FAO Says Rice Production Outpacing Consumption

Stocks to increase in 2013 with output gains foreseen in East Asia


Rome - Global rice production for 2012 is forecast to outpace consumption in 2012/13, resulting in an upward revision of 5 million tonnes in 2013 closing inventories, according to a new forecast by FAO’s Rice Market Monitor (RMM) issued today.

“Compared to last year, world rice carryover stocks are expected to rise by 7 percent, or 10 million tonnes, to a new high of almost 170 tonnes, marking the eighth consecutive year of stock accumulation,” says the RMM. “As a result, the world rice stock-to-use ratio is forecast to rise from 33.6 percent in 2012 to 35.5 percent in 2013.”

Global Rice Production

FAO raised its July forecast for global rice production in 2012 by 4.2 million tonnes to 729 million tonnes, or 486 million tonnes on milled basis, largely because the 2012 season has been “progressing satisfactorily, especially after a revival of the monsoon rains since mid-August allayed fears of a repeat of the 2009 drought in India.”

Prospects improved not only for India, but also for Egypt, the Democratic People’s Republic of Korea, the Philippines, the United States and Viet Nam, while they worsened in Myanmar, Colombia and Senegal.

In Asia, where rice is the staple food, FAO projects paddy output will reach 661 million tonnes, or 441 million tonnes on milled basis, up 0.8 percent on 2011, underpinned by widespread gains and particularly large increases in Bangladesh, China, Indonesia, the Philippines, Thailand and Viet Nam. “Beyond India, where production may fall by 4 percent, Cambodia, the Republic of Korea, Nepal and Turkey are also predicted to witness a decline.”

Production beyond Asia

Output is rebounding in Africa because of better weather, which “has led FAO to raise the region’s production forecast to 26.4 million tonnes,” or 17.3 million tonnes on milled basis. This is 4 percent more than in 2011. Much of the growth comes from Egypt, where attractive prices again prompted farmers to exceed their cultivation limits. But increases also come from Mali, Ghana, Mozambique, Sierra Leone, Tanzania and Nigeria.

The outlook for rice production in Latin America and the Caribbean points to a 6 percent contraction to 27.4 million tonnes, (18.3 million tonnes milled basis), as insufficient irrigation water and expectations of low margins depressed rice cultivation in many South American countries. In other regions, FAO anticipates that output in the United States will be boosted by record yields, while Australia is heading towards its best season since 2006. The Russian Federation looks set to harvest a bumper crop of rice, while unfavourable weather curbed production in the European Union.

Rice trade

Increasing rice production in Asia means that the region that consumes the most rice will not need to import so much of it. FAO forecasts that global rice trade in 2013 will reach 37.5 million tonnes (milled basis), marginally above the estimate for 2012, which was recently raised by more than 3 million tonnes to 37.3 million tonnes (milled), 2 percent more than in 2011 and an all-time record. The higher trade volume reflects expectations of large draw-downs from the huge inventories held by exporting countries as they make space for new crops.

“In particular, Thai sales, either through private traders or government to government deals, are forecast to rebound,” according to the RMM. Shipments by Australia, Egypt, Pakistan and Viet Nam are also forecast to increase. But, India’s 2012 production shortfall and rising domestic needs may reduce the country’s exports next year, while Argentina, Bolivia, Brazil, the United States and Uruguay are also expected to have lower sales in 2013.

Pending the arrival of the 2012 main season crops, large government purchases and stock building in Thailand plus lively purchases by African countries and China are causing international rice prices to firm up compared to the first four months of 2012. With Thailand extending its high producer price policy, Thai export quotations remain at a premium compared to other sources. This is depressing sales in 2012 and has compromised its long-standing primacy among global rice exporters.