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The ‘Rizza Maraka’ Shortage Explained
By Neda Ayar :: Saturday, April 26, 2008 :: 105737 Views :: Business & Finance, World News & Odds 'N' Ends

California, USA – “No Riza Maraka!  Who do I blame,” says Anthony Matti of Chula Vista, California.  Amid growing concerns of global rice shortage two of America’s biggest retailers place a limit on rice purchases.  Wal-Mart's warehouse chain Sam's Club, the largest warehouse and food grocery retailer in the US is limiting bulk purchases of rice this week, citing "recent supply and demand trends".  Seattle-based Costco Wholesale Corporation has also imposed limits in some stores on bulk rice purchases.

“I bet the limits are in Michigan, Chicago, Arizona, and here,” says Matti with a sly smile.  “It is no coincidence Chaldeans live mostly in those regions.  Chaldeans are eating too much rizza maraka (rice and stew) and we are causing a rice shortage.  What do you expect?  Chaldeans are not going to eat that fast food poison or restaurant filth.”

Chuckling over his own sense of humor, Matti does have a serious side.  The undergraduate student just submitted his final exam paper titled the Economic Food Web.

Matti says that world rice prices have more than doubled in the past year as demand has outstripped supply.  “The culprits include the drought-ravaged rice crop shortage, alternative fuel technologies, global population growth, speculation on food prices, and rise in traditional fuel prices.” 

Farmers in Australia's rice production region received zero water allocation from the Murray River. There rice crop will be the smallest since 1960, with exports barely a 10th of recent years.  Until 2002-03, Australia exported on average 620,000 tons of rice a year - or 80 per cent of what it produced. But figures compiled by the Australian Bureau of Agricultural and Resource Economics show the 2007-08 export crops will be 70,000 tons, with no improvement the following year.

Around the world, countries are restricting exports of rice and other grains as food prices rocket and nations move to ensure their own food security. The international price of rice has risen 118% in the past year despite world rice exports rising from 22.7 million tons in 2000 to a forecast 29.6 million tons this year.

“Australia’s problem is a small dent in the overall equation,” says Matti.  Ricegrowers' Association president Les Gordon agrees with Matti, saying prices were high due to "a straight-up case of supply and demand". "Supply has been slowly dwindling all around the world for the last 10 years, and it became apparent to our grain marketers 12 months, two years ago that it really was heading for a very low level," he said.

Matti’s joke about stores in highly dense Chaldean areas limiting rice consumption is not all too far fetched.  In Britain, rice is being rationed by shopkeepers in Asian districts to prevent hoarding. 

Matti adds, “The supply is also being impacted by ethnic restaurants, like the Chaldean, Asian, and Mexican places that serve rice as a major staple, buying in bulk to edge out price increase.” 

US Rice Federation spokesman David Coia suggested the shortage was due to small restaurants and retailers buying rice in larger quantities than usual to avoid higher prices. 

Sam's Club has 593 stores and 2,523 Wal-Mart Supercentres that combine a full grocery section with general merchandise. Costco has only 534 warehouses worldwide.  Both say that a demand for rice and flour had risen, with customers panicking about shortages and hoarded produce.

Tim Johnson, of the California Rice Commission, said: "This is unprecedented. Americans, particularly in states such as California, have on occasion walked into a supermarket after a natural disaster and seen the shelves are less full than usual, but we have never experienced this."

In the past three months, wholesalers have experienced a sharp rise in demand for food items such as wheat, rice and milk as businesses have stocked up to protect themselves against rising prices.

Global rice prices have risen about 70 per cent this year, partly because countries such as China and India - whose economies are booming - are buying more food from abroad. Poor crop yields have contributed to the trend, raising concerns of severe shortages of the staple food consumed by almost half the world's population.

Food prices have also been driven up by increased demand for corn - the grain that is fermented to produce ethanol, the biofuel. Similar jumps in the price of wheat, corn and soybeans have led to riots in Haiti, Senegal and Pakistan.

Key rice producers have banned exports of rice to ensure their own people have access: India, China, Vietnam, Brazil, and Egypt have blocked exports, causing imbalance in world markets.  In turn, a shortage in supply and an influx in demand for rice are causing the proverbial boat to rock.

The climbing global price of rice and other staples shows no sign of leveling off, given caps placed on exports and various supply-side squeezes.

“My mom is just switching to medium and short grain rice,” says Matti.  “It’s better and it is grown local.  It helps our state economy.”

There is an abundance of medium- and short-grain rice planted in California, the nation's second-largest rice-producing state after Arkansas. California growers will harvest approximately 4 billion pounds this year, with 40 percent of the crop to be exported, the majority to Japan. California's product, consistently among the state's top 20 crops, is known as sticky rice and is used in sushi, paella, risotto, sake, beer, baby food, rice milk and pet food.

“Another suspect in the equation is the bio-fuel push.  Ethanol is the most disastrous.   As the alternative green fuel of the day, craze for ethanol is running high.  The lobbyists are doing a good job in getting people to believe that Ethanol is a good alternative energy,” Matti says shaking his head. 

USA, Brazil, China, Europe, and many other countries are impacting food prices and farming choices based on alternative fuel choices.  Corn and soy is being used in the U.S., European countries are using edible vegetable oil for bio-diesel. Refined oil from rapeseed and canola is used for direct injection into truck fuel. China is using rice and wheat, besides corn, to produce ethanol.

54% of the world's corn supply is grown in America's mid-west, providing it an edge that is becoming more prominent in a world faced with an impending food crisis. However, U.S. corn exports are in danger of seizing up in about three years if the country continues to subsidize ethanol production.

“This again creates a strain on already receding abundance of food. The amount of food required to produce ethanol that fills the tank of a sports utility vehicle can feed a person for a year,” Matti says.

Chaldeans can expect to pay more for a bowl of their beloved rizza maraka at home and at their favorite Chaldean restaurants.   Chaldean restaurateurs are among those who buy rice at big-box retailers. Several in the Michigan and California said they haven't raised menu prices despite their cost increases.   However, if cost increases the Chaldean restaurateurs will have no choice. 

Matti added, "At the end of the day, the average Chaldean in California or Michigan is going to buy rice for about 10 cents a serving.   That is still the best deal on the plate."

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