The country is based on its people, and food is the paramount necessity of the people. As one of the countries with the richest rice resources, China has a history of more than 14,000 years of rice cultivation. Since the founding of New China, China has achieved a leap from insufficient food and clothing to fully entering a moderately prosperous society, which has greatly promoted the development of the rice industry. The areas south of the Yangtze River in China are rich in indica rice, also known as southern rice. Southern rice has a loose and soft texture. In the past five years, the southern rice market in China has shown good development. With the continuous growth of per capita disposable income among consumers, the rigid demand for rice as staple food, and the further development of downstream food processing industries, the demand for southern rice will be further driven.Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') has released the '2022 China Southern Rice Industry Research' based on primary interviews and desk research.
According to industry research and analysis results, with the improvement of people's living standards, the acceleration of urbanization process, and the continuous enhancement of national health awareness, competition in the southern rice market is no longer just about supply but is gradually moving towards meeting consumers' diverse and high-end needs. High-end southern rice products are increasingly recognized by consumers, and with the scaling up and branding acceleration of China's southern rice industry, southern rice processing enterprises with brand value will have significant competitive advantages.
Definition and Market Scale of Southern China's Rice
Rice can be divided into three categories based on the type of raw material: indica rice, japonica rice, and glutinous rice. Among them, indica rice and japonica rice are the main types of rice in China. The main production areas of indica rice are in the regions south of the Yangtze River, hence it is also known as southern rice. Indica rice is made from indica-type non-glutinous rice grains, and its grains are generally oblong or slender. According to the harvest season of indica rice, it can be further divided into early indica rice and late indica rice. The main production area of japonica rice is in Northeast China, so it is also known as northern rice. Japonica rice is made from japonica-type non-glutinous rice grains, and its grains are generally oval.
China is a populous country and a major producer and consumer of rice. Over the past five years, with continuous improvement in rice cultivation techniques, China's per-unit yield of rice has continued to grow, while the total rice output has remained basically stable. China's rice production increased from 21,267.6 million tons in 2017 to 21,284.3 million tons in 2021. In the past five years, the southern rice (indica) market in China has shown good development, with sales volume rising from 7,656.3 million tons in 2017 to 7,852.8 million tons in 2021. In the future, with the continuous growth of consumers' disposable income, rigid demand for staple rice consumption, and the development of downstream food processing industries, the demand for southern rice (indica) will be further driven. Over the next five years, the production of southern rice (indica) in China will maintain an annual compound growth rate of 0.8%.
Analysis of the Industrial Chain of Rice Industry in Southern China
The rice industry in China developed relatively early and has now formed a mature industrial chain structure. The industrial chain of the rice industry in southern China covers upstream rice cultivation, midstream rice processing, and downstream rice consumption. Midstream rice processing is the core link of the entire industrial chain, and the operation of upstream and downstream sectors has a significant impact on the development, profitability, and business methods of midstream rice processing enterprises.
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Upstream analysis
The upstream of the southern rice industry chain mainly consists of raw material suppliers. They primarily use agricultural supplies such as seeds, agricultural machinery, pesticides, and fertilizers for sowing, cultivation, fertilization, and harvesting, providing rice raw materials for the midstream southern rice processors.
The raw material for southern rice is mainly indica rice. The indica rice-producing areas are mainly concentrated south of the Qinling-Huaihe Mountains and east of the Qinghai-Tibet Plateau, accounting for about 95% of the country's rice area. According to regional differences, it can be divided into three regions: the South China double-cropping indica rice region, the Yangtze River basin single- and double-cropping rice region, and the Yunnan-Guizhou plateau rice region.
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Midstream analysis
The midstream of the rice industry chain in the south mainly consists of rice processors. They process rice through processes such as cleaning, paddy threshing, and milling, separating the endosperm from other parts with minimal fragmentation.
The rice processing market in China opened relatively late but has developed rapidly, initially dominated by state-owned enterprises. With the opening up and maturation of the Chinese rice processing industry, the sector has begun to develop towards scale, branding, and industrialization. Large and medium-sized processing enterprises have relied on their capital advantage to merge and integrate with smaller factories within the industry, forming their own brands, expanding the industrial chain, reducing operating costs through intensive production, enhancing market competitiveness, and gradually moving towards a healthy development trajectory. In recent years, leading rice processing enterprises have actively implemented brand projects, enhancing their quality and brand awareness through cultivation and promotion of brands, thereby driving improvements in operational management levels and product quality.
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Downstream analysis
The downstream of the rice industry chain in southern China includes sales channels and consumer sectors. Among them, sales channels include offline and online sales channels. Offline sales channels mainly include largeKA supermarkets, farmers' markets, distributors, etc. Due to the certain difficulties in transporting large packages of rice, current sales of rice products in southern China mainly rely on offline channels, with online channels accounting for less than 5%.
In recent years, with the continuous development and growth of e-commerce models, online sales channels have gradually become an important sales channel for the rice industry in southern China. Currently, the online channels of the rice industry in southern China mainly adopt brand direct sales methods, setting up brand direct stores on comprehensive e-commerce platforms such as Tmall and JD.com. Compared to offline channels, online channels mainly sell small-sized packaged products. Since 2019, with the rise of internet e-commerce models such as community group buying and fresh food e-commerce, enterprises have effectively improved the offline transportation efficiency of rice through self-built warehouses by third-party operators, increasing the online sales proportion of southern rice to a certain extent.
Analysis of Driving Forces for the Rice Industry in Southern China
Based on Frost & Sullivan's continuous market tracking and in-depth research on the rice market in southern China, the following three major factors will continue to drive the development of the rice industry in southern China:
In terms of southern rice processing technology, traditional methods involve multiple rounds of milling and polishing, which can lead to over-processing and significant nutrient loss after processing. In recent years, with continuous breakthroughs and upgrades in milling technology, rice breeding, vacuum packaging, and other techniques, southern rice has greatly retained its nutritional value while maintaining its original taste and color. In terms of processing, some enterprises rely on modern information technology to mill and distribute rice on demand; production factories also enhance the quality of rice through low-temperature storage and rice grading processing technology.
In terms of breeding, with the continuous upgrading of breeding technology in China and the accelerated promotion of new rice varieties, the yield, quality, and resistance of indica rice in southern China have been further improved. In packaging, some leading companies have started using vacuum packaging machines to launch small-packaged vacuum-packed rice, while fresh food platforms are creating small portions of bottled and canned rice without washing through quantitative filling machines. Overall, both are of great significance in maintaining the original flavor, taste, and color of rice. Products like rice without washing have also brought ample convenience to the younger consumer group.
In recent years, the Chinese government has successively introduced a number of policies to support the rapid development of the rice industry. The development direction of the rice industry in southern China has shifted from focusing on quantity to improving quality. For example, in the field of rice processing, the 'Grain Processing Industry Development Plan 2011-2020' clearly states that by 2020, a number of large leading enterprises with an annual rice processing capacity of over 200,000 tons and several large enterprise groups with an annual rice processing capacity of 1 million tons will be reorganized and constructed in major rice-producing areas, main sales areas, and important logistics nodes, to build a complete rice processing industry chain. Policy support has promoted the development of rice processing enterprises in southern China towards scale and groupization.
Over the past five years, with the consumption upgrade in the rice market in southern China and the continuous emergence of new varieties and technologies in the southern rice industry, southern rice processing enterprises have been continuously improving product quality to meet consumer demands. This has also directly promoted the upgrading and transformation of equipment, processes, and factories involved in high-quality rice production by leading southern rice enterprises, as well as market integration for small and medium-sized southern rice processing enterprises.
Large and medium-sized rice processing enterprises have strong process flexibility and can be used for processing different raw material varieties. Most large southern rice enterprises adopt a dual-line or multi-line production model, which allows them to simultaneously complete the processing of rice of different qualities and grades. Small and medium-sized enterprises do not possess grading processing capabilities and mainly operate on a single line. In addition, large southern rice enterprises achieve scaled production systems through industry integration, continuously expanding their capacity.
Analysis of the Price Trend of Rice in Southern China
From 2016 to 2021, the retail price of small-packaged rice in China increased from 3.26 yuan per jin to 3.34 yuan per jin, while the market price of Chinese indica rice at the grain exchange rose from 2.45 yuan per jin to 2.61 yuan per jin. Due to national control measures and low profit margins in the industry itself, the growth rate of rice prices has been limited. In recent years, rice prices have maintained a trend of slight growth, with the price increase for indica rice being slightly faster compared to the overall rice market.
Analysis of the Development Trend of Rice Industry in Southern China
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production side
Rice cultivation and southern rice production and processing will move towards digital development. The digital development of cultivation and processing industries will reduce labor demand, improve productivity and efficiency, thereby enhancing economic benefits.In the future, digital planting and production of rice in the south will be an important trend.
In terms of geographical distribution, rice processing enterprises in China are mainly concentrated in the main rice-producing areas. Before 1998, the rice processing industry was dominated by state-owned enterprises. With the deepening of grain reform, private enterprises began to enter the rice processing industry in large numbers, gradually diversifying market competition. Some small and medium-sized enterprises have deeply cultivated local markets, accumulating a loyal customer base at lower prices and gradually expanding their scale to establish their own brands.In the future, the rice industry will continue to develop in the direction of scale-up, branding, and industrialization.
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consumer side
On one hand, due to the surge in online community group buying needs brought about by the pandemic, southern rice brands have started to focus on self-operated online stores, complemented by a series of online platform activities that have attracted a group of price-sensitive consumers.Therefore, the proportion of online sales channels will gradually expand.
On the other hand, high-end rice is usually sold in small packages due to its high price. For solo individuals or small families, small-packaged rice better meets their consumption needs. Compared to 5kg or 10kg specifications, small-packaged rice is lighter in weight and less likely to be wasted. Therefore, with the increasing number of solo individuals and small families in China,High-end small-packaged rice is more favored.
Sales results indicate that the Taiguang brand products are recognized by Chinese consumers.On August 19th, the '2022 China Indica Rice Industry Forum', guided by the China Grain Association, hosted by the Rice Branch of the China Grain Association and the Guangdong Provincial Grain Association, and undertaken by Taiguang Group, with the theme 'Chinese Indica Rice, Benefiting the World', was grandly held in Guangzhou, China.
