On Wednesday, CNBC reported that according to a new report from Fitch Solutions, nations around the world are facing the largest shortage of rice seen in 20 years. By the agency’s estimates, there will be an 8.7 million ton shortage in the global supply for the 2022-2023 crop year, marking the biggest shortfall seen since 2003-2004, when there was a shortfall of 18.6 million tons.
Last year, rice production was 502.9 million tons, according to data from Statista.com, making rice the third most produced grain in the world after corn and wheat. However, in recent months, bad weather in countries like China and Pakistan has caused production to begin falling, according to the report.
The biggest global producer, China, which produced over 148 million metric tons of milled rice in the 2021-2022 crop year, saw heavy rains and flooding in the second half of last year, which impacted many of the regions where rice is grown. At present, the nation is, “experiencing the highest level of drought in its rice growing regions in over two decades.” Analysts say both situations will impact the valuable crop’s yield.
Producing almost 8% of the global rice yield, Pakistan also endured severe flooding, causing the annual yield of its harvest to fall by 31%.
Making matters worse, forecasts claim that India, the second largest rice producer in the world, may experience intense heat in the second and third quarters of 2023, which could also impact crop outputs. In Europe, rice growers have also been enduring the highest drought levels seen in 20 years, which could further imperil this year’s harvests.
Analysts say that as a result of the shortages, rice prices will probably hold near their current highs for the rest of the year, at about $16-18 per cwt (50.8kg), which represents about twice what the cost was in 2020. Analysts also note, rice is not immune to the current military conflict in Ukraine, where the military actions have imperiled the arrival of both Ukrainian and Russian grain supplies to the world market, driving up the price of wheat, which has made rice more attractive as a potential substitute, driving up the demand.
Looking at the situation, analysts warn, “given that rice is the staple food commodity across multiple markets,” this state of affairs will likely contribute to continuing global food price inflation.
In the note, Fitch Solutions estimated that given current projections, it is possible the global rice market could return to “an almost balanced position in 2023/24,” even reaching a surplus by 2024-2025, if there is an expected surge in production in India.
