China cadmium scare might lead to global rice price support

By RJ Whitehead

- Last updated on GMT

Related tags Rice International rice research institute Thailand

China cadmium scare might lead to global rice price support
IRRI rice guru Sam Mohanty has shed some light on China’s cryptic rice position while at the same time asking even more questions regarding this potentially troubling situation. 

With the country importing increasingly more rice even though these has been no apparent shortfall in domestic production over the last few years, rice stocks have been rising steadily since 2007.

Back then, China was largely an irrelevance on the world’s rice market by importing and exporting negligible amounts of the crop. However, Mohanty, who is social sciences director at the International Rice Research Institute, says the country has been the “saviour for the market​” with 2.3m tonnes of imports last year and the likelihood of 3m tonnes this year.

Price spread

But why could this be? While altruism is highly unlikely to be behind the move, Mohanty says rice prices might well have set the ball rolling.

[It] could be that the large price spread between domestic and international rice prices is making it attractive for Chinese traders to import cheap foreign rice​,” he wrote on his blog this week.

Another reason could be that Chinese consumers are increasingly diversifying their food consumption, thus creating demand for different types of rice such as sticky rice from Vietnam, Jasmine rice from Thailand, and long-grain rice from Pakistan​.”

Whatever the reason, however, there is no doubt that China is letting imported rice enter the country and is rebuilding domestic stockpiles through a government purchase programme.

Moreover, Mohanty has recently been speculating about the impact the cadmium scares, which erupted following the discovery by authorities in Guangzhou of above-safe quantities of the metal in half the rice samples it took of supplies from nearby Hunan province, would have on the situation.

Cadmium scare

Chinese rice imports may go even higher because of the cadmium scare and this should provide much-needed support for rice prices​,” he wrote.

This news comes at a time when there is an excess supply of rice in the global market. This must be music to the Thai government, which is desperately looking for buyers to offload some of its bulging mortgage stocks​.”

In Southeast Asia, Thailand’s National Rice Policy Committee is piling pressure on the government to sell rice from its stockpile, which has increased to record levels since 2011, to help fund the rice mortgage programme for the coming main crop.

The US Department of Agriculture estimates the country holds around 17m tonnes at the moment, with around 8m tonnes of carry-over stocks from previous mortgage carry-over stocks included in the figure.

The department also suggests the Thai government has so far provided around US$17bn in loans as part of the mortgage scheme, and so is unlikely to rubber-stamp any more for the time being over concerns about the growing public debt.

So rice saviour or importing enigma, it is hard to judge China’s position. 

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