Following years of bumper harvests, worldwide rice production last year experienced its first annual contraction since 2009, while global prices for the grain remain soft, according to the first rice market report of 2015, published by the UN's Food and Agriculture Organisation.

The FAO has lowered its 2014 estimated global paddy production by 3.3 million tonnes since December, to 741.3 million tonnes (494.4 million tonnes of it milled), a level only 0.5 per cent below the record 2013 performance.

The largest downward revision related to Thailand, one of the world's leading rice exporters, where unseasonable dryness leading to severe constraints in water availability for irrigation took a heavy toll on secondary crop production, the April 2015 issue of the "FAO Rice Market Monitor" states.

While the dreaded effects of El Nino failed to materialise, a poor monsoon affected the main and secondary crop cycles in India, another leading rice exporter, causing production prospects for the country to deteriorate further.

"Thailand's rice production (paddy) declined by 2.7 per cent in 2014 to 34.3 million tonnes (22.7 million tonnes of milled rice), due mainly to a decline of secondary crop outputs affected by cuts in planted areas," said Hiroyuki Konuma, FAO assistant director-general and regional representative for Asia and the Pacific.

"However, in 2015, Thailand is expected to increase production by 2.1 per cent," he added.

The "Rice Market Monitor" predicts that, under more normal climatic conditions, this year will see a modest recovery of around one per cent in world paddy output to 750 million tonnes. "While nature was chiefly behind the lack of last season's growth, a prolonged period of falling prices also played a role.

Such low prices are encouraging several governments, especially in exporting countries, to engage in less supportive production policies and to pay more attention to other considerations, such as the negative environment impacts of rice cultivation, and the heavy budgetary implications of holding bulging public stocks," said Konuma.

'Shift of emphasis'

"This shift of emphasis, which translated into constant or lower official procurement prices and more stringent limits on rice cultivation, in part explains the modest pace of production growth forecast for 2015."

Rice exports by India and Thailand surged late last year. The latest revisions for rice exports indicate that India edged out Thailand to retain the position of top rice exporter, shipping an unprecedented 11.3 million tonnes, only slightly ahead of Thailand's 11 million tonnes (milled).

However, the FAO report predicts that Thailand will regain the title of top exporter in 2015, when it is forecast to export 11.2 million tonnes compared to 9.3 million tonnes for India.

In spite of falling international prices, many rice-importing countries continue to pursue policies to reach self-sufficiency in rice production.

Among the most prominent, Indonesia is forecast to reduce its imports by 25 per cent this year, the Philippines by some 21 per cent, and Bangladesh by 36 per cent.

Against that backdrop, export competition for markets will intensify further in the course of the year.

Source: The Nation