The Hindu Business Line : Global rice consumption may exceed production

IN 2004-05, for the fourth consecutive year, global rice consumption is expected to exceed production. As a result, the ending stocks are likely to see the lowest levels in almost two decades.

Tightening supplies and resultant drawdown of stocks are, however, unlikely to impact world prices significantly, unless of course China changes its position, that is, stops exporting and starts importing more rice.

In its latest report, the US Department of Agriculture has forecast world rice production in 2004-05 at 397.3 million tonnes (386.9 mt), while consumption is placed at 413 mt, unchanged from the previous year.

End-stocks are projected at 68 mt (83.7 mt), the lowest since 1983-84. World trade is projected little changed from the previous year at 25 mt

Vietnam and Myanmar are likely to boost their rice exports to fill the void created by lower exports from China and India. Thailand is unlikely to increase its 2004 rice shipments beyond the anticipated record of 9 mt as supplies shrink.

Rice export prospects from India are not rated bright. Kharif season output may be affected by some measure because of aberrant monsoon in July, although copious rains in August have contained the extent of loss.

An ambitious target of 93.5 mt has been fixed for 2004-05, but actual output is sure to fall short. In 2003-04 rice production was 86 mt. The volume of procurement will have to be watched too. On July 1, buffer stock level was 10.7 mt versus the minimum norm of 10.0 mt.

The Government is already under pressure because of inflationary tendencies in the economy. So, for the time being at least, open market sale by the Food Corporation of India at highly subsidised prices for export is ruled out.

During fiscal 2003-04, non-basmati rice exports were 2.6 mt valued at Rs 2,142 crore, considerably down from 4.1 mt worth Rs 3,634 crore the previous year. In the current fiscal, shipment volumes may drop further.

For purpose of export, private parties are allowed to purchase rice directly. The Centre is in the process of formulating a grain export policy which is likely to include an element of subsidy in the form of reimbursement of certain costs. However, given current market conditions, rice exports from the country are unlikely to be substantial.