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'People are ripping up contracts': price of rice boils over into new … – The Guardian

The pressures faced by one Yorkshire rice importer illustrate how costs feed through to consumers
The 20kg bags of rice stacked on ceiling-high shelving units look like any other but are the first to arrive in the West Yorkshire depot from Vietnam as the food price shocks fuelling inflation force companies to find cheaper ingredients.
Jason Bull, one of the directors of Eurostar Commodities, which imports rice and flour destined for restaurant chains, supermarket suppliers and caterers, says the Brighouse-based company is facing its biggest challenge in nearly 30 years.
“Brexit, Covid, the cost of living crisis, and the war in Ukraine, are all having an impact on the supply chain in different ways, and causing food insecurity,” says Bull.
“People are ripping up contracts and saying the price has just gone up … if you want it, you’re going to have to pay more. This is the hardest, most turbulent period for our business in its history.”
With UK inflation now at 9.1%, driven up by soaring fuel and food costs, Bull said the pressure on the family-run company is still increasing which is likely to mean more pain for households. Often, the reason prices rise for consumers is because businesses facing rising costs, pass them on.
“Fuel is still going up, so that’s increasing our costs, and shipping rates are going up again too, so we’re not out of the woods yet,” says Bull. “We’re going to see more inflation; I think it will probably top out at 12 or 13%.”
The company is passing higher costs on to its customers with the extra time involved in Brexit paperwork, another management worry. “We work on tight margins and high volumes,” says Bull, who adds that it “has never been harder to make sure food is in the supply chain and to get it in a timely manner and at the right price”.
Rice, along with pasta and bread, was one of the budget foods recent Office for National Statistics’ figures highlighted as increasing in price at a much faster rate than general inflation, with the cheapest rice option now costing 15% more than a year ago.
Supermarket shoppers spend about £220m a year on rice with the overall price per kilo up 0.8% over the last three months versus 2021, according to NielsenIQ Scantrack. The headline figure masks big price moves up and down for different varieties. Basmati, which makes up 60% of the market, is up 3.7% with risotto rice also increasing by a similar amount. The price of brown rice is up over 13% while Thai has fallen more than 10%.
Eurostar Commodities usually buys short-grain rice, used to make the sushi sold in supermarkets, from Italy, Europe’s largest producer. However the price per tonne is now “crazy”, Bull says, due to the hit to harvests caused by severe drought.
It used to be able to buy rice on a 12-month contract but its longest agreement is now under two months. “You will probably be able to buy Italian rice this year but the price is going to be sky high. The millers say they’ve never seen a market like it in 40 to 50 years.”
Last spring Italian white rice reached the milestone of $1,000 (£817) per tonne but it did not stop there. Weather issues combined with higher input costs like fertiliser, saw the price eclipse $2,000 last month. Over the same period the cost of Vietnamese white rice dropped by a fifth to about $400 per tonne, according to Mintec.
Bull has just returned from Vietnam, the world’s fifth largest producer of rice, where he toured some of the fields and mills belonging to the UK-approved suppliers it is now using. “There is going to be a lot less rice within Europe and that’s going to increase demand for the far east supply,” he says. “Vietnam only grows a certain amount of EU standard rice so if you’re not contract farming and booking it, it ain’t going to be there.”
Long-grain rice is also a problem . The company usually sources from Spain but farmers there have also been hit by drought and extreme temperatures. Come autumn he predicts it will have no rice for export, a view that explains the huge white sacks emblazoned with stars and stripes piled on the warehouse floor. Even though it has come all the way from the US it still works out cheaper, Bull says.
The UN Food and Agriculture Organization’s monthly index, which tracks changes in the price of commonly traded food commodities, showed international rice prices up for a fifth consecutive month in May.
Global rice production is bountiful, with a record harvest of 514.6m tonnes predicted, but the high cost of wheat and maize means it is in demand as a substitute for animal feed, says Zanna Aleksahhina, a market analyst at data firm Mintec.
Eurostar Commodities also imports specialist flours as well as ingredients such as canned tomatoes and pasta sauce that end up in ready meals and restaurant dishes. Prices are going up for these products too, with wheat flour costing 50% more than before the war.
The impact of this is visible on supermarket shelves where the price per kilo of plain and self-raising flour is up 9.6% and 7.4%, according to the NielsenIQ Scantrack data.
“We will have to see what the new [wheat] crop brings,” says Bull. “A lot depends on which countries are going to export but if nothing drastic changes … prices are going to remain firm.”


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