March FAO Rice Price Report Shows Higher Global Prices in 2021

ITP-FAO Rice Price Index graph-210318
Five year comparison
Mar 29, 2021
ROME, ITALY – Earlier this month, the United Nations-sponsored Food and Agriculture Organization (FAO) published its monthly FAO Rice Price Update, drawing attention to the continuity of elevated global pricing.  As with other commodities, products, and services, global rice prices have been no exception.  The report cites increased prices throughout 2020 and the start of 2021 across the board for major rice producing countries.

The FAO All Rice Price Index rose for the third successive month in February 2021 to reach 116.0 points, up 1.5 percent from January and 11.4 percent above its year-earlier level.  This index is based on 21 rice export quotes, split amongst four varieties: Indica, Aromatic, Japonica, and Glutinous.  Within each variety, a simple average of the relative quote prices is calculated, then the average relative prices of each of the varieties are combined by weighing them with their [fixed] trade shares.  For example, Thailand, a heavy indica exporter, carries significant weight in the calculation and has seen prices increase an average of 25 percent between January 2020 and January 2021.

U.S. rice prices also saw increases over the same time period at similar rates to the world rice increases.  Domestic price fluctuations were due to a combination of factors, including sharp boosts in retail demand, reduced 2019-20 production, and changes in export demand during the COVID-19 pandemic.  While the pandemic-related demand situation has been somewhat alleviated and there was increased production in 2020-21, elevated prices have lingered through early 2021.

“Higher-than-normal prices impact all aspects of the global rice industry, from the producer-level to the merchandising and processing levels, including worldwide export volumes,” said Jesica Kincaid, USA Rice senior manager for international trade policy.  “COVID restrictions are partially to blame for the higher prices, as are the inflated transportation costs due to container and crew shortages.”

The FAO Rice Price Update report is published monthly, here.