Rice, a strategic agricultural and food commodity.
Rice is a major food staple and a mainstay for the rural population and for household food security.
It is mainly cultivated by small farmers in holdings of less than one hectare. Rice also plays an important role as a “wage” commodity for workers in the cash crop or non-agricultural sectors.
This duality has given rise to conflicting policy objectives, with policy makers intervening to the rescue of farmers when prices fell too low or in the defence of consumer’s purchasing power, in cases of sudden prices hikes.
Rice is of special importance for the nutrition of large reaches of the population in Asia parts of Latin America and the Caribbean and, increasingly so, in Africa. As a result, it plays a pivotal role for the food security of over half the world population. It is also a central component of the culture of a number of communities. For those reasons, rice is considered as a “strategic” commodity in many countries, both developed and developing, and has consequently remained subject to a wide range of government controls and interventions. Rough rice is the whole rice grain that is harvested from the rice plant. It includes the hull, which is the hard protective covering that accounts for 20% of the grain’s size. Also known as paddy rice, rough rice has a coarse consistency. It can be transformed into brown rice by removing the hull or white rice by removing the hull, bran layer, and cereal germ. Rice is a member of the grass family (Gramineae). There are more than 10,000 species of grasses, and they grow worldwide in a variety of climates. (Other grass crops meant for human consumption include corn, wheat, sorghum, barley, oats, and sugar cane.)
Domestication of Rice
Archaeological evidence shows that rice domestication began more than 8,000 years ago in the Yangtze Valley in China. The crop steadily proliferated to other regions, and by around 2,000 BC, the ancient peoples in the Ganges region of India were cultivating rice as a food source.
Why Is Rough Rice Valuable?
Today rice is a staple in the diets of more than half of the world’s population, especially in Latin America, Asia, and the Middle East. Annual production of milled rice tops 480 million metric tons, which makes it the third most-produced grain in the world after corn and wheat.
Types of Rice
Most cultivated rice belongs to the grass species Oryza sativa. (There is also a less common variety known as Oryza glaberrima.). There are over 40,000 different varieties of Oryza sativa, but the majority of rice cultivated worldwide can be categorized into two main types: Japonica and Indica. Japonica Indica Growing Climate Temperate Hot; tropical and subtropical Growing Regions Portugal, Spain, Japan, Italy, and the United States (California) Southern Asia, including Sri Lanka, India, Thailand, Vietnam, and Southern China Plant
Narrow, dark green leaves, medium-height tillers and short to intermediate plant stature.
Broad to narrow, light green leaves and usually tall to intermediate plant stature. Plant is characterized by its abundant tillering.
Grain Short and round and doesn’t break easily Long and tends to break easily Cooked Consistency Sticky and moist Fluffy – grains don’t stick together
% of Global Trade
More than 10% More than 75% Amylose (starch) 0 – 20% 23 – 31% Specialty Rice
The remaining 10 – 15% of the global rice trade consists of specialty varieties known as aromatic rice.
Aromatic varieties of rice can be found in both the Japonica and Indica main types.
Jasmine rice from Thailand and basmati rice from India and Pakistan are examples of these varieties. Aromatic rice sells at a premium in the marketplace.
Main Uses of Rice
Uses Of Rough Rice Description Food staple Rice is a staple food in many countries, particularly in Asia, Latin America, and the Middle East. Beverages Rice milk and the Japanese alcoholic beverage sake are two examples. Biofuels Straw from rice is increasingly being used in the production of renewable energy. How is Rough Rice Grown? Rice production takes place in seven steps: Preparation Planting Harvesting Drying Hulling Milling Enriching Rice
During this step, the soil is leveled and fields are plowed to prepare for planting. A key component of preparation is ensuring an adequate supply of water for the crop. Farmers surround fields with a water source controlled by dikes or levees. Pumps and reservoirs may be used to control the amount of water the crop receives. Start Trading Rough rice at eToro (78.00% of retail CFD accounts lose money.) Planting Rice seeds are first soaked and then sown in flooded fields (or first in nurseries) either by machine or hand. Typical distribution for rice is 15 to 30 seedlings per square foot. Harvesting Approximately three months after planting, the grains begin to ripen. The tops will droop and the stems will turn yellow. At this time, farmers drain water from the fields and begin the harvest. Sharp knives, sickles, or a mechanized harvester is used to cut, thresh, and stack the grains. Drying Machines that heat air or natural sunshine dry the grains to decrease moisture content to around 20%. Once dried, the grains are ready for processing. Hulling Machines or farmers clean the grains and remove the hulls. Milling Brown rice requires no further processing. To produce white rice, mills remove the outer bran layers and polish the remaining grain. They may coat it with glucose to increase its shine. Enriching During this step, the white rice grains are processed further to restore vitamins and minerals to the finished product. World’s Biggest Rice Producers Global rice production is heavily concentrated in a small number of countries. China and India produce more than half of the annual global output, and the top five producers supply more than 70% of the global supply of rice. Rice is cultivated in many diverse climates. As a result, four different growing methods have evolved: Irrigated: Primarily found in East Asia, irrigated farming supplies 75% of global rice production. Irrigated rice grows in paddy fields. Rain-fed Lowland: This farming method produces one crop per growing season and requires flooding of the rice fields with almost 20 inches of water. Growing regions include East India, Bangladesh, Indonesia, Philippines, and Thailand. Production is variable and inconsistent due to poor soil quality and drought and flood conditions in these regions. Upland: These farming zones are located primarily in Asia, Africa, and Latin America. Upland rice fields are usually dry, and the land can be low-lying, drought-prone, rolling, or steep. Upland rice plants are usually rotated or interspersed with other crops. Flood-prone: These farming zones are located mostly in South and Southeast Asia. Flood-prone zones are characterized by extreme flooding or drought conditions. As a result, the yield is inconsistent and volatile. June to November is the rainy season in this region.
Top Rice Producing Countries Rank
Flag Country Rice Produced (Thousand Metric Tons)
#1 China 146,000
#2 India 107,500
#3 Indonesia 37,000
#4 Bangladesh 33,000
#5 Vietnam 28,450
#6 Thailand 20,400
#7 Burma 10,200
#8 Philippines 12,900
#9 Brazil 7,950
#10 Japan 7,600
What Drives the Price of Rough Rice?
The price of rice is most dependent on the following factors: China and India Demand Inventories Climate Trade Policies Crude Oil Prices
China and India Demand Any discussion of rice prices inevitably centers on China and India. Although these two countries are the main producers of the commodity, they also combine to consume about half of the world’s supply of rice. There are two possible scenarios to consider. As the population in India and China increases, their demand for food will grow. This could help boost rice prices. However, as these countries grow wealthier, they are also likely to adopt Western dietary norms. This could mean increased consumption of meat and other Western foods such as pasta and bread. Since rice has traditionally been viewed as a cheap source of food, its consumption may decline. Traders should keep careful tabs on consumption patterns in these two countries for clues about future prices. Rice inventories can offer key information about supply surpluses and shortages. In recent years, China has been stockpiling more rice. While other countries including India and Thailand have diminishing stockpiles, these decreases pale in comparison to the size of China’s increases. Elevated stockpiling by the world’s largest consumer should be a troubling sign for prices. As these inventories increase, it lessens the chances for a supply shortage and increases the chance for a supply overhang on the market.
Climate As with all agricultural commodities, climate plays a key role in determining rice supply and prices. Rice production, in particular, is highly sensitive to the availability of an ample water supply. Drought conditions in major rice-producing regions could create shortfalls in supply and lead to higher prices. Rice traders should pay close attention to precipitation levels and temperatures in key growing regions.
Trade Policies Policies that affect the importing and exporting of rice have a significant effect on prices. India, for example, has placed limits or bans on rice exports in the past. Fears that these policies could resurface have the potential to create price spikes.
Crude Oil Prices Rice production is an energy-intensive endeavor. Large-scale production requires machinery to irrigate fields and control water levels. During the harvest, mechanized cutters cull the crop, while other machines dry the grains. Each step of the process requires energy consumption. As a result, a rise in crude oil prices can make rice more expensive.
International trade in rice is mainly conducted through large international trading companies, which may deal with other grains and foodstuffs too. Some of the trading firms could also deal with rice processing, storage and transportation in the source markets and with its shipment to the import market. Because, in the case of rice, it is not uncommon to load a ship without knowing the destination of the rice, especially if directed to Africa, traders also carry the financial charges until a buyer is found and rice delivered. Unlike maize or wheat, rice is not a standardized commodity, so brokers play an important role in facilitating trade by identifying a suitable buyer and seller for the required rice types and qualities, getting in return a commission for their services. Brokers specialized in rice include Jacksons, Marius Brun et Fils, Schepens & Co SA, in Europe or Creed Rice, in the United States, or Western Rice Mills Ltd in Canada.
Private companies trading in rice are particularly numerous, many of them specializing in particular geographical areas. Because trade in rice is particularly risky, many of these firms have been subject to upheavals over time, with some ceasing to trade in rice or merged into other companies. In the 1990s, the main rice trading firms were Continental, Richco (Glencore) and Cargill, with other firms such as André, Global Rice, Riz et Denrées, Rial Trading, New Field Partner, Inglewood and Orco acting as niche players.
By the 2000s, all of these firms had downscaled or abandoned their rice trade operations. The major rice private firms currently operating at the global level and trading at least 500 000 tonnes per year are:
• American Rice Inc: accounts for some 4 percent of world rice market and markets around one fifth of US rice.
• Archer Daniels Midland Co. (ADM): a major US agricultural processing and trading firm
• Ascot Commodities: based in Switzerland and mainly dealing with rice sales to African markets.
• Capital Rice Co. Ltd: an affiliate of the STC Group, a Thai conglomerate of trading and manufacturing companies in the field of agro-industry; accounts for about a fifth of Thailand’s rice exports.
• Churchgate: An Indian trading firm particularly active in Nigeria
• Louis Dreyfus: a French family firm
• Nidera: a family firm with headquarters in The Netherlands and major trading operations in Latin America.
• Novel: one of the largest privately held rice trading firm, based in Switzerland.
• Olam: a trading firm with headquarters in Singapore; part of a large Indian conglomerate, and one of the principal suppliers of rice to African countries.
• Rustal: a privately held firm based in Switzerland.
• The Rice Corporation, TRC: based in the United States; a major rice trading company, with worldwide trading operations and rice mills in Europe, Latin America and the United States.
Rice exports are also operated by State Trading Enterprises (STEs) or other government institutions, which are particularly active in concluding government-to-government transactions, sometimes in the form of barters. Government-to-government rice agreements often involve importing countries such as Cuba, Malaysia, Indonesia, the Islamic Republic of Iran, Iraq, the Philippines and Sri Lanka and exporting countries such as Myanmar, Pakistan, Thailand and Vietnam.