Rising rice prices impacting Africa
November 01, 2007
by Meyer Sosland
World rice reserves, estimated at 80.6 million tonnes in 2005-06, are at the lowest level since 1983-84 as world rice consumption continues to outstrip production. As a result, rice prices continue to rise and are expected to double in the next couple of years.
The U.S. Department of Agriculture said prices could rise to near $400 per tonne on average next year, up from around $335 per tonne in 2007.
According to Dr. Papa Abdoulaye Seck, director general of West African Rice Development Authority (WARDA), the current world rice situation could have serious implications on sub-Saharan Africa, where nearly 40% of the region’s demand for rice is being met by imports.
Africa has 13% of the world population but is the world’s biggest rice importer, accounting for nearly one-third (32%) of global imports. In 2006, sub-Saharan Africa imported more than 9 million tonnes of rice worth an estimated $2 billion.
Noting that only 7% of world rice production is traded, WARDA economist Dr. Aliou Diagne said, "sub-Saharan Africa should urgently reconsider its rice import policy to avoid the looming crisis. African national rice economies will increasingly become exposed to unpredictable external supply and price shocks," Diagne said.
This summer, the World Bank warned that the current increase in prices of cereals and the low level of global reserves could unleash widespread food riots in Africa. The current world rice reserves represent less than two months of consumption, with half of the stocks being held by China.
In recent months, the price of rice has risen in Thailand and Vietnam, the traditional rice exporters to Africa.
The news in recent weeks regarding the rice situation in Vietnam has been particularly troubling. As of early October, more than 120,000 hectares of the country’s rice crop has been wiped out by flooding and a significant portion had also been decimated by insect-related crop damage. The Vietnamese government had reduced rice exports in the third quarter of this year so that the rice supply will meet local demand.
Thailand officials said that Africa is expected to purchase as much as 41% of its 2008 rice crop, which is expected to be around 9 million tonnes. Africa bought around 37% of Thailand’s 8-million-tonne crop in 2007.
UNTAPPED POTENTIAL The good news is that Africa has plenty of untapped potential for rice production. According to the Food and Agriculture Organization (FAO) of the United Nations, the paddy (unhulled rice) production in Africa has increased for six consecutive years, reaching 21.6 million tonnes in 2006. But with consumption in West Africa — the continent’s rice belt — doubling every nine years, the rice production challenge is immense. During the 26th session of the WARDA Council of Ministers in late September, Nigerian President UmaruYar’Adua asked the organization to assist local farmers with the latest technical support to boost rice production.
Nigeria’s rice output has increased from 3.4 million tonnes in 1999 to 4.3 million tonnes in 2006, allowing the country to cut its import total in half (2 million to 1 million tonnes) during that time. However, Nigeria’s average yield is a paltry 1.2 tonnes per hectare, ranking far below other rice producing nations such as Egypt (8.1), the United States (7.1), China (6.3) and Vietnam (4.2).
WARDA economists say the availability of cheap imported rice in past years has provided an excuse for many sub-Saharan African governments to neglect domestic rice production.
"In that sense, the rise in world rice prices is a golden opportunity for sub-Saharan Africa, because this increases the competitiveness of the local rice sector," Diagne said.
In August, WARDA, which is based in the West African nation of Benin; Colombia-based Centro Internacional de Agricultura Tropical (CIAT); and Philippines-based International Rice Research Institute (IRRI) announced plans to combine their activities in Africa with the goal of boosting its rice production.
"To me, this is the best way to reach a consensus on rice research in Africa," said Seck. "By harmonizing our activities, we can cover the whole continent, have a critical mass, address most of the problems facing rice, and at the end of the day we can have a very high impact."
The three organizations — all of whom are supported by the Consultative Group on International Agricultural Research (CGIAR) — affirmed their commitment to bring the best of science and their experience in Asia, Latin America and Africa to address the major challenges facing Africa’s rice sector.
Among their initial proposals was the establishment of a sub-Saharan Africa Rice Consortium (SARC), which will consolidate the two existing regional rice networks — the West and Central Africa Rice Research and Development Network (ROCARIZ) and the Eastern and Central Africa Rice Research Network (ECARRN). The new combined entity will also cover other parts of sub-Saharan Africa that are not members of the existing regional rice networks.
SARC’s objectives will include providing better farmer access to improved seeds and technologies and to develop a critical mass of trained scientists to increase Africa’s capacity in rice research.
For years, rice farmers in the region have complained of facing unfair competition from subsidized rice imports.
During WARDA’s Third Annual Meeting of the Africa Policy Research and Advocacy Group at the Africa Rice Center in June, representatives from a West African rice farmers group urged the West African Economic and Monetary Union (UEMOA) to adopt a higher level of the common import tariff (TEC) for agricultural products. They said the current TEC level applied by UEMOA has a detrimental effect on the sub-region’s agricultural sector, particularly where rice is concerned.
UEMOA said it was revisiting the TEC issue.