Rice Crisis: Why It Is Happening?

By International Rice Research Institute


We are consuming more than we are producing

Many factors, both long- and short-term, have contributed to the rice crisis. At a fundamental level, the sustained rise in the price over the past 7–8 years indicates that we have been consuming more than we have been producing. This imbalance between demand and production has been partly masked by a reduction in rice stockpiles. In fact, rice stocks are being rapidly depleted, with current stocks at their lowest since 1988 (Figure 3). This depletion of stock has moderated the rise in price that would have occurred otherwise. The current low stocks, however, negate the chances of such a moderating influence in the future and increase the risk of a sharp rise in price.



Fig. 3. Rice stocks, 1990-2007


Annual growth in yield is slowing

A major reason for the imbalance between the long-term demand and supply is the slowing growth in yield, which has decreased substantially over the past 10–15 years in most countries. In South Asia, average yield growth decreased from 2.14% per year in 1970-90 to 1.40% per year in 1990-2005. In some years, this has been below 1%. Yield growth in Southeast Asia has decreased similarly. In the major rice-growing countries of Asia, yield growth over the past 5–6 years has been almost nil (Figure 4). Globally, yields have risen by less than 1% per year in recent years.



Fig. 4. Trends in rice area (columns) and yield (lines) in Asia, 1990-2007

Little room for expansion of rice area


Further, the possibility of increasing the rice area is almost exhausted in most Asian countries. With little expansion in area and slowing yield increases, growth in rice production has fallen below growth in demand as population has continued to increase.

Reduced public investment in agricultural research and development

An important factor accounting for the slowdown in yield growth is the reduced public investment in agricultural research and development (R&D). In particular, international donors have not provided sufficient support for agricultural R&D that is directly related to increasing crop productivity. Many governments have been unable to compensate for this by allocating more of their own resources.

Rice prices declined steadily in the 1990s, leading many governments to believe that the supply of food was plentiful. Lower prices were taken for granted, leading to complacency in agricultural research and development. Such investment has decreased in Asia in real terms over time (Figure 5). Public spending on agricultural research in Asia grew by an average of 3.9% per year during the 1990s, compared with 4.3% annually during the previous decade. In 2000, overall public research intensity, measured by the percentage of agricultural gross domestic product (GDP) invested in public agricultural research, remained low at 0.53 for developing countries as a whole.



Fig. 5. Public investment in agricultural research and development

Africa

Rice has become an increasingly popular food in Africa, with imports into Africa accounting for almost one-third of the total world trade in rice. This has increased over time as growth in rice production is far slower than growth in total demand. It is expected that demand from Africa will continue to grow.

Population increase

Population growth is outstripping production growth and this is projected to get worse. Demand for rice in Asia is expected to continue to rise as its population expands. Even after allowing for some decrease in per-capita rice consumption in Asian countries with higher income levels, it is projected that in 2015 Asia will need to produce 38 million more tons of rough (unmilled) rice than it produced in 2005. Globally, demand is increasing by around 5 million tons each year. This means that in ten years the world will need to produce 50 million tons more than it does now.

Economic growth

With rapid economic growth in large countries such as India and China, demand for cereals has increased substantially for both consumption and livestock production. This income-driven growth in demand has pushed up the price of cereals in general. In many areas with high population density, highly productive rice land has been lost to housing and industrial development, or to growing vegetables and other cash crops.

Irrigation

Investments in irrigation, which peaked during the Green Revolution period in the 1970s and 1980s, have decreased substantially. Existing irrigation infrastructure has deteriorated considerably because of inadequate maintenance.

Oil prices

The price of oil has increased rapidly during the past year. In addition to contributing to general inflationary pressure, this has pushed up freight costs for countries that import rice. The world price of fertilizers—which are essential for rice production—has increased sharply, with the price of urea almost doubling over the past four years (Figure 6).

Rising oil prices and concerns about climate change have also spurred rapid investments—particularly in developed countries—in biofuels such as ethanol produced from maize grain or biodiesel produced from oilseeds. This has increased pressure on international trade of grains and livestock feed, as well as on agricultural land in some countries. Until now, the direct impact of biofuels on rice production and rice trade has likely been small. However, if the industry continues to grow, rice production and prices may be affected more seriously.



Fig. 6. Rising world prices of rice, urea, and diesel fuel, 2000-08

Extreme weather

Natural disasters such as widespread drought in India and China in 2002, typhoons in the Philippines in 2006, and major flooding in Bangladesh in 2007 have contributed to the shortfall in production in recent years. Global temperatures, particularly night-time temperatures, have steadily risen in recent decades because of increasing greenhouse gas concentrations in the atmosphere. Some evidence suggests that rising temperatures may have already contributed to lower rice yields in recent years, but a thorough global assessment is yet to be conducted. Further, human-induced climate change is expected to increase the severity and frequency of extreme weather events.

Reoccurring pest outbreaks

Pests such as planthoppers, and the various virus diseases transmitted by them, were major threats to rice intensification programs in the 1970s and 1980s. Now, they have returned as major threats to production, primarily due to breakdowns in crop resistance and the excessive use of broad-spectrum, long-residual insecticides that disrupt natural pest control mechanisms. Since 2005, planthopper outbreaks have affected several million hectares of rice land in countries such as Vietnam, China, Indonesia, Korea, and Japan, particularly in growing seasons with abnormally higher temperatures (which are becoming more likely because of climate change). In Vietnam, planthopper and virus outbreaks were a major reason behind the government’s decision to restrict rice exports.

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