Food prices could decline as global rice output grows by 1%2 min read . Updated: 22 Sep 2008, 07:53 AM IST
Food prices could decline as global rice output grows by 1%
Chandigarh: In what should be a dampening effect on international food prices, the US department of agriculture, or USDA, has projected a bumper for the world’s major rice producing countries including India.
USDA has projected that the world will produce 432 million tonnes (mt) of rice this year, up from 429.5mt tonnes last year. The “Rice Outlook", released by USDA on 15 September, has projected an increase of almost 1% from last year. However, it postulates a fall in rice trade and exports this year, a continuation of a trend that began last year.
Global prices of rice have witnessed a fall in preceding months, primarily due to a stronger dollar and lower global commodity prices. While India has remained out of the global rice market, the export price of rice from Thailand, the world’s biggest rice exporter, has seen a decline of almost $25-30 a tonne since August.
The Food and Agricultural Organization (FAO) rice price index, which was placed at 322 points in May 2008, has fallen to 281 points in August and is expected to decline further in September.
The increase in estimate is primarily due to expected increased production in five countries, namely, India, Thailand, Pakistan, Japan and the US, while the Philippines and Iraq are projected to have lower production.
Gurdev Singh Khush, one of the pioneers of the rice revolution and World Food Prize recipient, describes the USDA report as “good news for food security". It will certainly help stabilize the market price of rice in India, he said in an email response.
The USDA projection is similar to the fourth revised estimate of the Union agriculture ministry. The estimate has pegged the rice production in India at 96.4mt in 2007-08, up 0.9mt from the third estimate and much higher than the rice production of 93.4mt in 2006-07. USDA has projected the Indian production at 97mt, 0.6mt more than the Indian estimate. According to USDA, this higher output may not translate into more exports, because countries such as Egypt and India are unlikely to relax the export restrictions imposed in the wake of the sharp spurt in domestic prices. Global trade of rice in 2008 was 29.1mt, 9% less than 2007. In 2009, global rice trade is expected to be lower by another 3%.
The increase in production is primarily due to an increase in area under rice globally, which has touched 156 million ha. Production in Thailand is expected to be 19.5mt, while in Japan it would be 8mt. The US crop is pegged at 6.31mt.