of the top 10 countries was only 44%. However, because of market segmentation, some of the larger rice importers have had major impacts on world rice prices. Large purchases by state trade in the Philippines in 2007 and 2009 demonstrated how an individual importer could contribute greatly to world price destabilization. Indonesia’s rice imports accounted for 10% and 15% of world trade in the 1960s and 1970s, respectively (and 7.4% and 9.2% of national net availability). During these years, Indonesia’s imports had major impacts on world rice markets.

rice

Supply going short

The decreasing trend in growth yield is due to insufficient public investment in agricultural research – the very engine that drives productivity. Lest we forget, modern high-yielding varieties – the fruits of rice research – triggered the Green Revolution some 40 years ago. This contributed to poverty reduction directly through increased income for rice farmers, and indirectly through lower prices of rice due to the steady supply brought about the and overall increase in global rice production.

Increasing rice areas is now almost impossible as housing and industrial development have been encroaching on highly productive lands.

Demand increases

The steady increase in demand naturally comes from increasing population, which outstrips production. Also, rapid economic growth in large countries such as India and China has increased the demand for cereals livestock consumption. This demand has pushed up cereal prices in general. Africa, too, has been importing rice accounting to one-third of the total world trade.

rice sorting

IRRI, for more than 50 years, has dedicated itself towards helping the rice-producing and rice-eating parts of the world produce enough rice to keep the famine that led to IRRI's establishment in the first place, at bay.

To do so, an array of rice sciences come together to support the development of new and modern rice varieties that respond to challenges in production.

The foundation of development of improved varieties is rice's diversity. IRRI houses the International Rice Genebank, a repository of about 118,000 different rice types. This diversity is considered a treasure trove of important and critical traits that breeders infuse into popular varieties.

Biotic and abiotic stress resistance and tolerance are examples of these important traits. Breeders at IRRI and its partners use modern and conventional breeding methods to track down genes associated with these traits, create new and modern varieties, and release them to countries where these stresses occur.

The benefits of using new and modern rice varieties can only be optimized if they are grown and managed in conditions that are optimum to the their growth. This include making sure that crop management technologies, which include water, pest, diseases, nutrient, and soil management, go hand-in-hand with using new and modern variety.

Challenges in the rice fields are not the only driving force in the IRRI's breeding work. What consumers buy tells farmers what types of rice are profitable for them. IRRI and its partners also study the quality of rice. In Asia alone, different countries have different preferences in their rice. Making rice farmers' efforts to produce enough rice worthwhile is making sure that rice that has already been produced get to the market with minimal losses between the farm gates and the market. IRRI works with partners to deliver postharvest technologies that aid in harvesting, drying, milling, and storage.

rice in the marketTo improve countries’ national rice programs, governments need effective and well-informed rice-based policies. Effective policies and measures rely on good quality and timely information on farmers’ technology needs, rice ecosystems, yields, input use, rice markets, and prices. IRRI is working towards providing better and more easily available information on these topics to help fine-tune national and regional rice strategies and guide priority settings for investments.

IRRI had taken the initiative to create the “global rice information gateway”. This information gateway is an information hub that provides real-time crop information, medium-term supply and demand outlook, policy briefs, and comprehensive rice data sets at the national, subnational, and household level.

Lastly, the next generation rice science has to be secure, if we want food to keep coming. IRRI is also an educational institution that has trained scores of thousands of rice professionals from all over the world. These professional go back to their countries equipped with world-class training on rice research.

Video

A video playlist on the 2008 rice price crisis

IRRI references