In this year, the prices of international grains have increased significantly. Rice is not an exception. Egypt, one of the major japonica rice exporters, declared an export ban to stabilize its domestic rice market. As a result, the price of international japonica rice has showed a sudden rising tendency since April, 2008. To cope with the market condition, we need to grasp the market factors that have an influence on supply and demand of the international japonica rice market. The objective of this study is to develop a new econometric simulation model to provide outlook of the international price and supply/demand utilization in japonica rice.
The international japonica rice model is mutually connecting 3 sub-models consisted of macro economy, supply and demand by countries, international utilization. Sub-model of supply and demand by countries employed the estimation of area harvested, yield, per capita consumption, ending stock, import in exporting country, export in importing country, and farm price. In addition, other consumption is exogenized applying the increasing rate in the past 10 years. In the case of the country where carries out a stock control policy, the intended stock quantity is adapted. An equilibrium price in each country is driven at a point where supply and demand is equal. Same as the one-country model, the international price of japonica rice(California #1) is determined when total exports and imports are balanced.
The U.S shows a relatively high price elasticity on demand compared to the other countries. Price elasticity on area harvested in Egypt is relatively high, while the rest are inelastic. Based on the analysis, the production of international japonica rice would increase 6.4 million ton in 2019 from 5.8 million tons in 2006. The area harvested is forecasted to have a peak of 1.2 million ha in 2009 and then decreased to 1.1 million ha in 2019 due to Korea and Japan. The reason why there would be higher production in spite of the reduction of area harvested is that yield projection would be continuously increased, except Taiwan.
International consumption of japonica rice would be 5.8 million ton in 2019 from 5.4 million ton in 2006 due to an increase in per capita consumption of China. Therefore, import needed in importing countries would be bigger than the major exporting countries would be able to export. In addition, the international price of japonica rice would surge to $1,067/ton in 2008, and stabilize to the level of $610/ton much higher than the average year. If the possibility of extraordinary market condition is lower, however, the price would be at a lower level than the forecasted. In short, export potential that might be determined by food consumption in U.S. and China as well as Egyptian export policy influences the international price significantly in the future.

Researchers: Lee, Dae-Seob; Sung, Myung-Whan, Jun, Hyung-Jin, and Yoon, Hyung-Hyun
E-mail address: ldaeseob@krei.re.kr, mhsung@krei.re.kr, hjchon@krei.re.kr, aruki00@krei.re.kr