WASHINGTON, D.C., U.S. — Rough rice production in China is forecast at 204.3 million tonnes in 2018-19, down nearly 2% from 208.6 million tonnes in 2017-18, according to an April 4 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA).

The USDA said the forecast decline reflects lower estimated harvested area in 2018-19 due to government interventions. According to the report, harvested area in 2018-19 is forecast at 29.5 million hectares, down from 30.2 million hectares in 2017-18.

In mid-January, the Ministry of Agriculture announced plans to lower rice planted area by more than 670,000 tonnes, a total that while not necessarily consequential, does send an important signal that the country will reform its rice sector.

“Rice production area in North East China and the Yangtze River basin will be rotated or fallowed,” the USDA noted in the report. “In North East China, growers are encouraged to switch to corn, potato, and pulse production as they face diminishing water resources and short growing seasons to support sustainable japonica rice production. In the Yangtze River basin, growers on marginal lands, such as terraced hillsides in mountains areas, will be encouraged to switch from double-crop varieties of indica rice to single-crop varieties or vegetables. Farmers will also be supported with programs to develop off-farm income, raise value-added crops, and financial resources to start new enterprises for grain processing, e-commerce, and rural tourism.”

In early February, the National Development Reform Commission lowered the minimum support price for various rice varieties by 10%. The reductions represent the largest reductions to China’s minimum support price for rice in at least 14 years, the USDA noted.

“The reforms will have profound impacts on MY 2018-19 planting intentions, affecting production, and supply and demand,” the USDA noted.

In addition to the minimum support price reductions, the NDRC also announced that the government will provide “direct payments” to growers in major rice producing provinces to maintain stable production.

Rice consumption in China is forecast at 145 million tonnes in 2018-19, up from 142.7 million tonnes in 2017-18, driven in large part by higher food, seed and industrial use and feed use.