World rice production is expected to increase in 2008 by 12 million tonnes or 1.8 percent, assuming normal weather conditions, FAO said today. Production increases would ease the current very tight supply situation in key rice producing countries, according to the first FAO forecast for this year. International rice trade is expected to decrease, mainly due to restrictions in main exporting countries.

Sizable production increases are expected in all the major Asian rice producing countries, especially Bangladesh, China, India, Indonesia, Myanmar, the Philippines and Thailand, where supply and demand are currently rather stretched. Governments in these countries have already announced a series of incentives to raise production.

Production outlook is also positive in Africa, where high world prices may sustain a two percent growth, particularly in Egypt, Guinea, Nigeria and Sierra Leone. Concerns about food import dependency in the region have led to a mobilization of resources towards the rice sector. Production is expected to recover strongly in Latin America. Rice production in the European Union is also expected to rise while it may contract in Japan, one of the few countries where producer prices fell last year.

In the rest of the world, a dismal production is forecast in Australia, reflecting extremely low water availability. A reduced crop is also expected in the United States, mainly as a result of a cut in area caused by mounting competition from more profitable crops.

Prices

Since January 2008 international rice prices have seen a steep increase of about 20 percent, according to the FAO All Rice Price Index.

Recent sudden price rises reflect the very limited supplies available for sale, especially given the wide range of restrictions imposed by key major exporting countries. The tendency for further price rises, however, may diminish somewhat in the next few months, with the arrival of new rice harvests in Brazil or Uruguay but also in Bangladesh, India, Indonesia, Thailand and Viet Nam. “So far, prospects regarding these crops are positive,” Calpe said.