FAO forecasts rice output decline

by Arvin Donley
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The United Nations’ Food and Agriculture Organization (FAO) in its December "Food Outlook" said global consumption of milled rice, estimated at 454 million tonnes, will outpace projected production for 2010. The FAO projected that global rice production will decline by almost 2%, to 450.8 million tonnes next year.

The FAO said total rice utilization, including food, feed and other uses, is anticipated to increase by 8 million tonnes in 2010.

"Virtually all of the increase is expected in food consumption, which is forecast to absorb 389 million tonnes next year compared with 383 million tonnes in 2009," the FAO said. "The increase, however, would be barely sufficient to meet the needs of the world’s growing population and would keep average per capita intake unchanged at around 57.3 kilograms." In developing countries, average per-capita consumption of rice is expected to remain stable at 68 kilograms per year. In poor countries, such as the Philippines, the FAO noted that the widening of subsidized food distribution would likely contribute to the sustaining of rice consumption across the world.

The FAO said world reserves of rice would have to cover the projected 3-million-tonne supply-and-demand gap.

"As a result, rice carryover stocks at the close of the marketing seasons ending in 2010 are anticipated to shrink from 124 million tonnes in 2009 to 121 million tonnes this year, still high if compared with the 110 million tonnes held on average between 2002 and 2009," the report said.

India would draw around 9 million tonnes from its rice reserves to fill the gap between production and consumption, according to the FAO report. It also noted that India might carry over as much as 12 million tonnes at the end of its season on Sept. 30, 2010, down from 21 million tonnes a year earlier.

Bangladesh, Egypt, Myanmar, the Philippines and Vietnam are also expected to reduce the size of their rice inventories as they seek to meet the increasing demands of their population for the staple.

The FAO said that an erratic southwest monsoon, coupled with a series of natural disasters, such as earthquakes, landslides and hurricanes, have caused global rice production to shrink by 2% to 450.8 million tonnes in 2010.

"Despite the contraction, production in 2009 would still stand out as the second-highest after the record 2008 season. Furthermore, should rice prices peak up in the coming months, planting of the secondary crops may well expand beyond current expectations, as witnessed in 2008, which would boost global production in 2009 further," the FAO report said.

It said much of the production declines were registered in Asian countries, including the Philippines, where 1.3 million tonnes of paddy rice were destroyed by typhoons.

Asia produces and consumes about 90% of the world’s rice. The large crops of the last two years helped reduce prices after they jumped to their highest levels in late 2007 and early 2008, triggering riots in several Asian countries.

But World Bank President Robert Zoellick in January warned that Asia may be on the verge of another destabilizing rice price surge following the weather-related crop losses in India, the Philippines and Australia.

India is set to become a net rice importer for the first time in two decades. Both India and the Philippines may each need to purchase up to 3 million tonnes of rice this year, which would amount to more than 20% of the typical international rice trade.

The FAO is also expecting declines in rice production in Taiwan, Iraq, Japan, Nepal, Pakistan and Sri Lanka in 2009. By contrast, an improved production outlook for the 2009 crop is anticipated in Afghanistan, Cambodia, China, Korea, Indonesia, Iran, Thailand and Vietnam.

The U.S. Department of Agriculture (USDA) projects slightly different global rice production and consumption numbers than the FAO for 2009-10, forecasting production to slip from 446.5 million tonnes in 2008-09 to 434.7 million tonnes this year. According to the USDA forecast, production will barely surpass consumption, which it projects at 433.7 million tonnes.

The USDA foresees ending stocks for 2009-10 at 90.6 million tonnes, about 30 million tonnes fewer than the FAO is projecting but the second largest since 2002-03.

The International Grain Council (IGC) put world milled rice production at 433.8 million tonnes in 2009-10, down from 445 million in 2008-09. The main reason for the fall is a reduction in India’s production, down 14.8% to 84.5 million tonnes, a five-year low.