Bitter tastes in Necessity: The Rice Dilemma
Who would've thought buying rice in 2024 would be a bummer.
Welcome back stranger, it’s been a hot minute since we’ve touched base.
Today, we’re back to threading the needle on some of the most random niches of the world. On today’s agenda we got one of my favourite foods: Rice.
Think about your own eating habits, it's likely that you have had to rely on rice at some point this week (unless i just have a very asian-oriented diet). Funnily enough, those grains of rice you consume represent something much greater than a source of sustenance. Around the world, it’s a widely farmed and consumed staple food crop, serving as a significant source of fibre, vitamins and minerals for individuals.
For many residing in Asia, rice plays an integral role in providing 50% of calorie intakes for the regional population, to the extent that it tackles hunger and malnutrition within Southeast Asia - happy days from my home turf. The global community relies on rice as a necessary good, which is why there is cause for concern in recent months outlined by a series of economic, environmental and social issues.
Introducing what I coin…
‘The Rice Dilemma’
From the standpoint of an average consumer, you’d imagine that the rice market acts in conjunction with other basic necessities – It’s a necessity that consumers rely on over luxuries, thus having relatively inelastic demand. However, you’d be surprised by the implications of the rice market in global economies, especially within Southeast Asia. By looking at rice production fields, we can see how factors have stunted its growth, how it has impacted local communities. Thus, we can recognise the uncannily similar transregional struggles faced in other parts of the world, therefore being able to adopt similar actions to tackle our own personal crises.
The rice dilemma is a model that represents agricultural and social struggles within the region, which can be extrapolated on a global scale where it resonates with other socio-political issues.
Let’s take a look at…
The Straining Statistics of Rice
Upon looking at the general price trends of rice grains, nothing seems out of the ordinary. The valuation of rice is influenced by factors including supply chains, general demand and market speculations. According to Statista Market Insights, the price per unit (in USD) of rice has seen a gradual increase over the last 5 years by 27.6% , increasing from $0.98 to $1.25 (2018 – 2023).
Despite the price rises, the rice market is still expected to grow annually by 6.99%, with a revenue amounting to $77.12bn in 2023 (W’s in the chat). This outcome from a valuation standpoint is appreciated amongst producers, especially those within countries like Philippines and Indonesia, who spearhead market earnings alongside China, India and Japan.
You might be wondering… business is booming, so what’s the issue?
Well, if you take on the different stakeholder positions, it becomes clear that the market indicators do not represent the nature of the global consumer market. Due to the inelastic demand for necessity goods like rice, with it becoming a much more expensive commodity recently, there has been panic among buyers. Since the start of the year, there has been immense demand for the top Asian rice production hubs in short successions. Consumers across Europe, the US, Iraq and Iran are “trying to build stockpiles (of rice)” as a result of surging shipping costs arising from the start of the Ukraine-Russia conflict. Geopolitical tensions have disrupted supply chains, causing international and domestic freight costs to rise between 50 to 80% and forcing buyers to buy in bulk. Though the market indicators might imply a thriving rice market, it's a culmination of issues brought about by supply chain disruptions and bulk-buying behaviours.
Furthermore, the rice industry is challenged by adverse weather conditions that create agricultural issues. A critical concern arose among producers within the Indonesian community, where their crop fields have been threatened by dry weather circulating from the El Niño weather phenomenon. El Niño has significant impacts on weather patterns and ecosystems around the planet, typically brought about by the weakening of trade winds, upwelling suppression, and changes in atmospheric pressure. This climate phenomenon usually enables heavy rainfall in the central pacific, yet has caused drier conditions in the area – dealing a massive blow to the industry in Indonesia.
For example, in April 2023 rice plants in Karawang, Indonesia haven’t received any rain, causing the production field to rely on irrigation channels which have also almost been exhausted. As a result, farmers are considering delaying the next planting cycles, potentially leading to rice market stocks being brought down by a third from 2022. Other leading nations - notably India - are securitising their own stocks by limiting overseas sales, protecting domestic prices from surging higher and meeting local food security standards.
The Budget Grain
To add insult to injury, local businesses and the everyday consumer are left to adapt to rising costs on their own. As mentioned earlier, a large proportion of the Southeast Asian population relies on rice as a consumption. The financial pressures placed on consumers threatens regional food security, heightened by the reliance 61 million undernourished people have (comprising 9% of the total Southeast Asian population) on rice. Without any support, many households could be constricted further into poverty.
At the heart of all culture in the region lies the infamous street markets and food vendors, bustling with aromas and mouth watering flavours. With rice as a key ingredient to many meals, even local food stalls are having a bitter taste towards supply costs. After having an interview with a local food stall owner in Indonesia, The Straits Times shines light on the dependency of low-wage labourers on cheap meals with stable prices. In order to accommodate their needs, vendors cut portions in budget meals so as to not burden higher costs on their customers. The extremities of the situation have forced stalls to lean towards alternative low-quality grains and serve smaller rice portions. Ultimately, even with these budget cuts, their sales continue to decline in this period.
A Spoonful of Concern
The rice dilemma has created concerns towards standards of living and market stability in Southeast Asia, but with Southeast Asia being the sole provider for 10% of global rice imports, this issue cannot be looked at in isolation. As someone living abroad, the struggles of the rice industry have ripple effects that extend far beyond the region’s borders. It’s a common phenomenon observed that affects consumers globally, including the UK (not based imo).
Supply chain disruptions feed into the UK’s domestic price and export markets, which is a rice-importing region. Speaking from personal experience, there’s no doubt groceries have gradually become more expensive over the last year, rice prices alone have shot up by 23% on average in British supermarkets. Businesses like Eurostar Commodities are acting similarly to local vendors in Indonesia, finding cheaper ingredients to satisfy supermarket suppliers, caterers and restaurant chains. The UK faces a massive predicament with food insecurity as price shocks continue to fuel inflation alongside the cost-of-living crisis, Covid-19 and Brexit. Even though it’s a supply-side issue, households are likely to feel the pain as businesses unfortunately pass some of the burden of rising costs onto consumers.
I myself brought a whole bag of rice with me when i returned to the UK from Malaysia, also because it just tastes so much better - devoured 5 kgs throughout my last 8 weeks at uni.
If we take a step back and reflect on attitudes present between businesses in the UK and SEA, there’s a clear distinction in care for its consumers. If UK firms were to adopt some considerations made by Indonesian food vendors (i.e. embrace financial costs and retain stable prices), would that solve the financial issues faced by the everyday person? Would it help securitise the food industry? Or is it too theoretical of a solution to extrapolate into a larger financial model?
It's important to understand the rice dilemma in a holistic sense, as it contextualises the changes we feel on an economic and social level. We all come from different backgrounds and beliefs which determine our outlooks on life and adversity. The index questions the wider socio-economic approach to fundamental goods, and how conditions influence our decision-making processes.
The next time you walk into a restaurant or supermarket, consider the valuation of the goods you purchase - have they changed over a period of time? What justifies the market price of specific goods to differ more than others? Could we attribute reactions to these changes with cultural norms?
Live,
laugh,
love,
& eat rice.
Take care of yourself, touch base soon.
Your rice-eating fella,
Saud.