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Dammed Regulator Drought
MILO HAMILTON
AUSTIN, TEXAS
Egypt has a disaster on its hands and is taking action by cutting rice production. Egypt may be importing US rice in 2019 and closing down its export business for good.
This water and rice crisis in Egypt has been in the making for decades but the decision was sped up by the damming up of the Nile by its neighbors to the South. Dams and profligate use of water will press more and more countries to curtail high water use crops like rice. The big prize for rice exporters is a reduction in rice production and exports from Pakistan and India to the east of the Middle East. These two have suffocating world trade with about 20 million MT of rice looking for a home.
Rice production in more and more countries will be set in the capital city, not with farmers or mother nature. We have been predicting this as countries have continued to defy good resource management. We call this trend towards declining rice production as the “dammed regulatory drought.”
In our annual report in July we will look at the role of water in world rice trade. We have been harping on this topic for five years with no action by governments. Now that is changing. Action is happening across the Middle East. Regulatory drought, which is forced cut backs on water use for rice, is setting in on us. In Egypt, Iran and Iraq, governments are forcing farmers to grow less or in the case of Iraq, no rice. Now Pakistan is facing water issues. Could that lead to less rice exports from this major exporter who is bigger than the US? Mother Nature takes its toll on rice production but so can regulation that bans rice production.
Two states in the US suffer from such “regulatory” drought: Texas and California. Both suffer from high urbanization and an active environmental lobby. It is hard to see how these regions can do much more than hold their own.
There is also a trend towards admission by some countries that they have a major water problem, due to declining aquifers and also the damming up of rivers that flow through their territories from neighboring countries. Egypt, Iran and Iraq are on this short list and Pakistan is also finding water problems that will not go away. Pakistan exports more rice than the US currently but has much less in the way of water resources than the US. The biggest exporter, India has endemic problems with water and has been negotiating with China for better water flow information on the Brahmaputra that flows from China through India as well as the right to export over one million MT to China. ∆
MILO HAMILTON: is President and Co-founder of the rice market advisory service, The Firstgrain Rice Market Strategist. He has extensive background buying and selling rice from 1981-1999. He established Firstgrain, Inc. in 2000. He has clients from farmers to rice processors, brokers and traders to international concerns involved in human and pet food rice products. With his business partner, Kevin Ries, Milo publishes the online service, www.firstgrain.com that is read by buyers and sellers around the world. His company, Firstgrain, Inc. is focused on rice and believes that “every individual is a market force.” The name, Firstgrain, comes from a Chinese proverb, “The precious things are not pearls and jade but the five grains, of which rice is first.” His email address is: milo@firstgrain.com.
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