Rice shortage boils up
While much of the crisis is being felt in Asia, local farmers and restaurant owners are feeling the effects
A peculiar new sign recently appeared beside the buffet at Priya Indian Cuisine. It reads: “Only take as much rice as you can eat.” The Chico restaurant hopes to keep people from wasting rice, which has become both expensive and hard to come by.
“It’s not that we don’t want people to eat the rice,” owner Venkat Yaramala said. “We just want them to not waste it.”
The restaurant serves basmati rice. A 20-pound bag used to cost less than $10. Now that same bag goes for about $17, and many wholesalers are limiting purchases to one bag per customer.
Due to the poor economy, Yaramala does not want to raise the $8.95 price of the buffet, though he is losing money by absorbing the increasing cost of rice himself. Customers have been very understanding thus far, he said.
Local businesses are not the only ones affected by the sharp increase in the cost of rice. Internationally the price of rice seems to be expanding nearly as rapidly as a grain in boiling water, leaving half the world’s population, for whom rice is a diet staple, scrambling.
Citing demand, wholesalers such as Costco and Sam’s Club have begun rationing rice sales, requiring that shoppers limit their rice purchases to their normal consumption, based on prior purchase history, said Jim McCrossin, a manager at Chico’s Costco. In recent weeks the store has sold out of medium-grain rice due to an increased demand.
Americans as a whole are not experiencing any immediate threats to the staple’s supply. We consume more rice in the form of cereals and inexpensive beers than as a grain. (Rice is used as an additive in popular beers, making Budweiser, as unlikely as it may seem, the No. 1 industrial user of California rice.) In many Asian countries, however, the mounting costs mean difficulty putting food on the table.
The best way to describe what is happening in the rice market is to liken it to a run on the bank. High prices are causing panic-buying, which in turn creates an increased demand that lifts costs even higher, leading to a cycle that is spiraling prices out of control.
Adding to the price inflation is speculation and even rice hoarding in Asia. People have discovered they can turn a profit by storing rice and waiting to sell it for a higher price on the market’s upswing.
Although there is no physical shortage of rice, the increasing cost is due to basic supply-and-demand mechanisms, said Adam Barclay of the International Rice Research Institute in the Philippines. In recent months, countries that import large amounts of rice have experienced shortages stemming from international trade regulations and countries such as Vietnam, India and Nepal are restricting exports. While there is enough rice available, much of it is not of the variety people are accustomed to eating.
“Rice is a very emotional crop in Asia,” Barclay said. “It is fundamental to the history and culture, and people are very attached to the type of rice they eat.”
For people who grew up with rice as a staple food, different varieties hold very different flavors. The area of China, Japan and Southeast Asia that cradles nearly 60 percent of the world’s population is also home to a breadth of rice varieties.
Basmati rice (also known as popcorn rice), a medium-grain rice that cooks drier than most varieties, is native to Pakistan, while soft-cooking Jasmine rice is cultivated in Thailand, explained Chico-based rice breeder Carl Johnson, who holds a Ph.D in agronomy and quantitative genetics. Japan is home to a host of short-grain varieties.
American law defines short-grain rice as characterized by grains shorter than 2.0 mm, medium grain as between 2.1 and 3.1 and long grain rice longer than 3.1. These different varieties also have different nutritional contents, with long-grain rice containing more starch than shorter grains. People in most regions prefer the rice variety they grew up eating.
“They would rather go hungry than eat rice they don’t like,” Johnson said. “Most Americans don’t realize rice has a taste.”
American sushi restaurants typically use rice grown in California rather than importing from Japan, said Jim Morris of the California Rice Commission. The switch saves restaurant owners 40 percent on rice, sparing them the cost of the expensive short-grain Japanese variety, of which a two-pound sack costs $10, Johnson said. The switch works out well for everyone, as patrons don’t notice the difference and they pay less for sushi.
“Everyone loves a deal,” Johnson said.
The increasing affluence of Asian nations is also playing into regional rice issues. For example, Asian countries have begun to experience a greater demand for meat; ranching uses land traditionally used for rice production, and rice itself to feed the animals, Barclay said.
China also is beginning to devote more land to the production of traditionally Western crops such as walnuts, almonds and apples, Johnson said.
As Asian countries’ wealth increases, so does their people’s appetite for higher-quality varieties of rice. Much of the rice currently available is poor quality, Johnson said.
“If you’re hungry, you’ll eat anything, but as people get wealthier they want to eat better rice,” Johnson said.
China has historically bred wild varieties of rice that yield a larger, yet poorer quality harvest, Johnson said. Requiring cross-pollination, these varieties of rice are fundamentally different from the rice farmed elsewhere in the world, which is self-pollinating. The poorer-quality varieties require fewer resources and labor and thus are cheaper to produce.
While some long-grain varieties have the potential to yield more grain per acre, lack of demand prevents farmers from switching over to these varieties.
“If something is desirable, it comes from a plant that is not as productive,” Johnson explained.
The International Rice Research Institute hopes one way to curb the rice crisis is through research and development of new varieties, Barclay said. The hope would be to produce higher-yielding types of each variety of rice so that people don’t have to change their customary cuisine. IRRI has a bank of more than 1,000 seeds, only 10 percent of which have been tested to see what possibilities their genes may hold.
Already IRRI has developed a flood-resistant variety of rice, Barclay said. This type was conceived without the use of genetic-modification technology. Able to withstand up to two weeks of being completely submerged in water, the use of these varieties in flood-prone regions could prevent the type of crop losses currently plaguing cyclone-ravished Bangladesh and Myanmar.
Disseminating information about these new varieties presents a challenge in Asia, however, where millions of subsistence farmers with little education farm on less than one hectare (2 1/2 acres) of land, Barclay said. In the Philippines, IRRI has a new method of getting in touch with rural farmers: Rice producers can text message questions to the institute and receive answers on their cell phones, which most Filipino farmers are wielding these days.
Research also may be helpful in discovering new ways to maximize the amount of rice that actually makes it from the field to the table. Particularly in Asian countries, there is a need to modernize milling techniques so grain is not wasted due to outdated technology, Barclay said.
Researchers also are hoping to distribute a type of bag that keeps humidity and pests out of rice in storage. Many farmers do not have access to such basic technology, which in part contributes to the more than 15 percent of the world’s rice that is lost to rats each year.
The rice-growing situation in the U.S. differs greatly from that in Asia, where the majority of farmers produce rice to feed their own families. American rice production consists mostly of bigger farms that export a large portion of their crop. There is also a technology divide, whereas much of the rice grown abroad is hand-planted and picked, California rice growers have been using planes to plant rice for the past 80 years. With the advent of GPS technology, planes are being used to precisely map out where to sew the seeds to optimize the harvest. American farmers also are using laser beams to level the fields prior to planting.
The Sacramento Valley is the second-largest rice-producing region in the United States (second only to Arkansas). American growers produce only 2 percent of the world’s annual yield, according to the USA Rice Federation. Even so, the United States is the fourth-biggest exporter of the crop.
California’s rice farmers predominantly produce the Calrose variety, which is a medium-grain rice. In 2007 the 533,000 acres farmed in California yielded 4.4 billion pounds of rice. Approximately 40 percent of that was exported, predominantly to Asia, said Morris of CRC.
With the unprecedented demand for rice, it appears California farmers may be in for a profitable year. While the majority of the world’s rice is being harvested in Asia, California farmers have only just finished the planting stage. But while prices are up at the moment, only a small percentage of the coming season’s harvest has been sold, Morris said.
With fuel costs up 40 percent and the price of fertilizer having doubled in the past year, local growers are ambivalent as to whether the increased demand will translate into higher profits.
One benefit to local growers is that the region remains relatively stable. Even with a statewide drought, the farmers have access to the water they need through the Tuscan Aquifer, which runs south from Northern California. This has allowed growers to produce a fairly constant crop each year, said local grower Josh Sheppard of JAKS Farming.
“The people who come to us for rice have really benefited from that,” Sheppard said.
If this year turns out larger-than-usual profit margins, the extra money will provide some relief, said Sheppard, who farms in the Richvale area. In recent years rice farmers had been struggling to turn a profit over rising costs.
“If this trend had continued, we’d be in real trouble,” Sheppard said.
Sheppard also doubles as a contractor to other local farmers, offering fertilizer and pesticide services. Increasingly in recent years, the farmers he’s contracted with have told him upfront that they would not be able to pay him for his services until after the harvest. Many of these people were falling behind on their farms’ equity and were unable to keep their machinery updated.
“A good farming year will allow me to replace some older equipment,” Sheppard said.
Replacing outdated equipment could help farmers modernize their operations, making them more productive.
While higher prices may provide much needed cash-flow to area farmers, local businesses may be forced to raise prices. Jim Williams, owner of Pommes Frites on Broadway, said the price of the Thai jasmine rice the restaurant uses in its rice bowls has increased from just more than $18 for a 50-pound sack last year, to between $16 and $18 for a 25-pound bag. A couple of weeks ago, the Cash & Carry on Mangrove Avenue where Williams and many other local business owners buy their rice, ran out of jasmine rice. Owners of Asian restaurants such as Gen Kai were left scrambling to get the rice necessary for their businesses.
“We’re not going to starve, so this is more of an annoyance for us,” Williams said. “But some people in other parts of the world can’t afford to eat.”
Another cause of the rising price of rice is the increase in demand for all grains. The United States’ corn is increasingly being bought by oil companies and converted into ethanol and biofuel. While these “green fuels” were long touted as the answer to global warming, they are as not sustainable as was once believed.
While the use of ethanol releases less-harmful CO2 emissions into the atmosphere than does the burning of regular gasoline, there simply is not enough corn to sustain its widespread use. The increasing demand for biofuels has helped drive up the costs of not only corn, but all types of grains.
“Essentially people’s two basic needs—food and shelter—have come into competition,” said Chico State nutrition professor Faye Johnson.
There are ways of producing ethanol that don’t cut into the food supply. Ethanol can be concocted from agricultural waste products such as cornstalks. There is also switchgrass (a prairie grass), which grows both in soil that is too poor to be cultivated and between cultivated fields, according to an article in Scientific American. The use of switchgrass does require the construction of a different kind of biofuel refinery than those currently in existence; however, it would produce a much higher-energy return ratio and ease the competition between the use of corn for food versus energy. The use of switchgrass for ethanol returns the energy used to produce it by 540 percent, compared with only 25 percent returned by corn-ethanol.
As the demand for greener fuels increases, so does the desire to produce crops in a more sustainable way. Although rice requires standing water, it actually uses less water than many crops.
A drive down Highway 99 in the Sacramento Valley reveals rice fields aplenty, the pooling water mirroring the pattern of the sky. Although the crop may appear to be sucking up large quantities of water, a contentious resource in California, rice is actually one of the most “water-wise” crops grown in the Golden State, according to CRC.
As concern grows over the depletion of the Tuscan Aquifer, which sits directly beneath much of the Sacramento Valley, rice farmers are actually using less water to produce each serving of rice than are growers of other crops. Rice requires just 25 gallons of water per serving, compared with the 40 gallons used to produce a serving of cantaloupe and 80 gallons per serving of almonds, stated CRC.
Rice has not always had such a low water requirement, but over the course of the past 30 years, better technology has allowed for a 40 percent decrease in the volume of water necessary to raise the crop.
The impending Asian rice harvest may bring much-needed price relief. The new supply of rice hitting the market may be enough to satisfy the demand, and thus ease panic buying, which would drive prices back down. The fundamental price of rice, however, likely will stay higher, Barclay said.
It is also possible that over time the market will take care of itself; farmers will have more incentive to plant more rice if they know they will receive a higher price for their harvest. The problem is that there is little available new farm land in Asia. This year, the cyclone-hit region of Myanmar will become an importer of rice, but in future years it may be able to turn a profit by increasing exports, Barclay said.
There is also the possibility that governments may allow land they subsidize to lie fallow, to be farmed to help meet the growing demand for rice. However with the rising costs of fuel and fertilizer internationally, it is unclear whether farmers will have enough incentive to try to yield more rice. One solution may be to avoid high transportation costs by eating locally grown crops.
Nevertheless many restaurants like Priya Indian Cuisine rely on imported varieties of rice, because the rice they use is not comparable to anything grown in California.
“We depend on rice to survive,” Yaramala said. “You gotta eat rice with curry.”