Rome, April 2 - World rice production is set to increase by 1.8 percent this year as government incentives and high prices spur output in Asia and Africa, the United Nations Food and Agriculture Organisation (FAO) said on Wednesday.
Export restrictions in place in major producing countries like China, India, Egypt and Vietnam will however contribute to a fall in the rice trade where volumes will drop 1.1 million tonnes to 29.9 million tonnes, FAO said.
"The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases," said FAO Senior Economist Concepcion Calpe.
"Higher rice production in 2008 could reduce the pressure, but short-term volatility will probably continue, given the very limited supplies available from stocks. This implies that the market may react very strongly to any good or bad news about crops or policies."
International rice prices have increased by about 20 percent since the start of the year, FAO said. Its forecasts are based on the assumption that weather conditions will be normal.
While output will increase in most of Asia, Africa, Latin America and Europe, it will decline in Japan where producer prices fell last year, in Australia which is suffering from low water availability and in the United States where there is mounting competition from more profitable crops, FAO said.