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Rice Industry Review: Human Consumption Accounts For About 78% of Global Production

Agriculture	1454 VIEWS
Agriculture
1454 VIEWS

Wednesday, November 06, 2019 /10:00AM / By KPMG Nigeria / Header Image Credit: KPMG Nigeria

Introduction

The Nigerian agricultural landscape is changing, with increased government policies aimed at stimulating private sector involvement and boosting local production of key products. In line with the diversification drive of the current administration as well as in fulfilment of one of its cardinal pillars of food security, it is expected that the government will continue to prioritise activities within the Agriculture sector through targeted policies to attract investments.

Globally, rice is a staple food to over 50% of people, providing over 19% of global human per capita energy. Human consumption accounts for about 78% of global production while the balance serves

other uses such as feed.

Rice is one of the major staple foods in Nigeria, consumed across all geo-political zones and socioeconomic classes in Nigeria. Only about 57% of the 6.7 million metric tonnes of rice consumed in Nigeria annually is locally produced, leading to a supply deficit of about 3 million metric tonnes.

With rapid growth in the country's population which is estimated to exceed 200 million by 2019, it is expected that the demand for rice will be sustained and increased in the foreseeable future.

In this document we present an analysis of the rice industry and the tremendous opportunities across the various value chains.

Nigerian Agriculture Sector - Overview

Crop production covers the production of cash crops (Cocoa, Rubber, etc) as well as staple foods (Rice, Maize, Cassava,etc). This sub-sector is the major driver of agricultural sector output; contributing an average of 90% to the total agricultural sector output between 2012 and 2018, growing at a CAGR of 3.6% over the same period.

Livestock/ Animal production covers the rearing and sale of animals and animal derivatives (animal products) for consumption. Over the past period 2012 â€“ 2018, livestock production has grown at a CAGR of 4.4% and accounted for an average annual contribution of 7% to the entire agricultural sector output.

Fishery includes activities aimed at rearing fish and other aquatic animals. The subsector accounted for an average of 2% of the annual agricultural sector output and grew at a CAGR 4.4% between 2012 and 2018.

Forestry entails the legal planting and felling of trees. This sub-sector has contributed an average of 1% to the entire sector output; and grown at a CAGR of 4.0% between 2012 and 2018.

Nigerian Agriculture Sector - Value Chain

Nigerian Agriculture Sector - Key Trends

Global Rice Industry - Overview

Rice is the primary staple food for more than half of the world's population - over 3.5 billion individuals depend on rice for more than 20% of their daily calories - with Asia, South America and Sub-Saharan Africa the largest consuming regions.

Rice is the second largest staple crop, behind corn (maize). It is produced over vast areas of the world, with the area of land totalling 161million hectares harvested for rice in 2017.

Four major types of rice are produced worldwide:

Indica (75% global production), the most common type, is majorly grown in the tropics and subtropics including India, Central and Southern China, and the Philippines.
Japonica (8% global production) is from Northern and Eastern China, and grown extensively in cooler zones of the subtropics and temperate zones.
Aromatic (Jasmine and Basmati) (15% global production) is mainly found in Northwestern India and Pakistan.
Glutinous rice (<2% global production) is grown mainly in Southeast and East Asia.

About 729 million tonnes of rice paddy was produced in 2017 (488 million tonnes of milled rice), with 652 million (~90%) produced in Asian countries. Sub-Saharan Africa produced about 25 million tonnes (~3.5%); Northern Africa, about 6.2 million tonnes (~0.8%); and Latin and Central America, along with the Caribbean, about 27 million tonnes (~3.7%).

Rice production recorded significant growth since the start of the 'Green Revolution' (between the 1930s and the late 1960s) due to advances in research and development, leading to the improvement of modern agricultural inputs and processes â€“ irrigation, fertilisers, improved, high-yield, disease-resistant seeds, pesticides, and mechanisation.

About 700 million tonnes of rice paddy was produced in 2018 (485 million tonnes of milled rice)3, with 90% (640 million) produced in Asian countries. Sub-Saharan Africa produced about 3.5% (19 million tonnes ); Northern Africa, about 0.8% (6.2 million tonnes ); and Latin and Central America, along with the Caribbean, about 3.7% (27 million tonnes).

Through the years (and also in 2018), China and India alone have accounted for about 50% of the global rice production and consumption. However, strong economic growth has halted the upward trend in per capita rice consumption, due to diversification of consumers diets.

Rice provides up to 50% of the dietary caloric supply for hundreds of millions in Asia and is, therefore, critical for food security. In Sub-Saharan Africa, rice is the fastest growing staple food, with annual per capita consumption of 27kg/year.

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