Water scarcity spells trouble for long rice, as prices set to rally

15 Nov 2022 --- A 29% increase in prices for long rice will hit markets starting this December, with price increases set to continue through 2023, according to UK’s Eurostar Commodities. Severe drought in the Northern Hemisphere has hit the commodity hard.

“Countries like Spain have planted less rice because there is less water. Lack of water resources means farmers have turned to less intensive water-based crops,” Helen Trevorrow, managing director of Green Row Communications, speaking for Eurostar Commodities, tells FoodIngredientsFirst. 

For instance, Spain has planted 70% less long rice than last year, which according to Trevorrow, will allow farmers in the country to still make a good income.

Other countries such as Portugal and Italy have also seen decreased production of long-grain rice. 

The summer drought struck a tough blow to the Po valley in Italy. The region accounts for between 30%-40% of Italy’s agricultural production, but rice growers in particular have warned that up to 60% of their crop may be lost as paddy fields dry out and are spoiled by seawater sucked in by the low river level.

Cereal prices set to skyrocket?
According to the Food and Agriculture Organization (FAO),international rice prices remained on an uptrend this October, as the bulk of new crop arrivals were still forthcoming in Asia. 

However, demand is not too high, limiting the monthly price increase of the commodity to 1% – following a 2.2% increase in September.

“Durum wheat [prices] are up and down. There are high spikes in price, so there is potential that this could go up (semolina and pasta). Wheat flour may go up, but this is due to energy cost,” notes Trevorrow.

“Anything that is energy intensive will see some price increases,” she highlights. 

 “Food price inflation is still going strong and increasing due to drought and raw material availability issues,” adds Jason Bull, director at Eurostar Commodities. “If we add in currency exchange rates, transportation and fuel costs, and finance interest, the market is in a situation where prices will rise sharply from early December of this year.” 

“Retailers, restaurants and the foodservice industry will either have to absorb these additional costs or pass them on to customers. The market is now increasing prices to reflect a substantial decrease in raw products and huge hikes. Food inflation still has a way to go.” 

According to the Food and Agriculture Organization (FAO),international rice prices remained on an uptrend this October, as the bulk of new crop arrivals were still forthcoming in Asia. Climate change woes
The availability of water in some areas needs to be increased to allow the growing of rice at all, flags the UK business.

“There are already significant problems all around the world caused by climate change and caused by mounting transportation, fuel and production costs that are making import of rice to the UK expensive,” explains Trevorrow. 

“US rice production may provide some good options for certain types of rice,” she underscores, noting a possible solution to the lack of long rice availability.

Cambodia and Myanmar rice import court win
Meanwhile, the Court of Justice of the EU issued a judgment canceling the imposition of safeguard measures to deal with cheap rice imports from both countries.

According to the agri-coalition Copa-Cogeca, both countries. Cambodia and Myanmar have “benefited greatly in recent years from the ‘EBA’ (Everything but Arms) agreement, enabling them to export considerable high tax free volumes to Europe, putting the viability of EU producers at stake.” 

The organizations “deplore” the court’s decision and call for a revision of the EU’s Generalised Scheme of Preferences (GSP), the system that regulates the reduction of trade tariffs.

“The European rice farming community calls on Member States to continue the negotiation, focusing on achieving a clear, solid and efficient mechanism, to be triggered only when damages to rice farmers are registered,” flag the European Farmers agri-cooperatives.

 “In addition, this mechanism should be swift, otherwise damages caused by imports would bring unbearable damage to a European rice sector that is already heavily impacted by recent crises.” 

By Marc Cervera