Agricultural and Food Policy
 Agri Outlook Radio
Number 157
Why are rice prices so high and why are rice consumers from parts of the Caribbean,
to Asia, to Africa angry and/or even rioting over rising rice prices?
Part 3: Consider the following about rice (4:05 minutes)
Audio/Video Script:
Dr. Bobby Coats
Extension Economist and Professor
University of Arkansas, Division of Agriculture
In the past one has wondered if U.S. commercial rice and cotton farms, or
other row crop farms, had a viable future, due to the global economy’s
inconsistent growth of the past 20 years, protectionism, and what at least seems
a willingness of U.S. trade negotiators to trade away parts of the ag sector for
the good of all.
Globalization or the movement toward increasingly open markets and free trade
over the past two decades has yielded global economic activity that ranges from
extremely strong to deeply recessionary with accompanying strong to weak
commodity prices. The last deeply recessionary period was the late 1990’s
through the early 2002.
In 2001 U.S. farm market rice prices were selling for around the same price
producers received in the 1950’s, which is why the 2002 farm bill extended the
traditional farm bill safety net.
On rice, now consider:
One cannot overstate rice’s importance in feeding the
world’s population.
Rice is one of the most protected commodities in the world.
Only some who have never been hungry will wonder why.
Global rice demand continues to increase with consumption
exceeding production in 5 of the last 7 years. The good news is that
global rice production has exceeded global rice consumption in 2 out of
the current 3 marketing periods.
A major global weather problem has not occurred in over a
decade. Given tight global supplies of rice and other food and feed
commodities then a significant global weather problem in the near future
could become more than a little problematic.
Rice prices must now reach a level that grows global supply
to more sustainable levels needed to meet the demands of a global
consumer with increasing food demands.
These rising rice prices though alarming to many of
the world’s consumers especially the very poor in emerging
markets and developing countries are required to assure the
needed future global supply of rice.
Our U.S. rice producers 2008 cost of production will
be about twice their 2002 costs.
Inflationary costs will continue to increase their
cost of production.
2008 should see most U.S. rice producers’ cash
flowing but prior to 2008 half to two-thirds of our producers
struggled with cash flow issues.
A review of the past decade shows rice producers
and row crop producers in general have been dealing with
accelerated change and levels of risk exposure that they have
never experienced on their operations.
The dollar’s weakness is a plus for U.S. exports but it is also
a factor in rising global rice prices. I expect the dollar to continue
to weaken.
Today’s world rice supplies are adequate, but extremely
tight. The 2007/08 marketing period ending stocks at 77.2 million tons
will exceed the previous three marketing periods so I expect global rice
stocks to build with these improving rice prices.
This has been Bobby Coats Extension Economist University of Arkansas Division
of Agriculture.
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