USDA Rice Outlook: Why Southeast Asia has a Rice Surplus and Why it Will Not Go Away

Southeast Asia is the leading source of world rice exports. Production growth in the region has slowed over the last decade. However, weaker consumption growth has allowed for export of a growing surplus. Rice markets favor varieties with relatively low yields but high consumer acceptance. Projections to 2021 foresee continued large exports from Southeast Asia, as regional exporters, including Thailand and Vietnam, are expected to produce enough rice to satisfy the import needs of Indonesia, the Philippines, and Malaysia, while continuing to serve large import markets outside the region.

Southeast Asia’s rice surplus remains a bright spot amid concerns about global food availability. Net rice exports from Southeast Asia, over 12 million tons in 2011, represent about half the import needs of the rest of the world. The rice surplus flowing out of the region has increased over the past 30 years, and USDA projections (2012) anticipate that this trend will continue over the next decade. Southeast Asian rice exports help underpin the world rice market, and changes in the rice surplus would affect world and U.S. prices. This report examines why Southeast Asia’s rice surplus exists and why it likely will continue.

In USDA’s most recent projections, Southeast Asia’s rice production and consumption are projected to grow at a slower rate over the next decade than in the previous decade. The projected slowdown in the rate of production growth is raising food security concerns because of projected slower production growth of food grains globally. In the case of rice in Southeast Asia, however, it is necessary to look at production changes in the context of consumption. In Southeast Asia, slowing production growth does not appear to threaten regional food security because consumption growth is also slowing. Projected production growth in the region is suffi cient to export a large rice surplus annually (10-12 million metric tons, or mmt) to the rest of the world, helping to meet global food needs.