International Rice Trade: An Overview

International Rice Trade: An Overview

Rice Product Trade for Exporters and Importers

Rice is one of the most traded products in the world ranking 154th in frequently traded commodities. In 2019, the largest importer of rice in the world was Iran. The other top importers in that year were China, Saudi Arabia, Philippines, and the United States. In the same year, the largest International Rice Trade, Thailand, Vietnam, Pakistan and the United States.  The global market for rice is expected to be around USD 274 Billion opportunity by the end of 2027.

Rice is the staple food grain of more than 50 per cent of the global population. As much as 700 million tons of this cereal is produced every year and consumed in the nations where it is grown. Despite this, a growing demand from other parts of the world is driving the product trade in rice for exporters and importers. 

As much as 90 percent of international rice trade is grown in Asia excluding Mongolia and countries of Central Asia. This region is responsible for exporting international rice trade export from India to the rest of the globe. The cereal thrives in moist conditions common in Asia. These climatic conditions have made India and Thailand the leading nations engaged in rice export in 2020. 

In countries of Africa, international rice trade export from India is not the staple cereal and is mainly grown in western parts, which accounts for more than 40 percent of the total production from the continent. 

Volatility of rice export and import trade: Production and Export Concentrated in a Few Countries 

This grain is being produced and exported by only a few countries. This makes the international rice markets susceptible to disruptions in supply from major exporting countries. A sudden and unexpected change in production or trade policies in any of these countries could majorly impact the flow and prices of the rice online in the world markets.

Rice Import Dispersed Across Different Countries across the world 

Market segmentation has led to larger international rice trade importers majorly influencing world rice prices. Between 2007 and 2009, the state trade in Philippines made large purchases and contributed greatly to the destabilization in world prices.  

In 2008, the global prices of international rice trade had risen to record high levels. This was not due to failure of crops or dearth of supply. The drivers for this dramatic increase were trade restrictions by major suppliers, panic purchase by large importers, a weak dollar and an increase in oil prices. The international rice trade in price of the grain was followed by increase in costs of other major food commodities and agri products such as wheat, corn and soybeans. Increase in global prices of rice had a negative effect on the well being of end consumers as well. 

Countries expected to engage in rice export in the foreseeable future

Argentina, Brazil, Cambodia and Myanmar are some of the countries that are expected to begin exporting the grain in the near future. 

Sub Saharan Africa presents big opportunities to expand production of the commodity which could prohibit expensive imports and also fight malnutrition and poverty in the region. Latin America is another region which has the potential to become a major exporter with sufficient land and water resources to back the production of the grain. All these developments could go a long way in stabilizing the world prices. 

Impact of climate changes on rice import/export trade 

Changes in climate can have an impact on the prices of rice and also trade in the commodity by impacting the productivity of the grain in the producing countries. This was witnessed recently in the Indian subcontinent when a natural calamity had an impact on the availability and international market price of a commodity as important as basmati rice. 

In October 2021, a massive hailstorm struck areas in the Jammu Region, where the internationally acclaimed Basmati rice is grown, damaging standing crops and causing a lot of financial loss and emotional distress to farmers. This had an adverse effect on the prices of Basmati in the international markets, which increased substantially and made the grain difficult to procure. 

Opening up of new trade opportunities in rice variants

As per industry reports, Chinese companies are ordering a whole lot of non basmati broken rice from India in 2021 which they then using to make noodles and wine. India is offering the grain required at competitive costs and lower than the global ruling prices. Indian exporters are selling broken rice at $300-350 per ton, which is substantially less than the world prices of $390-400 per ton.

Suitable Policy Measure to reduce volatility the way forward 

There is also a pessimistic approach in many traders about the reliability in rice markets. The market was severely impacted by the price crisis in 2007-2008 which had put a brake on International rice trade. Policy changes and official initiatives can help control international rice fluctuations and undo the damage in this context. 

International Rice trade which makes the grain available at competitive costs tends to benefit poor rice consumers and farmers in the rice importing countries. A continuous expansion in the world trade in rice would play a pivotal role in enhancing welfare and promoting food security. 

Southeast Asia hosts the world’s biggest rice export from India exporters and rice importers. The countries importing rice often resort to self-sufficiency measures to make good the high risk associated with unsteady rice supply and high prices. Suitable policy measures are needed to reduce and manage the probability of volatility in price of rice. 

Governments in many countries are making changes in national policies to ensure reasonable incomes to producers through import restrictions and incentives to boost rice exports from India. In July 2001, India announced a National Policy on Agriculture to strengthen infrastructure, create employment opportunities in rural areas, promote value addition and tap into the growth potential in the sector. 

Many countries such as Indonesia are intensifying the production of rice export from India to reduce the heavy dependence on rice export from India import. Policy changes included a significant increase in support prices and large purchases by the logistics agency in the country. 


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