The global rice market is experiencing its largest shortfall in two decades in 2023, with rice production declining in major countries such as China, the U.S., and the European Union. The shortage of one of the world’s most cultivated grains is expected to result in higher rice prices, which have already reached decade-high levels. Rice prices are expected to remain at current highs until 2024, according to Fitch Solutions Country Risk & Industry Research.
The shortfall is partly due to extreme weather conditions, including heavy monsoon rains and floods in China’s major rice production hubs, Guangxi and Guangdong provinces, and severe flooding in Pakistan. Rice is a staple food commodity across multiple markets in Asia, and its prices play a crucial role in determining food price inflation and food security, particularly for the most vulnerable households.
According to the report by Fitch Solutions, the global rice deficit for 2022/2023 is forecasted to be 8.7 million tonnes, which is the largest since 2003/2004, when the deficit reached 18.6 million tonnes. The vulnerability of rice crops is also highlighted in a scientific study, which states that it is at the highest risk of experiencing concurrent crop loss during an El Nino event.
Additionally, the surge in the price of other major grains since Russia’s invasion of Ukraine in February 2022 has resulted in rice becoming an increasingly popular substitute. This, in turn, has driven up demand for rice, contributing to the tighter supply challenges.
