Does it have an impact on our country?, International Rice Prices Rise | Rice | China

Since the beginning of last year, global rice prices have continued to rise. The Food and Agriculture Organization of the United Nations recently released data showing that the global rice price index rose 2.8% month on month to 129.7 points in July, the highest level in nearly 12 years, sparking concerns about global food security. Experts say that China's rice production exceeds demand year-round, with sufficient reserves, and the impact of fluctuations in the international rice market on China's market is limited.

Multiple factors leading to an increase in international rice prices

"The factors leading to the rise in global rice prices this year are different from last year," said Peng Chao, a researcher at the Management Cadre College of the Ministry of Agriculture and Rural Affairs. "Last year, the rise in global rice prices was mainly driven by the transmission of grain varieties such as wheat and corn, as well as feed demand. This year, it was mainly due to the combined effects of extreme weather, rice export bans in some countries, and strengthening exchange rates in some exporting countries, leading to the rupture of the global rice supply chain and soaring prices.".

The ban on rice exports in countries such as India is an important factor driving up global rice prices. India is the world's largest exporter of rice, with a rice export volume of 22 million tons last year, accounting for 40% of the world's rice exports. In order to control domestic inflation, on July 20th, India announced a ban on rice exports other than steamed rice and Indian fragrant rice, helping to drive up global rice prices. Afterwards, the United Arab Emirates and Russia successively announced the suspension of rice exports, causing panic in multiple markets and further inflating rice prices.

Extreme weather is a deep-seated factor affecting the rise in rice prices. Peng Chao believes that this year's El Ni ñ o phenomenon reappears periodically, and India, Southeast Asia, China and other major rice producing countries suffer extreme high temperature, drought and rainstorm weather. However, the impact of extreme weather on rice production remains to be observed. Due to the long production window of rice, coupled with high global rice prices and a decrease in fertilizer prices this year, the benefits of rice cultivation are high, and farmers' enthusiasm for rice cultivation has increased. The rice production situation may be better than expected.

The price linkage between grain varieties such as wheat, corn, and rice is strong, and the expectation of price increases for wheat and corn will also be transmitted to rice prices. Russia and Ukraine are major exporters of wheat and corn. The conflict between Russia-Ukraine conflict has hindered their grain exports. The Black Sea grain transport agreement helps to restore Ukraine's grain exports, but Russian grain exports are still suppressed by the United States and Europe. Not long ago, Russia announced its withdrawal from the Black Sea port agricultural export agreement, forcing Ukraine's grain to once again exit the global market, and global wheat and corn prices have risen to varying degrees. The International Monetary Fund predicts that Russia's withdrawal from the Black Sea port agricultural export agreement may lead to a 10% to 15% increase in global food prices.

Grain prices are the basis of a hundred prices, and fluctuations in grain prices can affect the rise and fall of other commodity prices, thereby affecting price stability. Professor Li Jun from the School of Economics and Management at China Agricultural University believes that although a few rice exporting countries can benefit from high priced rice, it may further exacerbate global food inflation. Currently, many countries, especially those highly dependent on rice imports, are facing high rice prices and supply shortages, and some economically underdeveloped countries may even face food security issues again.

China continues to play the role of market "ballast stone"

What impact will the rise in international grain prices have on the domestic grain market? Experts say that China is the world's largest rice producing country, with rice production consistently exceeding 200 million tons, accounting for about 28% of global rice production. Moreover, with annual production exceeding demand, sufficient reserves, and a self-sufficiency rate exceeding 100%, China plays a "ballast stone" role in the global rice market. "China's low dependence on foreign rice, India's ban on rice exports, and soaring global rice prices have little impact on China's rice market," said Zhang Huizhuo, Deputy Director of the Rice Business Unit of Yihai Kerry Group.

From the perspective of imports, China mainly imports rice to regulate demand and replace feed demand. Last year, due to factors such as a large price difference between domestic and international rice, an increase in demand for rice feed, and an adjustment in import structure, China's rice import volume reached 6.19 million tons, a year-on-year increase of 24.8%, breaking the import quota of 5.32 million tons for the first time. This year, the price of imported rice has been greatly affected by the significant increase in offshore prices and the continuous depreciation of the Chinese yuan against the US dollar, resulting in a significant decline in rice imports. In the first half of this year, China imported a total of 1.81 million tons of rice, a year-on-year decrease of 49.6%.

"In order to ensure the stability of rice imports, various import entities in China are also promoting diversified rice imports to avoid import security risks caused by excessive concentration of sources and varieties," Peng Chao said. On the one hand, promoting the diversification of rice import sources. China's rice imports come from major producing countries such as Vietnam, Myanmar, Thailand, India, Pakistan, and Cambodia. Since October last year, China has gradually reduced its imports of Indian broken rice, and India has slipped from being China's largest rice supplier in the past few years to fourth place. On the other hand, promoting the diversification of imported grain varieties. Reduce the import of rice while increasing the import of feed wheat. In the first half of this year, China's wheat imports reached 7.923 million tons, an increase of 62.1% compared to the same period last year, which can effectively offset the impact of the decline in rice imports on the domestic feed market.

"The stable operation of China's rice market has a material foundation and policy guarantee for stable self-sufficiency," said Peng Chao. Faced with the uncertainty of the international grain trade environment, China is continuously improving its comprehensive grain production capacity. This year, the state encouraged the cultivation of double cropping rice, and the area of early rice continued to recover. The overall growth situation of middle and late rice was good. Some local rice in major provinces such as Heilongjiang and Jilin suffered from severe rainstorm and flood, but the proportion was relatively small, which had limited impact on the national rice supply and demand fundamentals. At present, various regions are comprehensively carrying out agricultural disaster relief and reduction work, minimizing disaster losses, carefully managing unaffected fields, strengthening disease and pest control and flood and drought prevention, implementing measures to increase yield per unit area, and striving to achieve more and more grain production.

Maintaining a new dynamic balance between rice supply and demand

Will the global rice crisis evolve into a global food crisis? Expert analysis shows that the consumption of rice is concentrated in Asia and Africa, and the global supply and demand of rice are generally balanced. The current food protectionism has led some countries to restrict rice exports, causing temporary price increases, but it will not endanger global food security.

Due to India's ban on rice exports, the export prices of rice from Vietnam and Thailand have skyrocketed, prompting rice importing countries to seek new rice import channels and alternative varieties. Myanmar is an important exporter of rice in the world, and it is expected that rice exports will surge in the coming months. After phased adjustments, the global rice supply and demand will gradually move from the original static balance to a new dynamic balance.

In the short term, restoring free trade in food is an important channel to ensure stable global rice supply. Li Jun believes that global rice production and sales are characterized by concentrated production and dispersed consumption. The global rice exporting countries are mainly concentrated in countries such as India, Thailand, Vietnam, Myanmar, the United States, and Pakistan. There are many countries that import rice, mainly concentrated in Asia and Africa, and regional contradictions between rice supply and demand are prominent. Grain trade can promote global rice supply and demand balance, but some countries pursue trade protectionism policies, disrupting the global food trade order. Faced with the global rice crisis, the international community should urge India to lift restrictions on rice exports and stabilize global rice prices and supply.

In the long run, facing the uncertainty of the international food trade environment, countries should further enhance their food self-protection capabilities, support food production, increase food inventories, and reduce dependence on the international food trade system. Africa is a key region for achieving global food security, and with the help of China, some African countries have continuously expanded their rice planting areas, resulting in a significant increase in rice production. Among them, the hybrid rice introduced by Madagascar from Hunan has achieved consecutive harvests and is expected to become the first African country to achieve food self-sufficiency.