Rice co-op confirms ‘almost guaranteed’ price increase

Above average rain or snow is needed to avoid a spike in prices for California rice, according to Rose Cruz, president of R&E International, which serves as the broker for the Farmers Rice Cooperative in Sacramento, California, in the Guam-CNMI region.

This “above average” rain needed would be a sharp turn away from the historic drought that’s going on in California, which now enters a steady and devastating four-year march.

An estimated 95 percent of the state is in “severe” to “exceptional” drought, according an Associated Press report late last month. With this, Cruz said that higher rice prices are “probable for 2015.”

How much will prices rise in the region? That, Cruz said, depends on rain/snow fall throughout winter in the next few months.

“We need above average precipitation this winter to refill our reservoirs. If that doesn’t happen we’re almost guaranteed to see a supply decrease and prices firm,” Cruz said.

The cooperative has reported a 25-percent decrease in harvested crop compared to last year due to the severe drought. Pricing for California Calrose rice in 2014 has been approximately 20 to 25 percent higher than before the drought struck, according to Cruz.
Other medium grain rice exporters such as Australia and Egypt are also experiencing decreases in their supply, she said, which is helping support the higher prices now.

Long term, however, she said this will “stimulate a worldwide increase in medium grain rice production and should result in a decrease of prices.”

The cooperative’s pricing level has actually remained flat since the spring 2014 harvest, she said, but the poor harvest has made it more difficult to compete with international sources of rice.

“With the price of other rice commodities such as long grain and jasmine in an oversupply situation, our product can become less competitive and sales may decrease,” she said.

However, Cruz stressed that islands like Guam and Saipan are “key markets for the Farmer’s Rice Cooperative.”

“Even through a decrease in production, we will continue to supply these market’s need going forward,” she assured.

As reported earlier, a promotion period has been ongoing from Oct. 27 to Nov. 21. The holiday promotion now, Cruz said, is to ensure wholesalers and retailers have high quality rice this holiday season.

The cooperative will bring its “No. 1 brand”—Diamond G Calrose Rice—to its customers during this period. She said the promotion “will consist of new crop recently harvested and milled fresh.”

California’s drought has also affected supply and pricing of most commodities produced in the area, according to Cruz. All crops have been competing for water, prices of water are increasing, and along with this, the cost of crop fertilizers and diesel for tractors “remain strong,” she said.

Overall, this results in high production costs for California farmers, she said.

According to Cruz, the top rice buyers on Saipan are Pacific Grocers, Luen Fung Enterprises, Twins Supermarket, and JC Tenorio.

As reported earlier, the competitive price for Joeten hovers around $33.99 to $34.9,9 according to head buyer and wholesale manager Clarence Tenorio. This is 30-percent jump from Joeten’s $25.99 price in January this year, he said.

Twin Supermarket similarly has increased their prices. Last year, Twins sold Diamond G rice at $28.99 per 50 lbs. Now they sell it for $32.99.