| RICE Widely CULTIVATED Staple GRAIN Rice is the staple diet in almost 39 countries, and out of the top 10 rice consuming countries, eight are Asian/South-East Asian countries, making it a lifeline for the people of Asia and Pacific region
By Abhilsha Maheshwari Rathi
Rice is one of the most important and extensively grown food crops in the world and is an important source of calories apart from being a good source of income. Developing countries have long depended on its versatility and high caloric value: rice cultivation is the principal activity and source of income for about 100 million households in Asia and Africa. It is a staple food for almost 60 per cent of the world population, with Asia and Africa the largest consuming regions. It is the third most produced grain after wheat and maize; in fact, prior to milling, its production is almost equivalent to wheat. Globally, around 90 per cent of all rice grown commercially is used for human consumption, while the remaining 10 per cent finds its way to industries such as wine, starch, animal feed, etc.
Although rice is produced in more than 100 countries, the physical requirements for growing rice (available water, soil types) are limited to certain areas. Economically sound production typically requires high average temperatures during the growing season, plentiful water supply, appropriate land surface to facilitate uniform flooding and drainage, and a subsoil hardpan that inhibits the percolation of water. The species cultivated in Asia, believed to be where rice originated, is Oryza sativa from the Graminaceae (grass) family. It is also the species cultivated in most of today's rice-producing countries.
Four major types of rice produced worldwide are:
Indica - grown mostly in tropical and subtropical regions, and which accounts for more
than 75 per cent of global trade. Indica rice cooks dry, with separate grains.
Japonica rice - typically grown in regions with cooler climates, accounts for more than 10
per cent of global rice trade.
Aromatic rice - primarily jasmine from Thailand and basmati from India and Pakistan, accounts for more than 10 per cent of global trade and typically sells at a premium.
Glutinous rice - grown mostly in Southeast Asia and used in desserts and ceremonial dishes, accounts for most of the remainder.
Production to processing
The different stages that rice goes through from production to milling are as follows:
Paddy Rice or Rough Rice: Paddy rice or rough rice is rice which comes straight from the field after harvest. The rice has been threshed and each grain is separate. The grain has a hard husk (or hull) protecting the kernel inside.
Parboiled Rice: It is the rice that has been boiled in the husk. Parboiling makes rice easier to process by hand, improves its nutritional profile and changes its texture.
Brown Rice: After the husk is removed, the remaining product is called brown rice. Brown rice is more nutritious than white rice, but very little rice is consumed in this form because it takes much longer to cook. Also, it is not as tasty as white rice.
Milled Rice: Milled rice has its hulls and bran removed. It is also called white rice or polished rice. Almost all rice is consumed in this form.
Broken Rice: The kernel of rice can crack in the field, during the drying process, or during the milling process. Cracks are usually caused by moisture migrating too quickly within the kernel (drying too fast, or moisture being added back to a dry kernel). Often these cracks cause the kernels to break during milling and so broken rice is generated.
Global Production and Consumption of Rice
Rice is the staple diet in almost 39 countries, with the Asian countries being the largest consumers. Out of top 10 rice consuming countries, eight are Asian/South-East Asian countries, making it a lifeline for the people of Asia and Pacific region. Together India and China account for more than 50 per cent of the global rice consumption. Other major rice consuming nations include Indonesia, Bangladesh, Vietnam, Philippines, Burma, Thailand, Brazil and Japan. These top 10 consumers account for about 84 per cent of the total global consumption of around 424 million tonnes (in 2007-08). Despite reduction in per capita consumption of rice, total consumption continues to grow due to rising populations.
Indian rice production has shown a healthy growth in the past, particularly after late 1960s on account of the Green Revolution. However, of late, the production growth is slowing with the lack of expansion in the area under rice and slowing growth in yield
Interestingly, all these top 10 consuming nations are also the 10 largest producers and account for around 86 per cent of the total global production, with the Asian countries together contributing 90 per cent. China is the largest producer with 30 per cent share in global production followed by India with 22 per cent share (2007- 08). However, the growth in production is marred by the problem of declining yield and stagnating area under cultivation. Combined acreage of China and India, which produce 50 per cent of global rice and which command about half of the global acreage, is declining. Similarly, rice area is also stagnating in other major producers like Indonesia, Thailand, Vietnam and Bangladesh. However, the major cause of worry is declining/stagnating yield in some of the major producing countries. Among the major producers, China, Thailand, Indonesia, Burma and Japan have been witnessing steady to declining rice yield whereas in India the yield growth has slowed down. Countries like Philippines, Vietnam, and Brazil are still managing to boost rice yield to some extent. Lack of development of new high yielding varieties (HYV), growing problems related to irrigation,
   Global Trade in Rice
Despite a high proportion of rice produced and consumed as human food, international trade in rice is relatively very small when compared to other major commodities like wheat and maize. It is only around 6-7 per cent of its total production. One of the major reasons of the limited international rice market is that most producing nations are major consumers also. It is estimated that 50 per cent of the world crop is produced by small-scale farmers and consumed on the farms where it is grown.
Exporters are concentrated mainly in Asia, whereas importers are scattered. Top 10 exporters account for 94 per cent of the global trade, whereas top 10 importers account for only 44 per cent of the global trade. Top producer China accounts for a mere 3.7 per cent of global exports as it consumes most of its production. Among the top 10 producers, India, Thailand and Vietnam are major exporters accounting for 55 per cent of all exports. Apart from the top 10 producers, US and Pakistan are also major exporters, which account for 24 per cent of the total global exports. In the international market, rice is traded under two main categories – fragrant and non-fragrant rice. Basmati rice is the most preferred fragrant rice and India dominates its trade.
Prices
International rice prices recently surged to over $1,000 per tonne from under $400 per tonne a few months ago. Many factors have contributed to the present situation. Over the years, yield growth has slowed down in most of the rice growing countries. As a result, stocks have dwindled over the years. Natural disasters such as widespread drought in India and China in 2002, cyclone in Philippines in 2006 and in Bangladesh in 2007 have also contributed to a fall in supplies.
Global temperatures, particularly night temperatures, have steadily risen in recent decades. Some evidence suggests that rising temperatures may have already contributed to lower rice yields. Since 2005, planthopper (a type of rice pest) outbreaks have affected several million hectares of rice land in major producing countries, such as Vietnam, China, Indonesia, Korea and Japan, particularly in growing seasons. In Vietnam, planthopper and virus outbreaks were a major reason behind the government's decision to restrict rice exports.
However, despite these reasons, rice prices had followed a steady but sluggish rising trend particularly when compared to other bulk commodities such as wheat and corn. What triggered a sudden price rise was mainly export restrictions imposed by various exporting countries. These came at a time when a number of other countries, Bangladesh and the Philippines, in particular, were trying to procure sizeable volumes of rice to compensate for losses incurred by floods or to reconstitute reserves. Weather related production shortfalls have also resulted in increasing import demand. For example, a drought in Australia and cyclone/floods in Bangladesh destroyed the rice crop in these countries forcing them to raise imports to meet domestic demand. This put pressure on rice exporting countries, where prices started rising in the domestic market prompting their governments to impose export restrictions. While exporters started holding on to their stock of rice, importers rushed into the market to buy more rice to meet their consumption needs and to build their own stock. This combination of export restrictions and surging import demand exacerbated the situation to such a point that in a span of just four monthsfrom January to April 2008-rice prices have risen dramatically from $393/tonne to an all time high of 1,015/tonne, a rise of an astounding 153 per cent. Since then, prices have eased somewhat on expectations of a much better harvest in key countries in the coming months.
 
Indian Production and Consumption
In India, rice is not only an important commodity but an integral part of our society. More than 4,000 varieties of rice are grown in the country. However, government classifies rice into two categories: common (length to breadth ratio less than 2.5) and Grade A (length to breadth ratio more than 2.5). India has the largest area under paddy and ranks second in production after China. The country produces about 22 per cent of global rice production.
Indian rice production has shown a healthy growth in the past, particularly after late 1960s on account of the Green Revolution. Some expansion in acreage along with improvement in irrigation facilities and technological developments also supported the growth in rice production. However, of late, the production growth is slowing with the lack of expansion in the area under rice and slowing growth in yield.
Despite a slowdown in the growth in production, the country has managed to retain its position as the second largest producer. Rice is grown in several states, with West Bengal (16 per cent), Andhra Pradesh (13 per cent), UP (12 per cent), Punjab (11 per cent), Tamil Nadu (7 per cent), Orissa (7 per cent) and Chhattisgarh (5 per cent) being the major producers. The first four states contribute almost 50 per cent of the country's total production.
Rice is the staple food for 65 per cent of the country's population. Consumption has risen in the country over the years at a brisk pace with ever rising population. However, of late, per capita consumption has witnessed a decline despite a rise in total consumption due to a shift in consumer's preferences. There is increasing wheat product consumption in traditional riceeating regions such as the south and coastal areas. However, rice still remains a favourite staple in traditional rice eating states of South, East and North East.
Trade
India ranks among the first top five exporters of rice, exporting to a large number of countries, including the Gulf countries, European Union, the US, Indonesia, Malaysia, Bangladesh, Russia, Singapore, Sri Lanka, Japan, etc. India's total exports of rice were 2.5 million tonne in 2007-08. India exported both basmati and Nonbasmati variety. India is the world's largest exporter of Basmati rice, selling about 7-8 lakh tonnes mostly to Saudi Arabia and other Middle East countries, Europe, and the US. Major destinations for Indian non-basmati white/parboiled rice are Bangladesh, Indonesia, Philippines, Nigeria, South Africa, Ivory Coast, and other African countries
However, export of non-basmati rice was recently banned by the Government in order to augment domestic supply in wake of price rise and inflation. The government has also imposed an export duty of $200 per tonne on basmati rice and lowered the minimum export price to $1,000 per tonne. India's basmati rice exports have declined marginally at 7.43 lakh tonnes during April-December 2007 against 7.57 lakh tonnes in the year-ago period, according to the latest government data. However, the value realization by basmati exporters has increased to Rs 32,000 per tonne from Rs 26,000 a tonne during the period under review may be due to high international prices. In dollar terms, the exports of basmati rice have increased to $593.14 million during April-December 2007 compared to $431.85 million in the corresponding period of previous fiscal year.
Government policies and Rice
Rice is a staple food and an essential commodity under the Essential Commodity Act 1955, which gives power to the government to control production, supply, distribution, etc., of essential commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices so as to ensure food security. Hence, production and distribution of rice is closely monitored by the Government through the Public Distribution System (PDS), now known as the Revamped Public Distribution System).
The government procures rice (and wheat as well) through the Food Corporation of India (FCI) and other state agencies at the minimum support price (MSP), which it announces before the sowing season begins. The price support policy is directed at providing insurance to farmers. The minimum price is fixed beyond which the market price cannot fall. The MSP gives the farmer the assurance of getting that minimum amount. The producers/farmers have the option and not compulsion to sell the paddy to the FCI/State agencies at MSP. If the open market price is higher, farmers can sell to private players.
Apart from procurement of paddy from farmers, rice is also procured by the Government from rice millers and rice dealers. However, this is through statutory levy. The percentage of levy rice is fixed by State Governments with the approval of Central Government taking into account requirements for the Central Pool, domestic consumption and marketable surplus. Prices of levy rice are fixed by the Government before the commencement of every kharif marketing season.
Rice procured by the State Governments and their agencies are ultimately taken over by the FCI for distribution throughout the country, which is done through fair price shops. The total procurement of rice both under levy from the rice mills and directly in the form of paddy from the farmers by FCI is around 20-25 per cent of total rice production. Punjab contributes maximum to total procurement. The other major contributing states are AP, Chhatisgarh, UP, Orissa and Haryana.
Price Trend
The wholesale price index of rice is used as the proxy for the price trend witnessed in the commodity. As is evident, prices of rice, after remaining more or less range bound, started rising from 2005-06. A lot of factors have been instrumental in pushing up the prices some of which have already been covered earlier. Apart from falling growth in yield and lack of expansion in the area under rice, rising input cost, rising demand from the rice consuming countries has also added to the firm tone. The escalation in rice prices led to various measures being implemented by the government, including export curb on non-basmati variety and export duty on basmati rice exports. It is likely that the government will remove these restrictions by November when the new crop will start reaching the market.
Outlook
On the global front, for the year 2008-09, global production of milled rice is set to touch record levels of 431.4 MT, which is expected to meet consumption demand. However, prices are still unlikely to ease much till October- November, when bulk of the paddy crop will come to the markets. New crops are being harvested in both the South and North Hemisphere, which could help reverse the upward trend in prices but only after a few months.
Rice production in India is likely to exceed 94 million tonnes, despite unseasonal rains in southern states like Kerala and Andhra Pradesh in March this year. This bumper crop together with strict government controls on exports is expected to ease prices by the end of this year. However, till then, it is most likely that prices will remain firm.
Factors affecting Rice Prices
Weather: like any other crop, role of weather in rice production is immense. Temperature, rainfall and soil moisture are the important parameters that determine the crop condition. Further, natural calamities can also affect crops.
Minimum Support Price: Changes in the minimum support prices (MSP) by the government have immense impact on the sowing decisions of farmers and hence the price of rice.
Government policies: Exchange rates, fiscal policies, export incentives and export promotion policies influence price.
Substitute Product: Availability of substitute products at cheaper rate may lead to weakness in demand. This situation happens especially when the main products price tends to become higher.
Consumption: Rice consumption depends on two factors - population and income. Low-income groups consume more rice. However, as incomes increase, consumer preference tends to shift to more nutritious diets comprising dairy and poultry products. Thus, per capita consumption of rice starts to dip. However, a growing population ensures that total consumption keeps on rising. So basically income growth and reduction in population result in low consumption of rice.
Seasonal cycles: Seasonal cycles are present in rice cultivation. Price tends to be lower as harvesting progresses and produce starts entering the market. At the time of sowing and before harvesting, price tends to rise in view of tight supply situation.
Demand: Import demands as well as domestic demand.
Basmati Rice
Basmati rice also known as “King of Rice” is the leading aromatic fine quality rice in the world. The supremacy of basmati rice can not be superseded by any other scented variety because of its unique characteristics. It is basically the aroma that gives basmati its novel characteristics unmatched by any other rice grain anywhere else in the world. Many scented varieties of rice have been cultivated in the Indian subcontinent but basmati distinguishes itself from all other aromatic rice due to its unique aromatic characteristics coupled with silky texture of its long grain.
Basmati Rice has been cultivated at the foot of the Himalayan mountain ranges in India Basmati rice is grown exclusively in the northern part of Western Punjab (on both sides of the Indo-Pakistan border), Haryana and Western Uttar Pradesh. To obtain the correct aroma and flavor of Basmati rice, proper ageing is required to reduce its moisture content. The best quality Basmati rice comes from the old Karnal district, known as the ‘rice bowl of India’. India accounts for about 70 percent of the world’s basmati production
Basmati rice being novel product characterized by its unique grain size, aroma and cooking qualities (extreme grain elongation on cooking) is a high value product and has got good export demand. It fetches good export price in international market for its three distinct quality feature as mentioned above. India is the largest producer and exporter of basmati rice in the world the export has been very high steadily growing. Nearly two third of Basmati Rice produced in India is exported. Gulf region remains the major market for Indian basmati rice and inside Gulf, Saudi Arabia accounts for the major chunk of basmati imports from India. The other major destination of India’s export is EU.
In 2006-07, 1.06 million tonne of basmati was exported for Rs 3,064 crore and basmati paddy farmers realized Rs 2,298 crore. Basmati rice exports have grown 12% from 1991-92 till 2006-2007. India controls close to 53% of the total basmati rice market.
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