You guessed it – it’s rice! For the second installment of our five-part Ramadan special deep dive series, we’ll be talking all-things rice, a staple for many communities around the globe and a favorite in most households across MENA.
More than just a source of our post-iftar food coma these days, rice is one of the world’s leading food crops (topped only by corn and wheat), with over 3.5 billion people depending on it for more than 20% of their daily calories.
Asia is the region with the highest consumption rates of rice (around 90% of global consumption) – yep, if you thought your family ate a lot of rice, think again! So, follow along to learn more about the market for this extremely vital (and delicious) commodity.
Regional rice farming
Rice as a grain species can be commonly described as either basmati or non-basmati (in case you were wondering what these labels meant when you were grocery shopping). Basically, once the grain is harvested from rice paddies, it undergoes the process of milling. After that, the end product is what you typically find at the grocery store – voila! Basmati rice (aka, the aromatic once) is consumed by people in the Middle East more than anywhere else in the world – about 38%, to be specific. If you’re thinking “my fam probably ate half of that on any given Friday lunch,” don’t worry, you’re not alone.
Ironically, you can’t really grow this grain out in the Middle East because paddy crops need lots of water and humid climates to be able to grow, and ain’t nobody got time to try to figure out a way to grow it in the desert’s arid heat. Therefore, most of what is consumed in MENA is imported from India and Pakistan (good thing they’re neighbors).
Lots of factors contribute to the vulnerability of international rice trade. Supply (and hence, price) is exposed to things like climate change, environmental catastrophes, and even changes to trade policies. Many of the top exporting countries are highly dependent on rice as a source of revenue and foreign exchange income. And so, the humble grain also plays the role of a strategic commodity for workers in the agricultural sector.
Rice as a commodity
Despite the sheer size of the international rice market, there is still an untapped export potential of around $13.3b.
China, India, and Indonesia are three of the top 10 producers, just to shine a bit of the spotlight on them. And yes, we’ve all seen those rice field pictures on all the influencers’ Instagram feeds! Bangladesh, Vietnam, and Thailand are also in the running on this list. Meanwhile, the biggest importers of rice (in 2019, at least) were Iran, China, Saudi Arabia, the Philippines, and the US – just think of all the burritos and egg fried rice bowls being consumed.
Other countries are stepping in to increase their rice export game, including Brazil, Argentina, Cambodia, and Myanmar. Plus, the Food and Agricultural Policy Research Insititute (FAPRI) estimates that the global demand for milled rice is going to increase to 555 million tons by 2035. Now we’ll have to wait and see how China and India react to the competition.
Now, if you’re wondering “this is all great knowledge, but can I actually invest in the rice markets?” – the answer is yes, of course! You can either buy rice options or futures contracts (the ticker symbol is ZR), invest in stocks of companies that operate in the rice sphere, or purchase exchange traded funds that invest in several different, yet related, companies – in case you don’t want to place all your eggs (or rather, grains, in this case) in one basket.
Rice in everyday life
The history of rice in Arab gastronomy can be traced to centuries ago (maybe even beyond the dawn of Ramadan), but this fluffy grain is still as popular in Middle Eastern cuisine these days. The rising consumption of basmati rice is the driving force behind the MENA rice market because of the gastronomic diversity that sees different countries opt for different buying habits – imagine how boring life would be without biryani or mansaf?
There are now ample market opportunities for lots of rival companies in the region, and they’re all fighting for a share of your grocery budget. In MENA, some of the key players in the rice market include Adani Wilmar Limited (Fortune brand), Tilda Rice, Master Foods (Abu Siouf, Uncle Bens), Supple Tek Industries (Moafaq, Zeeba, etc), Mayar Foods Co, LT Food Limited (Daawat), Amar Singh Chawal Wala (Lal Qilla), and Kohinoor Foods Ltd.
On top of that, rice is an excellent gluten-free option for all you guys who are unfortunate enough to suffer from celiac disease (or are extreme keto-diet heads) – and make no mistake, companies know it. Rice flour is a good alternative to traditionally-used wheat plain flour, and there are lots of brands on the market seizing this opportunity, such as the UK’s Freee. You also have a whole host of rice flour-based products such as pasta (queue companies like Orgran and Italian household name Barilla, the world’s largest pasta producer), cookies, and cake batter mixes (even staple American brand Betty Crocker wants in on it). Clearly, the options are endless in this market segment that continues to expand.