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Rice demand in the US stands to benefit from an increasingly diverse population combined with the fact that rice does not contain gluten. Domestic production, however, stands to grow even more rapidly than demand due to increasing exports to the fast growing developing world.
An Asian Product
Rice has long been associated with Asia. The prevalent species of rice is called Oryza sativa, and is thought to have originated in China. Today, around 90 percent of global rice demand as well as production is accounted by Asia, with China and India being especially important.
But Rice Has Its Fans Outside Asia Too
However, over the past century, rice has managed to become a significant part of the diet in some regions outside of Asia too, especially in the Middle East and Latin America. Even economically expanding Africa is becoming a much larger consumer of rice, with Nigeria now being the world’s second largest net importer of rice after China.
So Will The US Market Also Become More Important Due To Its Changing Demographics?
In the 2013/2014 fiscal year, the US consumed 4 million metric tons of milled rice according to the United Stated Department of Agriculture (USDA). However, per capita consumption of rice in the US stands at only around 30 pounds per year, significantly lagging most Asian countries where it is between 200 to 300 pounds per capita.
During the past decade, the fastest growing segments of the US population have been Hispanics and Asians, and the smaller Asian population is now growing faster than the larger Hispanic population. Both these groups consume more rice per capita in comparison to the majority White American population. Moreover, as a result of the jump in the Asian population, there has been a huge increase in the number of Chinese, Indian and Thai restaurant in the US. Most such restaurants heavily favor rice as the carbohydrate or starch of choice. Mexican restaurants in the US have also flourished for several decades and are now major end users of rice. American origin Mexican food chains such as Chipotle and Taco Bell have also proliferated, in the process benefitting rice sales to the US fast food sector.
The Low Carbohydrate Fad – When Will It End?
Based on all these favorable trends, it would seem that US rice demand must have grown extremely rapidly over the past decade or two. However, this is not true, and growth has been modest. The single biggest reason preventing stronger gains has been a boom in low carbohydrate diet plans, initially spurred by the Atkins diet craze that started in 2003. The US obesity epidemic has ensured that low-carb diets continue to remain popular.
It should be noted that in virtually all of the heavily rice consuming Asian nations such as China, India, Indonesia, Japan and Vietnam, obesity is far less prevalent then in the US. However, such evidence has been insufficient to prevent rice from getting a bad rap as a carbohydrate laden food that can prevent weight loss.
In summary, US rice demand will continue to register positive growth, but gains will remain slow until low carbohydrate type diets decline in popularity. It should be noted that another recent dietary trend of avoiding gluten heavy products such as bread and pasta has not impacted rice, which is not a wheat based product. If anything, this trend might be modestly benefitting rice sales as some people switch from bread and pasta to rice.
US Production Has Much Stronger Growth Prospects
US rice production holds much stronger growth prospects than demand due to healthy activity in export markets around the world. The US was already the world’s fifth largest net exporter of rice in 2014 despite not exporting any substantial quantities of rice to China or Nigeria, the world’s two leading net importers of rice. Exports to China have been limited by complicated Chinese regulations, but it is possible that this situation will change in the near future as Chinese imports keep growing rapidly (a phenomenon that only started in 2011).
The US has ample land and water resources to meet increased production requirements. Rice farm yields in the country have also steadily increased over the past 30 years, a trend that will need to continue if exports grow as fast as expected.
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