Rice paddies near Nanning, China. As Chinese interest in foreign food has increased, the country has become the world's premier importer of the grain.
Photo: Kacper Kowalski
By Scott Cendrowski
July 25, 2013

Rice is a global food, but hardly a global commodity. Just a smidgen of the world’s rice supply each year — less than 8% — is traded between countries. Nations grow rice to feed their people, and because the countries that consume the most rice also produce the most, little of the grain has crisscrossed the globe. At least until recently.

China, for years the world’s biggest rice producer and consumer, this year will become the world’s premier rice importer, passing Nigeria. China has been a net importer of rice only a handful of times since Communists took control in 1949. Today there are no deficits — the country has adequate stockpiles of the indica variety grown across the south. Instead, China’s demand for foreign rice can be traced to a confluence of counterintuitive factors: changing urban tastes, the government’s payments to rice farmers, and a rice glut across the rest of the world.

As China moves tens of millions of its rural population into cities, its farmers are feeling vulnerable. In an effort to quell unrest, the government has boosted prices paid to rice farmers for their crop by 60% over the past six years. While Chinese rice sells for $500 a metric ton, rice in Vietnam, Thailand, and Pakistan goes for $350 a ton. The Chinese are buying cheap foreign rice and selling it for more domestically.

C. Peter Timmer, Cabot professor emeritus of development studies at Harvard, says, “All the sentiment in the market is basically, ‘Ugh, we’ve got surpluses. Who’s gonna buy them? Oh, China’s gonna buy some!’ ” In China’s urban south, Timmer says, there’s a newfound taste for long-grain rice, like basmati, and jasmine-scented rice from India and Thailand. In the north and coastal cities, eaters are increasingly opting for japonica rice — the short, sticky grain grown in Japan and Korea.

This story is from the August 12, 2013 issue of Fortune.

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