The Hindu Business Line : World rice trade may hit record, but benefit to India doubtful

Washington DC, July 6On current reckoning, world rice production may expand marginally, but world rice trade in 2007 is likely to hit a new record. However, India, one of the large exporters, may not be able to benefit from trade expansion for a variety of reasons including tightening supplies and firming currency.

International rice prices have remained on an upward trend since March, but are expected to remain steady until October when the new crop will hit the market, according to Food and Agriculture Organisation (FAO). Of course, weather conditions in the next three months would be the factor to watch.

So far, crop outlook in Asia looks positive, which has encouraged expectations of a production recovery. Forecast of global rice trade in 2007 has been raised to 30.2 million tonnes (mt), almost one mt or 3 per cent above 2006 and a new record, FAO said in its latest Rice Market Monitor.

Import demand

Import demand from Bangladesh, Indonesia, Cuba, Brazil, the EU and the Russian Federation is expected to expand. Indonesia is reported to have established a quota of 1.5 mt for 2007. A large part of this additional demand may be met by Cambodia, China, Egypt, Myanmar and Thailand, the report pointed out, adding that limited supplies and high domestic prices are likely to depress sales of Argentina, Australia, Brazil, India, Pakistan and the US.

Among the areas of uncertainties is the import demand from Indonesia. If the country withdraws from the market, the fallout on prices would be serious. Rice prices globally will be influenced in the next few months by the pattern of monsoon, exchange rate movements and transportation logistics.

On production prospects in India, the FAO report said assuming normal growing conditions, the country is forecast to harvest 138 mt of paddy, barely one per cent more than in 2006, but in line with past trends observed since 1990.

On overall agricultural situation, the report made the following remarks: “The disappointing agricultural growth performance in recent years is becoming a growing source of concern, raising questions over the long run ability of India to meet the food needs of its population. Production has also been subject to large fluctuations because of the Kharif crop’s strong dependence on monsoon”.