Rice is a diet staple in the countries of Southeast Asia, and they are large producers and traders in the crop, but diets are changing with taste, increased affluence and consumers’ desire for greater convenience. Even so, the cost of rice remains an important element in household budgets across the region, while rice also is widely used in animal feed.
According to the International Grains Council (IGC), Indonesian rice production will be 37.8 million tonnes in 2019-20, while the Philippines will produce 12.6 million tonnes, Thailand 21 million tonnes, Vietnam 29.3 million tonnes, and Myanmar 13.6 million. The IGC does not give a figure for Malaysia.
The IGC projected Myanmar’s rice exports at 2.4 million tonnes in 2020, the only country covered here to appear on the list. Malaysia will import 1 million tonnes in 2020, with Indonesia set to import 3.6 million and the Philippines 2.7 million, the IGC noted.
In Indonesia, according to an attaché report dated March 26, 50% to 55% of rice production is on Java, with 20% on Sumatera and 12% on Sulawesi.
“Around 85% of rice production comes from irrigated paddy fields,” the report said. “Typically, irrigated farms are planted to paddy during the first and second crop cycles (October-February and March-June), and followed by paddy or secondary crops such as corn, mung bean, soybean, peanut, or sweet potato during the third crop cycle (July-October).”
The report noted that rice consumption in 2019-20 is forecast to decline to 38 million tonnes as consumers continue to switch to wheat-flour based products. Per capita rice consumption is declining at about 0.62% per annum, the report said.
The attaché explained that “middle and upper-middle income consumers are diversifying their diets to include more western-style foods like bread and pasta and consuming more instant noodles in place of rice-based dishes. The affordability of noodles is another factor in their replacement of rice.”
The government maintains a purchasing price. The Indonesia Logistics Bureau (Badan Urusan Logistik/BULOG) buys from farmers when the market price is lower than or equal to the maintained price.
In the Philippines, according to an attaché report dated March 20, a move to turn quantitative import restrictions on rice into tariffs is likely to fuel an increase in consumption. Noting that rice remains the main staple in the country’s diet, the report said that “actual rice consumption is expected to increase modestly in two to three years as effects of the liberalization of rice imports (i.e. increased imports resulting in falling rice prices) become more apparent. Rice imports from Association of Southeast Asian Nations member countries will increase as a result of rice tariffication, benefiting from geographic proximity and lower tariffs.”
Production has been encouraged by government investments to make the industry more competitive, with rice produced by an estimated 3 million farm families.
“Rice is the main staple of the Philippine population, currently estimated at 109 million people and growing roughly 1.7% annually,” the report said. “Rice provides an estimated 45% of the average Filipino’s calorie intake and its production is the main source of livelihood in rural areas.”
The average household spends 20% of its budget on rice.
“This may go higher by as much as 30% for the bottom 30% of Filipino families, according to industry,” the report said. “High rice prices are a major contributor to inflation.”
In Thailand, according to an attaché report dated March 14, rice is the main staple food with consumption ranging from 80 kilograms for city households to around 155 kg for rural households.
“The Ministry of Agriculture and Cooperatives’ Department of Rice reported that rice per capita consumption varies by region,” the report said. “The highest per capita consumption is in the northeastern region with 142 kg, followed by 109 kg in the northern region, 83 kg in the southern region, and 46 kg in the central plains and Bangkok.”
The report cited a survey by Mae-jo University, which found that approximately half of the Thai population (51%) consumes the same amount of rice as in the past, 28% consume more rice and the rest (21%) consume less.
“Thai rice exports are expected to decline to around 10 million tonnes in 2019 and 2020, compared to the 2017-18 record exports of 11 million to 12 million tonnes, which were driven by government rice stock sales,” the report said. “This is a 10% reduction from 2018 as Thai rice is likely to be less competitive, particularly for white rice in African markets, which accounts for approximately 40% to 50% of total rice exports over the past five years.”
During that period, Thai rice exports to those markets were driven by the sale of government stocks at prices lower than competing supplies from other countries.
“The government sold off all of their remaining rice stocks in 2018,” the report said.
Vietnam, according to a report dated April 8, is another country where rice is the main staple food.
“Vietnam’s decline in per capita rice consumption is consistent with other countries in Asia,” the report said. “As the economy develops, consumers have greater purchasing power and more access to other foods and per capita consumption declines.”
The report cited United Nations Food and Agriculture Organization data showing consumption per person of rice at around 145 kilograms, less in urban areas. Because of population growth, the attaché estimated that Vietnam will need an extra 150,000 to 200,000 tonnes of rice to meet domestic demand.
Burma, which also is called Myanmar, is another country in the region where rice consumption is being cut by changes in the diet. According to an attaché report of March 28, although overall consumption is rising, it’s because of demand from the livestock sector, particularly poultry, because of higher maize prices. Blaming a diversifying diet, it said that consumption of rice per person would fall to 175 kilograms in rural households and 150 kilograms in urban households.
“Although people are eating less rice, trade sources reported that consumption of superior quality rice has actually been increasing in the past three years (2017-19), resulting in higher domestic prices,” the report said.
The country has 11,666 rice mills, but 88% of them are small with poor and old machinery.
Burma’s rice exports have been boosted by a memorandum of understanding with China that gives the country a 400,000-tonne quota for 2019.
“This idea came after China increased the intensity of inspections along the border in 2018 to intercept smuggled rice, causing rice exports from Myanmar through the border to fall from 1.8 million tonnes in 2017 to 1.4 million in 2018,” the attaché said.
However, the increase is likely to be offset by reduced exports to the E.U.
For Malaysia, in a report of March 20, the attaché said that “although western food such as pizza, pasta and bread are gaining popularity, industry analysts report rice remains a staple food among Malaysians. The locally produced ST-15 long grain variety is the cheapest variety sold and most popular in the country. Imported rice such as jasmine fragrant rice from Thailand is a favorite among upper income earners and those in urban areas.”
Malaysian rice imports rising
Growing demand means rising imports.
“Currently Thailand and Vietnam supply more than 80% of rice imported into Malaysia,” the attaché said. “Other major suppliers of rice to Malaysia are Cambodia, Pakistan and India.”
The countries of the region have come under fire from the European Union on rice trade this year. On Jan. 16, the European Commission activated a safeguard mechanism on imports from Cambodia and Myanmar, following a February 2018 request from the Italian government, which was supported by other rice producing European countries.
Under the activation, a customs duty of €175 ($194) a tonne is put in place in year one, falling to €150 ($167) a tonne in year two and €125 ($139) in year three.
The Commission launched a formal investigation in March 2016 that confirmed a “significant increase of imports of Indica rice from Cambodia and Myanmar into the E.U. that has caused economic damage to European producers.”
E.U. imports from the two countries had risen by 89% over the previous five seasons. Cambodia and Myanmar are beneficiaries of the E.U.’s Everything But Arms (EBA) trade scheme, which unilaterally grants duty and quota-free access to the world’s least developed countries.
The E.U. farming lobby group Copa and Cogeca turned their fire recently on imports of Japonica rice from Myanmar. Its Secretary General, Pekka Pesonen, wrote to E.U. Agriculture Commissioner Phil Hogan on July 1, citing Commission data that showed that imports of Japonica milled rice from the country were 58,029 tonnes in the first nine months of the 2018-19 marketing year, up from 24,014 tonnes in the same period a year earlier and 4,917 in the first nine months of 2016-17.
The problem could “lead to the collapse of Japonica rice production in the E.U.,” he warned. At the same time, he complained of concessions to Vietnam on rice in the E.U.’s new trade deal, signed in Hanoi on June 30.