There’s a Global Rice Shortage on the Horizon — Here’s What You Need to Know
For the first time in two decades, the global rice market is set to record its largest shortfall, and according to Fitch Solutions, it is most evidently due to decade-high rice prices. And with price increases affecting over 3.5 billion people around the world, the Asia-Pacific region, which consumes 90 percent of the world’s rice, is taking the biggest hit.
Although rice prices are expected to remain at these high levels until 2024, a report by Fitch Solutions Country Risk & Research suggested that the average price of rice through 2023 year-to-date has sat at around $17.30 per cwt, and is expected to ease up slightly to $14.50 per cwt in 2024.
“Given that rice is a staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households,” Fitch Solutions’ commodities analyst, Charles Hart, told CNBC.
This global shortfall for the 2022–2023 year would settle at a hefty 8.7 million metric tons, a forecast that would make this the largest global rice deficit since the 2003–2004 deficit of 18.6 million tonnes.
But it’s not just the rise in price that is causing the shortfall; the ongoing war in Ukraine has increased the need for an alternative for major grains following a large surge in price, and bad weather in the rice-producing economies like China and Pakistan are both to blame. Heavy summer monsoon rains and floods have contributed to an exponential accumulation of rainfall in China’s Guangxi and Guangdong provinces, which was the second highest on record in about 20 years, according to agriculture analytics company Gro Intelligence. Additionally, Pakistan saw their annual production drop 31 percent due to the severe flooding last year, with the Department of Agriculture claiming to not have expected this big of an impact initially.
Although most countries that will be affected by the deficit would be those already suffering from high domestic food prices, like Pakistan, Turkey, Syria, and some African countries, there is a surplus on the horizon. Fitch Solutions estimates that the global rice market will return to “an almost balanced position in 2034/24,” and that market will “return to surplus in the 2024/25 year and continue to loosen through the medium term.”
Although that all does sound promising, rice production still remains at the whim of weather conditions, and countries like China, France, Germany, and the U.K. all have serious levels of drought to fight through before getting back to some semblance of normalcy.