Stock Up on Rice: A Global Shortage Will Make the Grain More Expensive

From stir fry to sushi, rice is a staple in many cuisines and kitchens across the world. But its accessibility is about to change, according to a new report by Fitch Solutions Country Risk & Industry Research, which states that we're expected to experience the worst global rice shortage in 20 years.

The shortage is largely attributed to decade-high prices, which are affecting over 3.5 billion people around the world. The cost increase will be worse in the Asia-Pacific region, which consumes 90 percent of the world's rice.

According to the report, which is dated April 4, rice prices are expected to stay at current highs until 2024. The cost of rice averaged $17.30 per cwt through 2023 and is only expected to go down to $14.50 per cwt in 2024, the report states (cwt is a unit of measurement for small commodities like rice).

"Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households," Charles Hart, a commodities analyst at Fitch Solutions told CNBC.

This global shortfall is predicted to come in at 8.7 million metric tonnes—meaning this would be the largest global rice shortage since 2004, when the deficit reached 18.6 million tonnes.

There are a handful of factors that have contributed to the rice shortage, including the ongoing war in Ukraine, as well as bad weather in rice-producing economies. According to CNBC, areas of farmland in China (the world's largest rice producer) experienced heavy summer monsoon rains and floods last year. The rainfall affected China's major hubs of rice production, like the country's Guangxi and Guangdong province, said agriculture analytics company Gro Intelligence in a report.

A similar issue was experienced in Pakistan, which saw annual rice production decline by 31 percent due to severe flooding last year, the U.S. Department of Agriculture reports.

Despite the severe rice shortage, Fitch Solutions predicts that the global rice market will return to a nearly balanced position in later 2023 and 2024 and a surplus is expected to occur in 2024 and 2025. However, rice production is extremely weather dependent and while some areas are anticipating normal monsoon levels, heat and droughts are expected to impact other rice-producing countries, like France, Germany, and the United Kingdom, CNBC reports.