Potential effects of COVID-19 pandemic on rice production, supply and prices

AFRICA – In Africa, rice has become the fastest growing staple food in the region, and with the COVID-19 pandemic will certainly affect rice supply and cause prices to fluctuate during and after the pandemic.

According to a report by Africa Rice Center, rice consumption in sub-Saharan Africa (SSA) was projected to reach 35 million tons in 2020 before the COVID-19, out of which 15 million tons (43%) were to be imported from Asian countries.

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Some of these Asian countries have been hard-hit by the pandemic and the immediate impacts of COVID-19 in SSA will be felt by rice consumers, especially in urban areas, in the form of higher prices of rice and tighter food budgets.

The rice agri-food system, therefore, faces potential risks, including international market instability, increasing productivity shocks and socio-political instability.

The economic consequences of COVID-19 in major rice exporting countries, such as India, Thailand, Vietnam, Pakistan, United States and Myanmar, contributing to 83% of the volume of world exports in 2017-2018, are not yet fully understood.

Even if the world rice stocks increased in 2019 to 184 million tons versus 176 million tons in 2018, the stocks could fall due to the contraction of world production and increased speculation.

The lockdown in many countries has seen the transportation of goods including rice being curtailed in the short term, thus resulting in a decline in rice imports into SSA.

Asian exporting countries may also restrict exports to support domestic consumers until the end of the pandemic and when productive capacity is regained.

For example, as of 1st April 2020, Vietnam and Cambodia decided to restrict rice export to protect their domestic market and cope with a potential food shortage.

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Rice traders in India, which is the world’s biggest rice exporter, had stopped signing new export contracts for three weeks in March 2020, because of labor shortages and disruptions in supply during a countrywide lockdown to control the coronavirus spread.

This allowed rice-exporting countries like Thailand to increase shipments and raise global prices, forcing consumers in Africa to pay higher prices.

Fortunately, Indian traders have just resumed signing new export contracts.

This clearly indicates that such disruption, instability and uncertainty in supply from major exporting countries could lead to serious price spikes akin to those witnessed in the 2007-2008 global food crisis, which will certainly affect the vulnerable people in Africa.

The recent investigation of countries’ rice self-sufficiency status by Africa Rice Center has shown that countries like Gambia, Cameroon, Ghana or Senegal have self-sufficiency ratios of 60% or less.

Price shocks will therefore be more severe for these countries as they are still largely dependent on Asian exports to meet the gaps between production and consumption.

There is potential disruptions in domestic markets of inputs (seed, fertilizer), resulting in low use of inputs thus low domestic production of rice.

The shortcoming in the inputs production systems will even upset the nearly self-sufficient countries with high per capita consumption such as Madagascar, Mali or Sierra Leone, where in addition to reduced rice stocks in markets, farmers may also consume all their rice stocks including seeds.

In some countries, farmers may not be allowed to go to farm or find labourers for farm activities due to lockdown and social distancing rules that have been imposed.

With the current situation and given the role the rice sector could play to attenuate the negative effects of the COVID-19 pandemic on food security, some measures have been suggested which include subsidization and control the retail prices to contain the increase in consumer prices and avoid riots.

In addition to that a quick inventory and monitoring of rice stocks (local and imported) in countries need to be undertaken and promote regional trade by taking advantage of the existing regional trading blocs and free trade agreements, among other measures.

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