This year, it has climbed for the fifth consecutive month-
How to deal with rising international rice prices
The latest Food and Agriculture Organization of the United Nations (FAO) food price index shows that since the beginning of this year, international rice prices have risen for the fifth consecutive month, reaching a 12-month high.
As a ration, the price of rice has been rising continuously, which has caused widespread concern in the market.
Why do international rice prices continue to rise?
How big is the impact on the food market?
Why prices keep climbing
The data showed that even though international rice prices climbed for five consecutive months, their prices were still down 6.0% from the same period last year.
International rice prices have fallen continuously since March last year to the end of last year, and the price once fell by 27.5%.
The current rise in rice prices is a rebound from last year's consecutive declines.
In fact, as the main exporters of rice, the export price of rice in India and Vietnam has little fluctuation.
Dialectically, the rise in international rice prices is part of global inflation.
Since the beginning of this year, inflation has occurred in many countries, and the consumer price index (CPI) has hit a new high.
For example, Thailand is the center of international rice price formation. In recent times, domestic inflation pressure in Thailand has been relatively high.
Thailand's central bank data showed that Thailand's CPI rose 7.1% year-on-year in May.
The price of food is the basis of a hundred prices.
As an important agricultural product, the price of rice in the entire consumer price index "basket commodity" tends to rise earlier than other commodities, and the increase is larger than that of other commodities.
Since the beginning of this year, the price of rice in Thailand's domestic market has risen by about 25%. At present, the price of Thailand's domestic rice market has been higher than the export price.
The rise in international rice prices was also driven by the price transmission of related varieties such as wheat.
Under the current international situation, the international wheat price is easy to rise and difficult to fall, and the horizontal transmission will continue, causing the international rice price to rise in tandem.
It is estimated that if other factors remain unchanged, every 1% increase in wheat prices will drive rice prices to increase by about 0.2%.
The rise in international rice prices has its production cost-push and demand-pull market basis.
From the perspective of production, the main rice-producing countries are generally chemical fertilizer importing countries, which themselves are under pressure from the cost of agricultural materials.
The conflict between Russia and Ukraine has hindered the export of major fertilizer-producing countries such as Russia and Belarus, further driving up the prices of fertilizers and other agricultural materials and increasing the cost of rice production.
From the demand side, the market demand from the Middle East continues to increase.
Since the beginning of this year, Thailand has exported more than 200,000 tons of rice to Iraq, and it is expected to export another 200,000 tons. Due to the rising prices of wheat and corn, some countries use rice for feed production. The United Nations Food and Agriculture Organization has issued a forecast that in 2021/2022 The annual global use of rice for animal feed is expected to reach 22.3 million tons, an increase of 11.9% year-on-year.
Will it continue to rise in the future
Under the current background, will international rice prices continue to rise in the future?
What impact will it have on the food market?
In the future, international rice prices will be mainly affected by the policies of exporting countries.
A few days ago, the major rice exporting countries in Southeast Asia plan to jointly raise prices.
At the end of May, a Thai government spokesman said that Thailand and Vietnam planned to jointly raise rice prices.
However, no clear policy information has been released yet.
Judging from the situation in the past three years, Thailand and Vietnam account for about 9.5% of global rice production and about 32.8% of global exports.
This time Thailand and Vietnam plan to raise prices jointly, similar to the re-promotion of "rice export to OPEC" in 2008, but it was not implemented at that time due to factors such as inconsistency in the coordination of interests of major exporting countries.
In addition, India announced a ban on wheat exports in May, and the market has been highly concerned about the possibility of India restricting rice exports.
India's rice production accounts for 23.5% of global output, export volume accounts for about 26.2%, inventory accounts for about 18.1%, the export price is the lowest, and the export volume continues to grow, which has a greater impact on international grain prices.
According to the estimates of the Food and Agriculture Organization of the United Nations, rice stocks in India in 2021/2022 are about 39 million tons.
According to the official in charge of food affairs of the Indian government, the government inventory level of processed rice and rice in the country reached 57.82 million tons, which is about 4 times the target reserve of 13.54 million tons, so there is no plan to ban rice exports for the time being.
The rice market is relatively independent from other grain markets.
Rice is mainly consumed as a ration, and the processing chain is relatively short; at the same time, affected by dietary habits, the overall demand for rice rations has not changed much; in addition, rice is restricted by nutritional indicators, energy value, etc., and generally does not have the potential to be used in large quantities as feed. .
Judging from the situation in 2021, the global rice output is 521 million tons, and the trade volume is 51.5 million tons, with trade accounting for about 9.9% of the output.
During the same period, the trade volume of wheat exceeded 192 million tons, accounting for 24.7% of the output, and the trade volume of corn was nearly 181 million tons, accounting for 15% of the output.
No matter from the volume of trade or the proportion of production, the trade volume of rice is not large.
The main rice producing and consuming countries are mainly Asian countries. Asian countries can basically maintain self-sufficiency in rice and import less.
Taking the Philippines, which has a large import volume, as an example, the country's import volume will reach 3 million tons in 2021, and its foreign dependence will only be 18.8%.
Therefore, rice importing countries generally have a certain tolerance for fluctuations in international rice prices.
The international market has the production and inventory base to resist the surge in rice prices, as well as the corresponding exchange rate environment.
Currently, global rice inventories remain high, and production in major producing countries is expected to increase.
According to the latest forecast of the United Nations Food and Agriculture Organization, the global rice output in 2021/2022 is 520 million tons. Although the output is 0.2% lower than the previous year, the ending inventory remains high at 192 million tons, and the inventory consumption ratio reaches 36.4%.
According to the forecasts of major international institutions, the output of major producing countries in Southeast Asia and South Asia is expected to increase. It is expected that the output of India will reach a record 130 million tons, and the output of Pakistan, Thailand, Myanmar and other places is expected to generally increase.
In addition, the Thai baht has continued to depreciate since 2021, and has depreciated by 12.1% in May, so international rice prices denominated in US dollars are still under downward pressure.
How the domestic market responds
The rise in international rice prices has little impact on the domestic market.
Although my country is the world's largest rice importer, it will only import 4.96 million tons in 2021, accounting for only about 3.4% of the total output.
Moreover, my country's rice import source concentration is not high.
According to customs statistics, from January to April 2022, my country imported 2.26 million tons of rice. The main sources of imports are: India (accounting for 30.9% of total imports), Pakistan (accounting for 26.6%), Thailand (accounting for 13.5%) %), Myanmar (12.2%), Vietnam (10.2%).
Therefore, even if the price of rice in Thailand continues to rise, my country's rice importers can turn more to imports from India, Pakistan and other countries.
From the perspective of production, the stability of my country's rice market has sufficient material foundations and policy guarantees.
The output of paddy has been maintained at more than 400 billion catties since 2011. In recent years, bumper harvests have been achieved continuously, and the output in 2021 will reach 425.7 billion catties.
The state continues to implement subsidies for the protection of arable land, and subsidies for the purchase and application of agricultural machinery. Recently, the central government has also issued a one-time subsidy of 20 billion yuan to farmers who actually grow grains to ease the cost pressure caused by rising prices of agricultural materials.
In order to ensure farmers' income from growing grains, the minimum purchase price of rice in 2022 will be raised in an all-round way. The minimum purchase prices of early indica rice, mid-late indica rice, and japonica rice will be 124 yuan, 129 yuan, and 131 yuan per 50 kilograms, respectively, an increase of 2 yuan and 131 yuan over the previous year. 1 yuan, 1 yuan.
The state has also carried out green, high-quality, and high-efficiency actions for key crops, integrated and promoted new technologies, new varieties, and new machinery, and built a batch of high-quality edible rice and special grain demonstration bases for processing early rice.
At the same time, the state has adopted a series of policies to strengthen and benefit farmers and enrich farmers to ensure the enthusiasm of grain farmers; in addition to the grain import and export control mechanism, policies such as minimum grain purchase prices and policy-based grain bidding transactions are also implemented.
The above-mentioned relevant measures adjust and complement each other, providing an environment for the stability of the rice market and laying a solid foundation.
(The author is the director of the Rural Revitalization Research Center of the Management Cadre College of the Ministry of Agriculture and Rural Affairs)
Peng Chao