In 2023, the global market for rice could face its biggest shortage in decades, according to industry analysts. Production of rice is dropping and the industry is expected to experience its largest deficit between supply and demand in 20 years, according to Fitch Solutions, a credit ratings agency recognized by the U.S. Securities and Exchange Commission.
Rice prices have already been high since the start of the COVID-19 pandemic and the expected shortage means prices will likely remain high. Falling production in China and Pakistan, as well as in the U.S. and Europe, have meant the supply of rice is shrinking compared to global demand.
Additionally, Putin's war in Ukraine drastically pushed up the cost of wheat, which in turn has increased demand for grain alternatives like rice.
Why is there a rice shortage?
Bad weather in rice-producing regions around the world led to a drop in rice production in 2022.
- In 2022, parts of China known for producing rice were hit by devastating flash floods.
- At the same time, different parts of China that also produce rice were impacted by severe drought.
- Pakistan was also negatively affected by flooding. Standing water caused the country's rice production to slip by 6 million tons, according to the U.S. Department of Agriculture.
China is the world's largest producer of rice, while Pakistan produces around 7.6% of the world's supply, putting it in the top five rice-producing countries, according to the Trade and Development Authority of Pakistan.
The U.S. and EU countries have also seen lower year-over-year rice production. In the U.S., the most rice is produced in Arkansas, the Mississippi Delta, the Gulf Coast of Texas, Louisiana and California's Sacramento Valley.
Who will be most affected by rice shortages?
Rice is the primary staple food for more than half of the world's population, according to USDA.
Asia, Sub-Saharan Africa and South America consume the most rice in the world.
These countries consumed the most rice from 2019-2022, USDA data shows:
- China
- India
- Bangladesh
- Indonesia
- Vietnam
- Philippines
- Thailand
- Burma
- Japan
- Brazil
EDITOR’S TAKE:
Although there are several substitutes for a starch in the average American diet, this is not the case in many other countries where rice is the primary starch. This article also demonstrates just how interdependent commodity markets are globally. One thing for sure here in the U.S., sustained higher prices will lure producers in the key rice production areas into expanding acreage. Unfortunately, the investment and time to create the proper production environment does not happen overnight. In the meantime, those rice producers in this country will benefit from the higher prices. They, like any other farmer/rancher, will be seeking to invest in new equipment and trucks. If your dealership is in a rice producing area, please make sure you present AgPack® to these producers and demonstrate how you can give them a much greater return on their truck investment. Remember to put all of your inventory on AgTruckTrader.com if you have not done so already.
