GLOBAL – Lovers of long rice may have to dig deeper into their pockets or forego the commodity al together as supply tightens and prices rally as from December.

According to UK’s Eurostar Commodities, severe drought in the Northern Hemisphere has hit the commodity hard leading to lower output.

“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.

Other countries such as Portugal and Italy have also seen decreased production of long-grain rice. In Italy, rice growers in Po Valley 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.

With output projected at record lows, Eurostar Commodities projects the prices of long grain rice to jump 29% starting this December and to remain at elevated prices through 2023.

“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 Cambodia and Myanmar.

The decision has been received with regret from European agricultural organizations which have instead called 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.”

Food inflation still has a way to go

 “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.”

Bull noted that 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,” he said.

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