No rice supply crisis in Canada, industry says

If you're having trouble finding some specialty rices in Canada, blame flaws in the retail system, says an industry insider.

Ali Bilgen, president of A & BB Rice Inc. in Toronto, told CTV.ca on Friday that rice in general is in good supply in Canada.

Most of this country's rice -- such as the long grain typically served in Chinese restaurants -- comes from the United States, which is producing plenty of rice, he said.

But jasmine rice comes from Thailand, and reports have indicated the Asian country may have problems meeting its export obligations, Bilgen said. "They are having some serious issues."

The country's finance minister has since said Thailand can meet its contract obligations, but the price has still rocketed up to US$1,000 per tonne -- three times its January level.

"That's fuelling the frenzy a bit," Bilgen said, but his firm is having no real problem obtaining rice.

There were reports of U.S. retailers Wal-Mart and Costco limiting rice sales earlier this week, but Bilgen said, "Personally, I think they're over-reacting."

Herman Poon of T and T Supermarkets told CTV Newsnet on Thursday that his chain has no plans to ration rice sales.

If some supermarkets are running out, "to a certain extent, that's their own doing," he said.

Supermarkets require 30 to 60 days notice of a price increase. With prices rising so rapidly, importers are seeing their replacement costs go up just as quickly, Bilgen said.

"We don't have the luxury to continue supplying these supermarkets at well below the market prices for 30 to 60 days. So some of the importers may restrict quantities they are shipping to the supermarkets."

So while some supermarkets might be running out of some types of rice to sell, there is no supply issue at the wholesale level, he said.

David Wilkes, senior vice-president of the Canadian Council of Grocery Distributors, told CTV.ca that his members aren't having any supply problems.

"We are not seeing any changes in consumer shopping patterns with respects to rice at the current time either," he said.

Poon seconded that, saying some customers are stocking up, but most are not.

Difference of opinion

Wilkes disagreed with some of Bilgen's analysis, saying the importers are often buying on the futures market to protect themselves.

"Depending on your point of view, you're always going to claim you're getting squeezed on the way," he said.

Costs do get passed along in any supply chain, and everyone wants it to be orderly, he said.

"But at the same time, if there's an unavoidable change because commodities have gone up, I know that conversations go on between individual trading partners to make sure those adjustments take place in the most reasonable way possible."

The rice situation should also be looked at in the context of the apparent structural shifts going on in the global food market, Wilkes said. He listed some factors:

* Changing consumption patterns;
* Food being converted into ethanol;
* Agricultural land being taken out of production.

Foods based on the commodities being affected are rising in price as a result, he said, citing bread and pasta as two other examples.

On Friday, United Nations Secretary General Ban Ki-moon called the sharp rise in food prices a global crisis and asked for an additional $755 million in funding for the UN's World Food Program.

Bilgen said the high value of the Canadian dollar has protected consumers here. "If we still had currency at $1.30, $1.40, certainly there'd be a lot more concern."

Compared to developing nations, Canadians pay a relatively small proportion of their income on food. A price hike doesn't hurt the average Canadian consumer as much, he said.

But in parts of Asia and Africa, some poor people direct more than half their income to food, he said.

"So when the price of rice doubles, now they have to spend 100 per cent of their income on rice. Or their income is not even enough to cover their daily diet," Bilgen said.

Source: ctv.ca/servlet