Beijing/New Delhi: Rice prices have surged this year for many reasons, but unlike most other commodities, fast growing Chinese and Indian demand isn’t one of them.
With incomes rising in two countries where one-third of the global population consumes about half of the world’s rice, more people are eating protein-rich meat, or sampling new foods such as pastas, leaving less room on the plate for rice.
If Chinese rice demand follows the trend seen in wealthy Japan, it could fall by half in the coming decades, bringing relief to world consumers more anxious than ever after a near trebling in benchmark Asian rice prices this year.
“More people realize meat and vegetables are nutritious and healthy, and more choices have cut into consumption of rice,” said Chai Weizhong, associate professor at Peking University.
What’s bearish for rice is bullish for corn and wheat. Growing demand for higher-protein foods, both for livestock feed as well as food, is partly behind the doubling in global corn and wheat prices over the past two years.
This year, lagging rice prices moved swiftly to catch up with other grain markets, fuelled largely by decisions by Vietnam, India and even China to clamp down on exports in order to keep prices low at home.
That rally also revived fears about the long-term supply outlook for Asia’s staple food at a time when industrial development is encroaching on arable land, rising costs are straining farmers and volatile weather is threatening crops.
Per capita rice consumption in China, the world’s top rice consumer and producer, fell by 10% between 2001 and 2007, according to data compiled by Kyushu University in Japan. In India, per capita rice consumption has already fallen 7% over the past 10 years.
“People are spending more on eating out and we see consumption of pizzas and burgers going up, which was not the case earlier. Restaurants are chock-a-block,” said Vijay Sethia, president of the All India Rice Exporters Association.
Both are still big rice eaters compared with Japan, whose per capita consumption has halved to 60kg in the past four decades. However, a drop in per capita consumption does not mean they can relax their efforts on rice production, since they can’t always count on buying more abroad—global trade in rice accounts for only about 6% of consumption.
Water shortages, shrinking arable land, climate change and population growth still pose major challenges.
“In the long term, there are many potential crises for rice. Paddy fields are shrinking and yields have not improved much,” said Wang Huaqi at China Agricultural University.
“A key question for rice production in China is, which is going to happen faster—the decrease in consumption of rice because of growing wealth or the decrease in rice production because of less water and less land,” said Duncan Macintosh, a spokesman for the International Rice Research Institute in the Philippines.