Rice – scenario :: INDIA

Rice – scenario :: INDIA

68% of the world’s irrigated area is in Asia, and that about half of this land is used for rice.

Rice is also the most important crop to millions of small farmers who grow it on millions of hectares throughout the region, and to the many landless workers who derive income from working on these farms. 

Economic pressure is likely to move land, water, and labor away from rice to other activities.

Under the Business as usual reference scenario, the price of rice will increase almost 50% by 2025, and will continue to increase, although at a slower pace, from 2025 to 2050.

Labor :: By far the main costs in rice farming are land and labor, saving labor in rice cultivation has a price because many poor laborers receive a substantial portion of their income from available work in rice fields, and lower rice prices may force wages down. In the short run, laborers will have difficulty finding new jobs. Rural-urban migration are leading to rural labor shortages and higher rural labor wage rates, further discouraging labor-intensive rice farming.

Rise of $ :: Most commodities, including crude oil and grains are priced in U.S. dollars, but are purchased in the local currency. The world market price of rice in dollars is a poor indicator of profitability in the domestic market. Inflation in the market drops the price of rice but if the price doubles the domestic market shows a relatively no rise in price over the past few decades.

Lower prices do not necessarily mean lower profitability. The main factor driving the long-term decline in agricultural prices is technological progress that contributes to a drop in the unit cost of production.

Crude price :: Crude price will continue to rise in future. Rise in crude price will lead to rise in cost of fertilizers and insecticides needed to harvest the ‘Green revolution’ rice verities causing the increase of expenditure of the farmer. 

Insecticides and fertilizers :: Reoccurring pest outbreaks. - Many pests that caused major problems for rice intensification programs in the 1970s and 1980s have returned as major threats to production, primarily due to breakdowns in crop resistance and the excessive use of broad-spectrum, long-residual insecticides that disrupt natural pest control mechanisms.

Urban food habits :: At high levels of income, rice becomes an inferior commodity, and consumers prefer diverse foods with more protein and vitamins, such as vegetables, bread, fish and meat. Growing urbanization that accompanies economic growth leads to changes in food habits and the practice of eating away from home, which further reduces per capita rice consumption.

Rise in retail price of rice and its effects :: Rice retail food prices have increased due to such reasons as increasing food demand, high crop prices, increasing labor cost(excluding labor at rice field) and energy costs. These effects are not likely to stop, and the same increases will be experienced in future. A rise in the price of rice is equivalent to a drop in real income for the majority of the poor who are net consumers of rice. Higher prices increase the number of poor people and push people deeper into poverty and hunger, forcing them to sacrifice essentials such as more nutritious food, health care, and children’s education—thus condemning future generations to a vicious poverty cycle. The rice price will continue to rise because of low yield growth and limited area expansion. Statistical analysis of these factors and other key trends suggests that prices will remain near their current levels for the medium term. The one possible countervailing factor is the long-term slowdown in yield growth that has occurred throughout. If yield growth continues to decelerate, and does so more quickly than population growth, per capita production will begin to decline, and this may cause rice prices to rise again.

Trade Import/Export:: India is not a major factor in determining world commodity prices at world market because they do not trade. Increasingly popular food in Africa, with imports into Africa accounting for almost one-third of the total world trade. Latest trend of agricultural investment is seen by Indian firms in African continent.

Rice farmers :: Despite the higher cultivation costs of modern rice varieties has left the farmer poorer over the 40 years. Spending on education or health care for their children is a luxury many rural poor cannot afford at all. This condemns one generation after another to a prison of poverty and debt reinforced by cost of farming on to the farmer. In turn, malnutrition perpetuates poverty as it directly reduces the productive ability of those afflicted. Lead to a reduction in rice area there as farmers switch to other high-value crops. The High wages elsewhere, small town boredom, changing mindset of rural population towards city facilities, some may say but so is the believe that farming is low status job unworthy of modern youth causing the youth to drift as hired workers provide the vast bulk of labor to the cities.

Bio- fuel ::  Rising marketing costs (the difference between farm value and what consumers spend on food) are accounting for an increasing share of retail food expenditures. Higher and more volatile energy prices are quickly being passed onto the consumer. At the same time, the share of retail food expenditures spent on farm commodities is declining. Global economic conditions may result in continued food inflation. Global crop stocks are at record lows due to crops being used for non-food purposes. The use of raw materials in the fast-growing bio-fuel industry for the production of the petroleum-substitute ethanol

Population :: World population has more than doubled since the 1950s. . It may increase another 3 billion before stabilizing in 2100. Population growth is outstripping production growth. Expanding global populations with rising incomes are also cutting into global food supplies. This growth in population and consumption could outpace the projected growth of agricultural production and maintain high food inflation unless agricultural productivity is boosted.

Real estate land grabbing :: Over the years little room for expansion of rice area. The possibility of increasing the rice area is almost exhausted in most Asian countries. In many areas, highly productive rice land has been lost to housing and industrial development. The rice area will remain at this level or decline in future because of scarcity and competition from other agricultural and non-agricultural uses such as industrialization and urbanization urbanization in spite of global rise in stocks of rice production will fails to keep pace with demand growth.