The Impact of COVID-19 on Global Indica and Japonica Rice Markets: Examining by an Endogenous Agricultural Investment Model

Abstract

Indica and japonica rice are commonly subjected to different market structures, and the international prices for both subspecies display different trends. The global indica and japonica rice markets in the mid and long term under climate change conditions were projected by the Rice Economy Climate Change (RECC) model. Additionally, endogenous agricultural investments were incorporated into the projections. A COVID-19 pandemic scenario was stimulated to observe its impact on the global indica and japonica rice markets. The results indicated that agricultural investments are expected to decrease in many indica rice-producing countries, whereas the investments will increase in many japonica rice-producing countries in the long term. Therefore, the global indica rice production will decrease due to its investment reduction; however, global japonica rice production will increase in the mid and long term. Due to the COVID-19 scenario, the international indica and japonica rice prices would decrease in 2020 due to the unprecedented shrinking economies worldwide, but the prices would increase from 2021 to 2040 compared with the baseline average of the price projections with the RECC model. The scenario simulation results reveal that the japonica rice markets are projected to have less impact than the indica rice markets from the COVID-19 pandemic.