Thursday, April 24, 2008

Global rice shortage hits wallets in Silicon Valley

By Ken McLaughlinMercury News
Article Launched: 04/24/2008 02:19:23 AM PDT

At the Asian supermarket 99 Ranch, the price of jasmine rice has already doubled this year. Across the street, Costco is rationing its 50-pound bags of discounted rice - if you can get them at all. And some Asian restaurants are even reconsidering their longstanding policy of refilling rice bowls for free.

The worldwide rice shortage has come to Silicon Valley.

"There is no rice," said Rita Patel of San Jose, a native of India who couldn't find any at Costco on Hostetter Road in northeast San Jose on Tuesday night.

In a valley where nearly 30 percent of residents are of Asian descent, people are increasingly frustrated by the soaring cost of the staple of Asian cuisine. Economists blame the price increases on everything from lean harvests overseas to trade restrictions.

Patel had always depended on Costco for a constant supply of basmati rice, which along with jasmine rice is one of the "aromatics" preferred by so many Asians here.

"Just two weeks ago, jasmine was $20 for a 50-pound bag. Now it's $34," said Imelda Cunanan, manager of Goldilocks, a restaurant and bakery in San Jose's Pacific Rim Plaza that specializes in Filipino cuisine. "Some people are crazy about this."

Cunanan warns that the era of Asian restaurants graciously handing out free refills of rice bowls may soon go the way of complimentary windshield cleaning at gas stations.

"For me it's hard," said Rhonda Zulueta, an Apple project manager of Filipino descent dining at Goldilocks on Tuesday night who routinely eats steamed rice for breakfast.

Triple-digit increases

The average cost of exported rice has shot up 300 percent in a year. Every variety has seen enormous price increases - from Uncle Ben's long-grain rice to medium-grain rice like Calrose, the main variety grown in California's Central Valley. But because the Bay Area has so many Southeast Asians, Indians, Chinese and Filipinos, it's the imported jasmine and basmati that are in the greatest demand.

Latino restaurants have been hurt, too, but the price of the standard long-grain rice that is the staple of Mexican diets hasn't gone up nearly as much as the imported aromatics, said Rob Francis, executive chef of Aqui Cal-Mex Grill in Willow Glen. Most of the rice he buys is grown domestically, Francis said.

This week, Jossette Sheeran, executive director of the United Nations World Food Program, warned that 100 million people are being driven into poverty by a "silent tsunami" of world food prices that has sparked worldwide riots and caused untold deaths from hunger. One child is now dying every five seconds from hunger-related causes, the U.N. says.

Prices of rice, wheat and corn have skyrocketed in recent months because of rising fuel prices, drought, more demand for food in China and India and other emerging nations, and the trend of using crops for biofuel rather than food.

As food prices soar, countries such as Vietnam and India have imposed restrictions and even outright bans on exporting rice to keep the lid on food inflation, said Nathan Childs, an expert on global rice markets at the U.S. Department of Agriculture.

The restrictions lead to a classic economics lesson: low supply, high demand, increased prices.
"We've never dealt with rice prices this high," Childs said.

Stockpiling begins

The impact in Northern California, of course, hasn't been nearly as devastating. But store owners have reported that Asian shoppers recently began stocking up to avoid future increases. The problem was most noticeable at Costco, which because of long-term contracts has been able to sell jasmine for about half the price of Asian supermarkets such as 99 Ranch.
At 99 Ranch on Wednesday, 25-pound bags of Three Ladies jasmine were on sale for $22.99. Costco was selling bags twice as big for a dollar less.

Which no doubt explains why the daily shipment of rice at Costco is swept up by customers in less than half an hour while the jasmine rice at 99 Ranch is plentiful.

"There are a lot of people who want to hedge their bets by buying rice now," said John Booth, Costco's regional operations manager. But the company is trying to prevent hoarding by limiting customers to their previous buying habits, tracked through their membership cards.

"You can't go spend $50 on a membership, then buy 50 pallets of rice," he said. "We have an obligation to make sure our normal members get their fair share of rice."

Asian restaurants, too, are struggling to keep rice prices from going the roof.

Goldilocks just raised its price for a serving of jasmine rice to $1.50 from $1.20. But that 25 percent increase doesn't nearly cover the wholesale costs, said Linda Rose, purchasing manager for the Newark-based Goldilocks chain.

"We're sensitive to price - particularly rice, because for our customers it's a staple," said Rose, whose vendors have warned her to brace for another doubling in price.

Of two dozen Asian shoppers interviewed at 99 Ranch and Costco - immigrants from China, Vietnam, India and the Philippines - none said they planned to cut back on a food so common in Asian kitchens.

Along with the rising price of gas, it has just become another painful part of balancing the family's budget, said Zack Yu, a native of China who lives in San Jose.

But his family of four will never go without rice. "We will buy it because there is no choice," Yu said. "It's just like gas."

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