Panic over rice prices hits home in capital

The global rice panic has come to south Sacramento.

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.

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