International outlook for 1991/92 - rice production, consumption, trade - U.S. Dept. of Agriculture. Economic Research Service report

Situation and Outlook Report: Rice, Oct, 1991

World Production Down Slightly

World rice production in 1991/92 is forecast at 344 million tons (milled), about 2 percent below 1990/91. While declines in China and India account for much of the decrease, adverse weather in Southeast Asia is also contributing to production shortfalls. Global consumption is forecast down marginally, the first decline since 1987/88. World ending stocks are expected to tighten, projected down 4 percent from 1990/91.

Trade is expected to expand 3 percent to 12.9 million tons. Despite the forecast decline in global ending stocks and increased imports, world prices might not increase significantly above calendar 1991. Upward price pressure resulting from higher import demand will likely be dampened by increased exportable supplies, particularly in Thailand. Additionally, export prices in India and Vietnam are well below Thailand's.

Declines Expected in China and India

China's production in forecast at 127.4 million tons, down 4 percent from the 1990/91 record. Area is projected down slightly, as are yields, but the 1991/92 crop is still expected to be the second largest on record. Flooding in the lower Yangtze river valley damaged the early rice crop and disrupted the planting of the fall-harvested crop. However, the prolonged rain and cool weather in July and August reduced yields and affected output much more than damage from the flooding. Scattered dryness in northern China is also contributing to the decline. However, recent reports indicate that some areas in the flooded provinces were replanted with short-season varieties, similar to those used in Thailand. Those varieties are lower yielding than rice normally planted in China, but their use is expected to help offset some of the flood losses.

The floods also damaged grain storage facilities and destroyed grain stored in open areas. Reports indicate that approximately 4 million tons of stored grain has been lost. At least one quarter of that loss is thought to have been rice. China's rice exports and imports are not expected to be affected by the flood losses. Large stocks of rice remain and the large 1991/92 crop will likely allow China to maintain exports at 500,000 tons and limit imports to 50,000 tons in calendar 1992, although additional amounts are reportedly smuggled in from Vietnam.

India's 1991/92 production is forecast at 71.5 million tons, down 4 percent from 1990/91. Weak monsoons in northern parts of the country delayed or prevented planting in some regions. While the irrigated rice crop in the Punjab remains relatively unaffected, rainfed areas in Bihar, Uttar Pradesh, and West Bengal are suffering from drought. Late summer rains allowed some farmers in those provinces to plant a late crop, although October rains will be necessary for a good outturn.

Good crops in southern India are likely to offset some losses in the north. Stocks remain relatively high. In July, India devalued its currency, increasing the incentive to export rice and giving India's rice a competitive edge in the world market. Calendar 1991 exports are forecast at 500,000 tons, including both basmati and ordinary rice. However, calendar 1992 exports, forecast at 400,000 tons, will depend on the impact of the reduced 1991/92 crop, on domestic prices, on government stocks, and on the import demand for basmati rice. Policy makers will need to balance the need for foreign exchange earnings against the risk of higher domestic food prices.

World Imports Expected to Rise

Production Down Among Southeast Asian Importers

Countries in Southeast Asia have also been affected by adverse weather. Indonesia's minor second-season 1991/92 crop has been reduced by dry conditions in Java. Rainfed areas were particularly affected. Production is forecast at 28.9 million tons, down 2 percent from 1990/91. There is concern that continuing dry weather will have a negative impact on the 1992/93 main season crop, which is now being planted.

The Indonesian government announced that it will import rice to replenish stocks. The National Logistics Agency (BULOG) has been releasing rice into the domestic market to stabilize prices and assist farmers in drought-stricken areas. At the same time, its recent procurement efforts have been slow due to the reduced crop. BULOG stocks are reported to be the lowest since mid-1988. Imports are forecast at 200,000 tons for calendar 1991, twice as much as in 1990. Imports are projected to increase to 300,000 tons in calendar 1992.

Increased support prices encouraged area expansion in the Philippines, somewhat offsetting dry conditions that are likely to reduce yields. Rice production in the Philippines is forecast at 6.0 million tons, 6 percent below 1990/91. Calendar 1991 imports are forecast at 175,000 tons, down over 450,000 tons from 1990. Calendar 1992 imports are projected at 300,000 tons.

Dry weather in Malaysia has also reduced area planted to rice. Malaysia normally imports the equivalent of about 25 percent of its consumption. However, in calendar 1991, imports are forecast to rise over 30 percent to 470,000 tons, the equivalent of 30 percent of Malaysia's consumption. Next year, imports are projected to return to a more normal level of 350,000 tons.