FEATURE COMMODITY ARTICLES
Foreign Rice Crop Outlook for 2000/2001
This article presents early indications of the 2000/01 rice crop prospects in several major countries outside the United States. Information in this article is based on field reports received from U.S. agricultural counselors/attaches together with analysis from Washington DC-based USDA staff. The first official USDA forecast of individual countries' area, yield, and production will be released July 12, 2000. The 2000/01 total foreign rice production is forecast at 394.0 million tons (milled-basis), 2.0 million below last years record of 396.0 million tons for 1999/2000. The projected output is based on a slight decrease in total foreign area and assumes normal weather in all growing areas. Record or near-record crops are expected in the major producing countries, and large or record crops are projected for all major exporting countries as well. For rice currently being planted in Asia, rainfall has been adequate and timely, allowing producers to plant their crops without delays.
China: China produced a record rice crop of 141.0 million tons in 1999/2000, but production in 2000/2001 is expected to drop slightly due to lower expected area. The Chinese government recently changed its grain procurement program to discourage the production of low-quality and surplus grains, such as spring wheat and early indica rice. These crops will no longer be purchased by the Government at protected prices, thus making them much less profitable to grow. According to an official planting intentions report, early rice area (25 percent of total area) was forecast to drop significantly this year. In some southern provinces, farmers planned to replace early rice with corn, while in other areas, early rice has been replaced with vegetables and other cash crops. Late rice area is also expected to drop in 2000, but the planted area of single crop rice (mostly higher-quality japonica varieties) is likely to increase, partially offsetting the early and late rice area reductions.
Wet and cloudy weather is believed to have had an adverse effect on early rice development in South China, especially in Guangdong and Guangxi provinces, but moderate showers and warm temperatures in May have been favorable. The weather has been unusually warm and dry this year in the eastern Yangtze Valley (Anhui, Jiangsu, Zhejiang, and Fujian provinces), reducing moisture supplies for early rice filling and single-rice transplanting. Additional rainfall in this region is needed, especially for single crop rice, which accounts for 50 percent of Chinas total output. Planting conditions for single crop rice grown in northern China have been favorable.
Japan: Rice production has declined significantly in Japan over the last five years, due almost entirely to lower area. Despite lower production, excessive rice stocks remains a problem as rice consumption continues to decline due to changes in the Japanese diet. Japans Ministry of Agriculture, Forestry and Fisheries will continue its rice area reduction program aimed at holding down production. It has set a target area of about 1.7 million hectares, a reduction of 963,000 hectares from the total potential paddy land of 2.68 million hectares. Assuming normal yields, production in 2000/01 is expected to be similar to last years crop of 8.35 million tons.
India: Prospects for the 2000/01 rice production will depend on the June-September monsoon since only about 45 percent of the crop is irrigated. Assuming normal rains and no significant shift in planted area, the 2000/01 production is forecast to decrease only slightly from the 1999/2000 record harvest. Eighty to ninety percent of Indias rice crop is seeded during the monsoon, and is predominantly rainfed. In the states of Punjab, Haryana and Andhra Pradesh, the rice is predominantly irrigated and receives the greatest use of high yielding seed and fertilizer application. However, fertilizer application on the national level is not high compared to other crops in India. The use of genetically modified seeds is not widely accepted, but efforts are underway to overcome this and to have them commercially available in the next 4 -5 years, thus increasing the yield. Rice acreage has stabilized in most states, but in recent years a shift from cotton to rice has occurred in Punjab and Haryana due to higher returns and a more stable market. Although the intensive rice/wheat rotation in this region is causing problems (salinity, difficult-to-control weeds, low water table), a shift to less intensive crops is not imminent in the absence of a more profitable rotation. Most Indian basmati is grown in Harayana and Punjab; annual production is about a million tons.
Pakistan: The 2000/01 rice crop is forecast slightly below last years production, assuming a return to more normal weather. The 1999/2000 season experienced unusually favorable growing conditions resulting in higher than expected yields. In country sources expect returns for rice production will remain attractive so there will be only a minor shift from rice to competing crops--mainly sugarcane. The composition of production also is expected to remain fairly steady--an estimated 52 percent of rice area is expected to be Basmati, and the remainder will consist of IRRI and other local varieties. The Government of Pakistan encourages rice production by supplying fertilizers and seeds and irrigation to growers. Input subsidies have declined or have been eliminated in recent years as part of ongoing International Monetary Fund reforms. The government plays a much smaller role in the rice market than in the wheat market. Although the government announces a yearly procurement price (which acts as a support price), the government has not procured rice since 1995 as the market price has been higher than the support price. The MY 2000/01 procurement price is expected to be announced around planting time in the May-June period.
Bangladesh: Rice production is forecast to decrease marginally in 2000/01. The 1999/2000 season had unusually favorable growing conditions, adequate input supplies at competitive prices and increased acreage which contributed to the large production increase resulting in a bumper harvest. The 1999/2000 boro (spring-harvested) crop especially benefitted from abundant winter precipitation. Rice is the most important food grain in Bangladesh. Rice is grown in three seasons and planted on nearly three-fourths of the countrys cultivated land. In the past decade, seeded area has remained relatively stable at 10.5 million hectares. There has, however, been a significant decline in summer (aus) paddy and an increase in spring (boro) plantings.
Thailand: Rice area for 2000/01 in Thailand is likely to be level with 1999/2000. Rice prices are currently favorable in Thailand compared with other agricultural products, and rice remains the primary staple food. The main-season (rainfed) crop comprises about 85 percent of total production, is planted from May through August, and is harvested from mid-October to late January. The irrigated second-season crop will be planted in January - February 2001 and harvested from June - August 2001. Widespread rainfall over the past several weeks has slowed second-season rice harvesting, but increased moisture supplies for the coming main-season 2000/01 crop.
Burma: Rice area in Burma in 2000/01 is expected to remain level with 1999/2000's area. The main-season crop is harvested between November and January, and the second-season crop is harvested between March and May. Roughly 10 percent of the main crop is irrigated, while the second crop is mostly irrigated and comprises about 15 percent of total production. The monsoon has recently arrived bringing moisture for the 2000/01 main-season crop. Yield for the coming season for both the main and second crops will continue to be constrained by inferior seed quality and the high price of inputs.
Indonesia: Rice area in 2000/01 is expected to remain at its 1999/2000 level. Producers are uncertain about government rice policies for the coming year, and are therefore unlikely to expand area. Producers have been trying to increase yields in recent years by using higher yielding varieties, improving planting and harvesting practices, and increasing irrigation. However, rising prices for inputs due to the economic crisis made these projects difficult, and progress has been mixed. About 55 percent of the total crop is grown on Java and nearly 25 percent is grown on Sumatra. Planting of the 2000/01 crop begins this fall.
Vietnam: After many years of expansion, Vietnams 2000/01 rice area is expected to remain level with 1999/2000. Demand for Vietnamese rice is down this season because of recovery in the key Indonesian and Philippine markets, and low prices from China and Pakistan. Yields have been rising slightly each year for the past 5 years, and are up over 25 percent from 10 years ago. Vietnam has three rice crops: 10th month, winter-spring, and summer-autumn. The 10th month crop marks the first of the 2000/01 rice crops and will be planted in September.
Foreign Rice Area, Yield, and Production
Ronald R. Roberson, Cotton and Rice Chairperson
Phone: (202) 720-0879
James Crutchfield, India, Bangladesh, and Pakistan Analyst
Telephone (202) 690-0135
Paulette Sandene, China and Japan Analyst
Telephone (202) 690-0133
Suzanne Miller, Southeast Asia Analyst
Telephone: (202) 720-0882
Mexico Trip Report
Foreign Agricultural Service analysts from the United States Department of Agriculture traveled to Mexico (See Map) during March 2000 to meet with Government of Mexico representatives, to review the 1999/00 crop season, and to gain a better understanding of what crops are planted where in the agriculturally diverse states Veracruz, Puebla, and Mexico. While traveling by car, the analysts collected data concerning agricultural commodities, and took note of the viewpoints expressed by members of the industry. The opinions recounted here do not necessarily reflect the viewpoint of USDA.
Maize: Corn fields were commonplace on the drive eastward along Federal Highway (F.H.)150 away from Mexico City. The states Mexico, Puebla and Veracruz harvest 15-30 percent of the nations corn crop, the vast majority of it from rain-fed summer fields. Any space larger than what a bus would occupy is a candidate to be planted to subsistence corn. Corn is grown year-round in Mexico, however, the rain-fed spring/summer crop provides at least 85 percent of the annual total, and the major producing states include Chiapas, Jalisco, Mexico, Michoacan, and Puebla. The winter crop is mostly irrigated in Sinaloa, but rain-fed in most southern states.
Most of the winter corn was still in the fields completing drydown before harvest along the route traveled, but there were some very early planted fields introducing the spring/summer crop. Across the Puebla state line, fields of beans, cabbage, carrot, cauliflower, onions, chili peppers, sweet potatoes, and fresh flowers were prevalent along the side roads off F. H.150. The corn fields around Puebla city had mostly been harvested, and some had already been plowed in preparation for the summer crop. Beyond the intersection with F.H. 140, very large fields that had been prepared for summer corn stretched across a series of plateaus that step down the east face of the Sierra Madre Oriental Mountains to the Gulf of Mexico. F.H. 150 is the major artery to the port city Veracruz. Thousands of trucks traverse the 260 odd miles of forested mountains and cultivated valleys between Veracruz and Mexico City every day. Over that distance, elevation drops from around 8,000 feet above sea level in Mexico City to 7,000 feet at Puebla, to 3,000 feet at Cordoba, to just above sea level at the port of Veracruz.
Entering Veracruz state, sugarcane and fruit groves (grapefruit, lemons, limes, mangoes, papayas) began to dominant the mountainous landscape about 25 miles outside of the city Cordoba. The Government of Mexico nationalized the sugar industry in the 1970s, then re-sold it to private investors starting in the late 1980s. Companies have not fared well in the upheaval. Today most of Mexicos 61 sugarcane mills are approaching an advanced stage of obsolescence, trapped between a poor credit environment and low domestic and world prices. The twenty-six mills of Veracruz state account for 33 percent or more of national production, 70 percent Veracruzs sugarcane is on rain-fed land.
Rice: Nearing the city Cordoba in western Veracruz state, rice fields became more numerous. According to an international rice producer/miller in Veracruz state, Mexico imports about 60 percent of its rice needs, the majority of it from the U.S. On the day of the interview, the miller said the price for U.S. rice was 7 percent lower than Mexican rice. Quality and transportation costs make U.S. rice far more attractive to millers. It is more efficient to transport rice by boat from Miami, Florida across the Gulf of Mexico to metropolitan Veracruz than to transport rice by truck or rail from Pacific coast states such as Colima, Nayarit, or Michoacan (700 to over 1,000 miles).
In June of this year, Mexican millers will have to decide whether to finance the 2000 summer crop, and the Veracruz producer/miller believes an improved cost-to-price situation is necessary for financing to make sense. Should a favorable price swing prompt millers to offer financing, summer production will be 75 percent of normal. Beyond the anticipated lower output from traditional production leader Sinaloa state (insufficient water in the reservoirs portends reduced planted area), the Veracruz producer/miller expects Campeche state, also on the Gulf of Mexico east of Veracruz, to continue its steady growth in production.
Wheat: Mexico was a wheat exporter as recently as the 1950s, and may re-enter that marketplace in the near future. Wheat industry representatives in Mexico City estimate that 3.1 million metric tons (roughly 65 percent of the annual crop) will be forthcoming from the 2000/01 fall/winter wheat season. Wheat production from Mexicos central region of the Bajio, predominately soft wheat, is expected to be down from last year because of water shortages. Part of the wheat crop has been channeled to the Mexican swine industry in previous years, but from a durum crop of 1.3 to 1.4 million metric tons this year, industry representatives think 0.7 million metric tons may be diverted to the export market. The trend toward durum production may result in a corresponding shift for Mexico to the importation of soft bread varieties from the U.S.
Officials from the Department of Basic Grains, General Direction of Agriculture offered a more optimistic outlook, expecting the harvest of fall/winter wheat to yield 3.6 million metric tons. (Note that different officials may announce dissimilar numbers during the year, and adjustments in official numbers frequently lag events by a month or more.) Those same officials labeled prospects for overall grain production in the spring/summer season as good, assuming close to normal weather conditions.
Water: In a departure from anticipated election year activity in Mexico, the water situation has not been the subject of extensive campaign discussion. In the 1990s, the politically active farm sector regularly lobbied the Federal government for increased allocations of water for agricultural purposes as the primary response to below-normal precipitation. The National Water Commission (CNA) is the Mexican government agency that owns all the reservoirs, administering programs for 82 water districts. CNA also holds jurisdiction over wells, private and otherwise, and all wells are legally required to have meters which allow CNA to monitor flow.
CNA defines a drought as any year wherein rainfall does not reach "normal" for a given model; however, CNA has instituted the practice of releasing an undisclosed volume of water to the agriculturally important states of Sonora, Sinaloa, and Chihuahua each October regardless of the amount of water present in the reservoirs of that region. If water levels permit, those three states can receive additional allocations in February and the months thereafter.
Other Mexican states must adhere to the strict CNA guidelines in deciding for themselves when they receive water. If reservoir levels are high, states can ask for and receive water to plant a fall/winter crop in October, and be eligible to receive additional allocations in the winter and spring. If reservoir levels are low, no water allocation are requested by the state CNA offices; reservoir resources are instead held for distribution for the spring/summer season. Abundant precipitation at any time can prompt CNA to discontinue plans to restrict the volume and frequency of water releases. Most of Mexicos reservoirs were constructed in the 1950s, and there are no plans to expand the reservoir system beyond the projects currently underway in Sinaloa (Pacific northwest coast) and Tamaulipas (Atlantic northeast coast). Water re-cycling and improved efficiency in irrigation are among the preferred CNA methods for offsetting short water supplies in the long term.
In 1999, the government of Mexico designated 10 jurisdictions in the northern half of the country as Drought Emergency States, making them eligible for assistance from the national government. This financial assistance was drawn from the National Relief Fund, a program administered annually according to Mexicos fiscal calendar (January to December), and is a part of the Congressionally approved budget. The availability of funds is, like many Mexican government programs, tied to revenue from petroleum production.
Ron White, Mexico Analyst
Phone: (202) 690-0137
Return to the Table of Contents[images/pecad_timefooter.html]