Rice: will consumption actually exceed production?

31/05/2023

This topic is a hot one: European cereal production in recent months, and particularly rice production, has been seriously challenged by a series of more or less unpredictable events.

On the one hand, the war in Ukraine has led to a reduction in the stocks produced in the East, and on the other, drought—a problem that now seems to have become a regular occurrence in Italy— has forced Italian producers to reduce their cultivated areas.

Nevertheless, drought is not a problem faced only by Italy; the whole of Europe is faced with the consequences of a lack of snowfall and rain.

In contrast, figures reveal a steady increase in rice consumption. So, what are the prospects for rice production?

Drought and diminishing arable land in Europe

The last two years have featured unusually harsh weather conditions all over the world, which have reduced the cultivated area considerably.

Over the past few winters in Italy, the lack of rain and snowfall has made extraordinary countermeasures in agricultural production essential. For rice in particular, the sown area had to be reduced. This meant around 9,000 hectares for sowing were lost, causing a decrease in the size of the fields to 218,000 hectares.

The water shortage has also been addressed by the Italian National Rice Board, which has ordered a further reduction of about 23,000 hectares, or 10.5% of the national surface area.

If Italy is facing this kind of hardship, other European countries are likely to be no better off.

Spain has suffered the greatest loss of arable land for rice production, with a reduction ranging from 40% to 45%.

The Spanish regions with the largest production historically are Andalusia, Extremadura, the Valencian Community, Catalonia, Aragon, and Navarra. Even in these areas, the losses of cultivatable surface area were very significant. The most affected regions were Andalusia, where approximately 10,000 hectares were cultivated compared to the usual 35,000, and Extremadura, where only 10% of the surface area was cultivated.

In Portugal, Greece and Bulgaria there was also a reduction in the cultivated area in 2022, although for different reasons:

In Portugal, the reduction was just under 10%, from around 27,000 hectares to roughly 25,000.
In Greece, the reduction was 20%, meaning the number of hectares fell from around 25,000 to around 21,500.
In Bulgaria, the reduction was about 10%, so the cultivated area has fallen to about 10,000 hectares.

In the case of Greece and Bulgaria, the cause of the reduction in area was not drought. In fact, rainfall in these areas was not lower than the annual averages, but rather slightly higher. The war in Ukraine and the consequent increase in the prices of agricultural products, however, has led to a switch of cultivation from rice to wheat, sunflower and cotton, as these crops have higher margins and lower costs.

Finally, in Romania, several causes have combined. Drought, which has forced the Danube water pumps to shut down their activity due to the river being too low, has been compounded by technical and economic difficulties that are causing the rice area to shrink significantly year by year, so that this crop now occupies only a few thousand hectares.

Rice production in the world: what is going on

If Europe is facing these difficulties, the question arises as to what is happening in the rest of the world.

According to the latest FAO estimates, global rice production is not only declining in Europe, but is a widespread problem.

Figures show a reduction in world rice production in 2022 of 1.5%: from 790 million tonnes produced in 2021, it fell to 778 million tonnes.

In some areas of the world such as South Asia, harsh weather is said to have caused the reduction in production, so much so that Pakistan has reportedly seen a decrease of as much as 25%, while China and Vietnam have seen a decrease of 2%. The only positive figure comes from Thailand, with +4%.

The United States also reported a decline, in this case by as much as 16%, as a result of a reduction in rice-growing areas. In the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay), total production fell by 11%, dropping back to the levels recorded in 2019.

As for sub-Saharan Africa, harsh weather and floods, in addition to other economic and technical challenges, have once again halted production.

Estimates from the beginning of the year indicate that in 2023 there could be a further reduction, limited, however, to 1.5%, that may affect the main producing countries in Asia, the Western Hemisphere and the European Union.

A growth in rice consumption

While rice production suffers a crisis due to drought and rising production costs, consumption appears to be on the rise. According to the Italian National Rice Board, sales in Italy have increased by about 100,000 tonnes in the last 10 years, and the sector has considerable room for growth, all the more so since the focus on health and wellbeing and environmental sustainability align with this food choice.

In the months ahead, it will therefore be important to evaluate the correct strategies, including from a political point of view, to counter rising prices and climate problems, to be able to support a market with ample opportunity for development.