Panic over rice prices hits home in capital
Fearing shortages, Asian market shoppers in south area buy up supplies.
By Jim Downing - email@example.com
Published 12:00 am PDT Saturday, April 19, 2008
Story appeared in MAIN NEWS section, Page A1
As word of food riots and export shutdowns in Asia reached California in recent weeks, worried shoppers have been buying up hundreds of pounds of rice at a time from the Asian supermarkets that line Stockton Boulevard, looking for security against rising prices.
"When people saw the price jump $2 or $3, they started buying like crazy – 10 bags, 15 bags," said Cu Van, a floor manager at Goldstar Supermarket. Each bag weighs 50 pounds.
In recent weeks, the retail price for a 50-pound sack of Thai jasmine rice, the prized variety served steamed in Chinese and Southeast Asian cuisine, has risen from roughly $20 to $40, straining budgets for families and restaurants.
The spike in the cost of Thai rice is one of the most extreme examples of a trend that is pushing up prices for all the major globally traded food commodities – rice, wheat, corn, soy and dairy products. Experts say the increases largely have been driven by demand from booming Asian economies combined with poor harvests in key export countries like Australia. The demand for corn and soy to make ethanol and biodiesel also has boosted food prices, though economists disagree on how much.
Rice markets in particular have been jolted as a number of rice-exporting countries have restricted international sales in order to reduce prices for their own citizens.
State rice farmers thriving
For California rice farmers, though, the high rice prices are a boon. Even though the short- and medium-grain varieties grown here are sold into different markets than Thai jasmine rice, which has seen the steepest increases, spot-market prices for bulk California rice are up 50 percent since February, to about $20 for 100 pounds.
"We're kind of riding the coattails," said Pat Daddow, who runs the California Rice Exchange in Yuba City.
Domestic varieties of rice – long-grain from Texas, for instance – sell in some of the Stockton Boulevard markets for less than half the price of Thai jasmine rice. But grocers, shoppers and restaurateurs said the cheaper domestic long-grain varieties are suitable only for fried rice: Only Thai jasmine delivers the softness and aroma for proper steamed rice.
Still, Van said, some of her customers have begun to try other varieties. One morning last week,she pointed to a single bag of California medium-grain rice – typically used for sushi – lying askew on a pallet. It was all that was left of a one-ton shipment that arrived two days earlier.
But Paula Duong, manager at King Palace Seafood Restaurant on Stockton Boulevard, which goes through more than 300 pounds of dry rice a week, is still buying Thai rice. Her customers would notice any change, she said. She hasn't stockpiled, but is instead buying sacks as needed and hoping the cost will drop within a few months. She hasn't raised menu prices, citing the need to stay competitive.
Duong said that as soon as prices of Thai rice began to climb, she bought 10 sacks for her home. That 500-pound order will last her extended family of seven about eight months, she said.
"Every meal, there's rice," she said.
Importers in bidding wars
Nathan Childs, an expert on global rice markets with the U.S. Department of Agriculture, tied the jump in the price of Thai rice to a cascade of events touched off by attempts by several rice-growing nations to combat food inflation within their own borders.
Last fall India and Vietnam, both of which typically export several million tons of rice annually, announced they would be reducing rice exports in order to drive down domestic prices. China, Egypt and Cambodia followed suit, further restricting the amount of rice on the global market.
Rice-importing nations around the world then began scrambling to secure supplies, driving up the price for what rice remained available on global markets.
Thailand, the world's largest rice exporter, is reporting record harvests this year. But the increase in supply hasn't been nearly enough to offset global demand, Childs said, and the price of bulk Thai jasmine rice has nearly doubled since December.
With California rice prices at the highest levels since 1980, Sacramento Valley farmers are expanding planting this year – but only by about 3 percent, according to USDA surveys. Rice needs certain clay soils, which limits expansion. In addition, the cost to grow it has been especially impacted by the high price of oil, so some farmers are choosing to switch some of their land to other crops.
"They can make as much, if not more, on wheat or corn," said Don Bransford, a prominent rice grower in Colusa.
Tight global supplies and the run on Thai rice in specialty supermarkets have forced U.S. importers into bidding wars to fill their orders, said Pete Lee, who owns Southern California-based Sun Lee Inc., a major rice distributor.
Lee said he sold nearly his entire inventory of Thai rice in the last two weeks – but he worries that a big slowdown is in store for the summer.
"The panic just drained our stocks so quick," he said. "The thing is, everyone's buying future inventory. And if they buy everything now, we won't have anything to do two or three months from now."
Prices may have stabilized
Lee said he's guessing prices will stay at their current levels, or rise a bit, until at least the next Thai jasmine harvest, which begins in October. But there are too many variables in global rice trade to know for sure, he said.
"Whoever can predict that would be quite rich," he said.
Ronnie Duong (no relation to Paula Duong), who owns New Asia Supermarket on Stockton Boulevard, worries that high rice prices will eat into his profits. He makes the same margin on a sack of Thai rice whether it's priced at $20 or $40, he said – but his customers have a limited food budget.
"If they spend so much on rice, they don't have money to spend on other items in my store," he said.
Van, the Goldstar Supermarket manager, said as far as she can tell, the peak of the local rice panic has passed. Prices have stabilized, at least for now, and those customers who do buy rice get only a bag or two. Plenty, she reckons, won't need to restock for quite some time.
"Everybody's home has so much rice already," she said.