CoBank: Rice prices fall more than other commodities
CoBank, the bank for cooperatives, pointed out that U.S. rice prices have fallen more than corn, wheat or soybeans, and that the biggest problem is the flood of Indian rice into world markets.
CoBank’s KED Gleanings report said, “While rice is easily overlooked in the grain sector, as it is grown in just six states in the U.S., it offers important insight into the importance of world geopolitics. Over the past year, prices of rough rice (or unmilled paddy rice) have fallen 20%, which compares to corn prices that have fallen 7% YoY [year on year], wheat prices that are down 1% YoY, and soybean prices that have risen by 5% YoY.
“The U.S. has suffered directly from the flood of Indian rice saturating the world market as world prices fell well below the cost of production. Meanwhile, Mexico, which has historically been a reliable buyer of U.S. rice, has diversified its sourcing of rice away from the U.S., causing U.S. rice exports to plummet. Total export commitments (shipments + unshipped sales) of all rice are down 23% YoY with commitments to Mexico down 49% YoY. For comparison, U.S. corn export commitments to Mexico are up 140% YoY, wheat commitments to Mexico are up 18% YoY and soybean commitments are up 11% YoY. The loss of key markets like Mexico for rice is no coincidence when rice supplies outside of the U.S. are historically abundant. Imports into the U.S. of fragrant rice like jasmine and basmati also continue to rise, competing with U.S.-grown varieties in the domestic market.”
Tanner Ehmke, the CoBank lead economist on grains and oilseeds, said CoBank’s “take” is: “Rice prices have suffered disproportionately compared to other grains due to market-distorting policies in India. Change in India’s food and agricultural policies is highly unlikely. Unfortunately, balance in the marketplace will come from acres leaving production outside of India. This will be particularly acute in the U.S. with rice producers expected to reduce acres by 20%-30% this spring.”
Asked for a reaction to the CoBank analysis, USA Rice Federation President and CEO Peter Bachmann said in an email, “The CoBank analysis rightfully points out the over-subsidization by India as the worst bad actor, but we would be remiss not to mention that this is a systemic problem and extends across all of the major rice exporting countries in Asia. The side-by-side comparisons to other major U.S. crop price fluctuations further illustrates why we need the U.S. government to step in and punish India and other bad actors through a hefty universal import tariff on all rice and extend additional support at the farmer-level to keep the vibrant U.S. rice industry afloat during this difficult time.”
Meanwhile, Harvest Public Media reported that “tiny pests” are destroying American rice fields.
