Top Rice Consuming Countries In The World And Their Potential

RICHARD E. HICKS

OCEAN SPRINGS, MISSISSIPPI

For the past several months we have highlighted the top five rice producing countries in the world. As we have seen we have a new winner in the production category India and a new looser China. A look back the new winner is the larger problem I feel they are looking to export more than they consume. China on the other hand has plenty of domestic demand. They are, however, aggressive exporters in nearly every sector so time will tell.

We will now turn our focus to the top rice consuming countries around the globe. This is the all important sector as it ultimately drives the price, production is seasonal but demand will always increase as populations grows and standards of living rise. This is the ultimate challenge for rice producers. At this time, we are getting the uneasy feeling US rice production is on a path of decline. The economics of rice production is the cause. This is something I do not need to lecture anyone on. I feel most readers are in a position to give me the schooling. so let us move forward and see where the hot rice markets are.

Now a deep dive into the top ten rice consumers. Who are they?

1) China 193 million tons

2) India 141 million tons

3) Indonesia 52 million tons

4) Bangladesh 43 million tons

5) Phillipines 23 million tons

6) Vietnam 23 million tons

7) Myanmar 15 million tons

8) Thailand 13 million tons

9) Japan 9 million tons

10) Brazil 10 million tons

As a side note the two countries with the highest per capita rice consumption are Laos and Cambodia. These numbers are impressive as consumption is always the key. For decades I have put forth the idea that corn and soybean production is not the major factor determining price. It really does not matter how many bushels you grow, it matters how many you eat. The feeder can feed, the crusher can crush, but if you are not selling the excess prices stagnate. The tug of war between production and consumption is the ongoing concern.

We now want to do a bit of spitballing into the efforts in this supply versus demand tug of war. I am going to speculate on the various producers and the Mens Rea that drive them. This effort will be pure speculation on my part as we have no crystal ball to look into the motivation of these countries. Firstly, the major motivation is going to be feed your people. Governments all over the world have cheap food policies. Nowhere is this more evident than here in the US. A simple look at the USDA will prove my point. During the 1960’s my dad was paid money from the government not to grow wheat. He was a businessman that owned ground. He never farmed as a profession. Yet, he was paid not to farm as a price support. Or take a look at the old PL480. Bear with me as that might not be the right statute. For many years I called it the buy one get one free in the wheat market. As I recall countries could tender and be awarded a bonus bushel. I am doing this from memory so if I am not stating it correctly feel free to give me a shout and fill me in.

I am shifting thoughts into this line to attempt to isolate the consuming countries most likely to increase production way above their consumption needs. Thereby, tipping the supply demand tables. First on the list is China. This country needs no introduction. They have developed hegemony over Asia, but it appears they will not be happy until this extends over the entire world. As we have reported recently, they lost the top spot in production. We have placed them at the top of the list because I feel they have shot their bolt. They have enough internal production to meet domestic demand, I just feel they are not going to radically increase acreage to multiply production. They are already feeding their population and meeting export demand so I feel an increase in output will rest on genetics. They copy everything successful from other nations and I feel they have seen the US increase production based on science and not more dirt. This is speculation on my part, but I base that on nearly fifty years in the grain trade.

This brings us to India a real contender. We feel this is one of the producers to watch closely. They have increased output significantly. While they need to increase the standard of living and this is best achieved through nutrition. The giant strides they have made over the past few years gives them an edge to capture a larger share of the world’s rice market. I believe they have the ability to increase acreage and the improvement in genetics will simply give them more of an edge. These factors in conjunction with an aggressive marketing posture makes India a real concern. As another concern, India is using a portion of the rice surplus to increase ethanol production.

I am not listing these countries in order of consumption, rather, I am placing them in my concern list order. The next bandit on the list is Vietnam. While researching the previous article we wrote about the Vietnamese production figures. I was taken aback at the speed that they went from an importer to an exporter. They did it very quickly. During the war Vietnam was an net importer of rice This is not hard to explain. After the war the capitialist/communists quickly went from a rice deficit to becoming a major producer in the course of several decades. This was and remains quite a wonder. I suppose that re-education really does work. At any rate we feel Vietnam can and will continue to be a mover in the rice market. I have no economics to back this up and I suppose it is a bias, but they are already meeting domestic demand so the only avenues left are storage or exports.

Vietnamese production figures. I was taken aback at the speed that they went from an importer to an exporter. They did it very quickly. During the war Vietnam was a net importer of rice This is not hard to explain. After the war the capitialist/communists quickly went from a rice deficit to becoming a major producer in the course of several decades. This was and remains quite a wonder. I suppose that re-education really does work. At any rate we feel Vietnam can and will continue to be a mover in the rice market. I have no economics to back this up and I suppose it is a bias, but they are already meeting domestic demand so the only avenues left are storage or exports.

We will now take a look at the countries down the list. Historically, Thailand was an important player in the world rice trade. It seems to me back in the 1980s they had a firm control on the export game. Today, I hardly ever see any concerns about Thailands’ rice production. Perhaps I am looking in the wrong place, but it seems they have bern outpaced by their competitors. I do not see a large shift in the supply/demand table coming anytime soon.

Indonesia is one of the countries that leaves me a bit confused. They are a top producer, however, they have a large population. This places them in an awkward position. One that hampers their potential to be a threat to the supply/demand table. They consume nearly as much as they produce so the overriding concern is there is not exports. My knowledge of the lay of the land is limited. If they could they would already be doing it so a significant increase in production is, in my estimation, unlikely.

Myanmar. has the potential to be a sleeper. In the recent past Myanmar was the largest producer of rice in the world. This means

they have the ability to do it all over again. They are the largest country in SE Asia, so they have plenty of acreage. The drawbacks are twofold lack of technology, rice is still mostly produced by human and animal power and unstable domestic conditions. They are a sometime socialist, military junta, followed by periods of a weak civilian government. One of these is a problem, both at the same time a disaster. They have in the past been a contender but at this time moving up the list may be difficult.

Bangladesh and the Phillipines are both importing rice. While they are large producers, they are still concerned enough about domestic demand to import. This indicates to me while they are top producers they are not top contenders.

Japan and Brazil between these two nations, I feel only Brazil could increase rice production in a big way. They do not appear to be so inclined. They seem content on driving corn and soybean prices lower and taking more of our market share.

In conculsion. I have tried to condense two articles into one and may have rambled a bit. I wanted to highlight production vs consumption and a nations’ ability to increase production enough to create a problem. I think India and Vietnam are the most likely contenders India is already doing it and Vietnam is growing. The other countries seem to me to have significant obstacles to increase their production enough to be a real threat.  Until next time thanx.   ∆

RICHARD HICKS IS THE MANAGING DIRECTOR OF THE R.E. HICKS GROUP LLC AN NFA REGISTERED INDEPENDENT IB.

I can be reached at 618-301-2244, 618-363-0252 sat phone 1-254-219-7336.

Note: Past Performance Is Not Indicative Of Future Results.