Rice losing place on Asian plate as diets improve

By Niu Shuping and Mayank Bhardwaj - Analysis

BEIJING/NEW DEHLI (Reuters) - Rice prices have surged this year for many reasons, but unlike most other commodities, fast-growing Chinese and Indian demand isn't one of them.

With incomes rising in two countries where a third of the world's population consumes about half of the world's rice, more people are eating protein-rich meat and diary, or sampling new foods like pasta, leaving less room on the plate for rice.

If Chinese rice demand follows the trend seen in wealthy Japan it could fall by half in the coming decades, bringing relief to world consumers more anxious than ever after a near trebling in benchmark Asian rice prices this year.

"People are making more money and are eager to try other tasty food," said Chai Weizhong, associate professor at Peking University, where he studies public nutrition.

"More people realize meat and vegetables are nutritious and healthy and more choices have cut into consumption of rice."

What's bearish for rice is bullish for corn and wheat. Growing demand for higher-protein foods, both for livestock feed as well as food, is partly behind the doubling in global corn and wheat prices over the past two years.

This year, lagging rice prices moved swiftly to catch up with other grain markets, fuelled largely by decisions by Vietnam, India and even China to clamp down on exports in order to keep prices low at home.

That rally also revived fears about the long-term supply outlook for Asia's staple at a time when industrial development is encroaching on arable land, rising costs are straining farmers and volatile weather is threatening crops.

WEALTH EFFECT

The industrialization of Japan, South Korea and Taiwan highlights the scale of a trend that's already underway.

Per capita rice consumption in China, the world's top rice consumer and producer, fell by 10 percent between 2001 and 2007, according to data compiled by Kyushu University in Japan.

Even with the population rising, that cut total consumption to 127 million tons from 135.5 million, still almost one-third of the world's total. All of that was grown in China.

In India, per capita rice consumption has already fallen by 7 percent over the past 10 years, and quickening development threatens to speed up the shift, industry officials say.

"People are spending more on eating out and we see consumption of pizza and burgers going up, which was not the case earlier. Restaurants are chock a block," says Vijay Sethia, president of the All India Rice Exporters Association.

Both are still big rice eaters compared to Japan, whose per capita consumption has halved to 60 kg in the past four decades. In China that figure was 96.1 kg in 2007, and in India 81.1 kg. In Taiwan, consumption has tumbled to just 50 kg.