High demand, price of rice good news to U.S. farmers
It's aerial seeding season for rice farmers in California, which produces about 20 percent of the crop grown in the U.S. With the price of rice surging internationally, much of the medium-grain rice being planted between the Sutter Butte mountains and California's Coastal Range has already being sold, even though harvest still is months away.
"It's nuts," said Pat Daddow, head of the California Rice Exchange, a platform where processors bid on and buy rice. "We've sold an ungodly amount of rice, the price has nearly doubled — and this is the crop they're just beginning to plant."
The greater demand and new foreign customers driving the global price hike have been a boon to American farmers, who are welcoming the reprieve after years of shouldering high fuel and fertilizer costs and weak prices for their grain.
Commodity traders and economists attribute the global price increases to everything from weather — a drought in Australia, floods in Asia — to the declining value of the dollar, the jump in fuel costs and increased buying power in countries like China and India, said Nathan Childs, an economist and rice expert with the U.S. Department of Agriculture.
But one of the main factors pushing up prices this month is a peculiarity of the rice market. Although rice — as in Middle Eastern pilaf, Asian rice bowls, or Latin American beans and rice — is a staple around the world, less than 8 percent of the global crop is traded internationally. Most of it is eaten less than 60 miles from where it's grown.
That means that when some of the largest producers — among them India, Vietnam, China, and Brazil — curtail exports to protect prices at home, the international marketplace reels and prices for imported varieties soar, Childs said.
"A thinly traded market will be more volatile, easily shaken up," Childs said.
The most expensive rice varieties — the ones known in the trade as aromatics — can't be grown in the U.S. But with imported types such as such as Thai jasmine and Indian basmati selling for $1,000 and $2,000 a ton, respectively, farmers here are still reaping profits.
California's cooler weather produces mostly medium- and short-grain rice varieties, the moist, sticky kinds favored for sushi or risotto. With some of its main competitors out of the market — Australia due to a long drought, Egypt because of a decision to cut back on exports — the price of medium-grain rice rose from $551 per ton in April 2007 to $750 per ton a year later.
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