China's rice exports to Africa surge

25.01.2018

China's rice exports to Africa surged last year, customs data showed on Thursday, with the world's second-largest producer of the staple grain pushing to clear bulging state and commercial warehouses as it overhauls government support for its farming sector.

That rapid growth in sales to African nations is expected to continue in 2018, as buyers there increasingly turn to China as stockpiles are almost depleted in rival supplier Thailand.

West Africa'sIvory Coast overtook South Korea to become the top destination for China's rice in 2017, with total purchases of 309,200 tonnes.

"China has very high stocks of rice. The state is taking various measures to destock," said Chen Xiaoshan, an analyst with Zhuochuang, a commodities consultancy in China's eastern province of Shandong.

"The Belt and Road Initiative policy also boosted the chances to export rice to these African countries," Chen said, referring to a Chinese project to promote trade links with Asia, Africa and Europe through billions of dollars in infrastructure investment.

The pace of exports may stoke concerns in the international market about China selling excess grain abroad after years of stockpiling. In 2016, the United States complained to the World Trade Organization about Beijing's support for the country's wheat, corn and rice farmers.

China has around 94 million tonnes of rice stockpiles, two-thirds of the world's excess inventory and enough to feed India for a year. A lot of that was accumulated through years of the government buying the grain from farmers at a minimum price when the market price dropped below that level.

But last year Beijing cut minimum prices for rice and wheat for the first time, marking the start of an overhaul of the subsidy programme. Analysts expect another cut to rice prices in 2018.

The U.S. Department of Agriculture said earlier this month that it expected Chinese sales of old-crop rice, especially to West Africa, to continue to expand as Thailand's old-crop government stocks are nearly depleted.

Thailand has sold most of the about 18 million tonnes of rice built up during a rice-buying scheme introduced by a previous government.

"This year, we no longer have any old rice in the state stockpile, so it is likely that China will take this African market from us," Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, told Reuters on Thursday.

"This will also depend on how much old rice China has in its stockpile."

South Korea bought 167,270 tonnes of rice from China in 2017, Thursday's data showed, making it the second-largest buyer of the grain. That was down 4.7 percent from 2016.


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