Rice Procurement Intelligence Report 2025-2030

Rice Supply-Demand Overview

Key factors influencing demand in the rice procurement market are population growth, with countries like China, India, and Indonesia representing dominant producers and consumers in Asia. The rising population in these regions would continue to drive demand, being a staple food as per the rice procurement report analysis. The expanding rice-consuming middle class, and metropolitan populations in countries such as India and China, are markedly impacting positively in terms of rapid consumption. 

Favorable climatic conditions, government policies, and technological advancements in rice sourcing should provide the necessary supply side to meet global demand. However, raw material supply unequally disturbed by natural calamity, increasing labor and input costs, and adverse climatic conditions could hamper supply stability which is indicated in the rice procurement report.

Rice Cost Structure

According to the rice procurement report, key factors driving the cost modeling of production include several key components, such as raw material costs. The four principal inputs are paddy, which is harvested and milled to make edible rice, and seeds, which are priced at different market rates, such as basmati or jasmine. Fertilizers increase soil acidity, and workers are required to care for vital growth, as well as pesticides and herbicides to protect against pests and disease threats. Lastly, irrigation water is a vital raw material, particularly in Asia Pacific regions, where farming relies on controlled water systems.

Labor costs, another major component that determines the pricing model in the rice procurement market, stem from the intensive labor in planting, irrigation, pest control, and harvesting. In irrigated croplands, the costs associated with obtaining sufficient water for production affect the strategic pricing in such areas. According to the rice procurement report, the cost of machinery and equipment such as tractors, harvesters, and milling machines contributes further to the financial structure of rice production. After harvesting, rice undergoes processing, which includes drying, milling, and packaging, contributing to overall costs.

Transportation costs play a key role in moving raw, unprocessed rice from farms to mills and finished products from mills to markets. Other miscellaneous expenses, according to the rice procurement report, such as insurance, administrative overhead, and other operational costs, further round out the sourcing.

Rice Pricing Trends

In determining procurement pricing trends, various factors such as supply-demand dynamics, weather conditions, and production costs play key roles. Prices are expected to remain elevated through 2024 and into early 2025, driven by multiple factors. India's export restrictions, implemented in July 2023, have significantly disrupted global supply, causing prices to surge to levels not seen since 2008. The continuing El Nino weather cycle also raises supply concerns in relation to the yield of the crops. These factors, combined with rising production costs, are expected to continue to affect strategic purchasing. 

Rice Procurement Best Practices

Procurement practices for the industry include acquiring paddy from farmers, usually through direct contracts or open market purchases. These include price stabilization and fair trade by government agencies or cooperatives in many areas. Farmers can also sell to large rice millers who will process the paddy into finished rice. Moreover, trends in the rice procurement market report are determined by demand, weather conditions, and government policies such as minimum support prices or export restrictions. Mills and traders, in some cases, buy and reserve rice stocks during harvest seasons to protect themselves against future price fluctuations. Additionally, international rice procurement is governed by trade agreements and global market trends.

Key Players in the Rice Industry

Recent Developments in the Rice Industry

• In April 2024, RiceTec and Mahyco formed 'Paryan', a joint venture aimed at reducing carbon emissions in agriculture, improving weed management in rice farming, accelerating farmer education initiatives, and promoting low-carbon rice procurement.
• In June 2024, RiceTec, Savannah Seeds, and ADAMA introduced the FullPage® Rice Cropping Solution, featuring SmartRice® genetics, SQUAD® seed treatment, FullPage IMI herbicide tolerance trait, ADAMA's Vezir herbicide, and two new rice hybrids: Sava 134 and Sava 127.
• In January 2024 BASF and the International Rice Research Institute (IRRI) entered a scientific collaboration called "OPTIMA Rice" (Optimizing Management for Reduction of GHG in Rice) to reduce greenhouse gas emissions from rice production. 
• In May 2023 Syngenta and FMC partnered to commercialize Tetflupyrolimet, a novel herbicide for rice, offering the first new mode of action (DHODH – HRAC Group 28) in over 30 years and improved grass weed control for Asian rice markets.