Noon International: Food Trading Import Export

Wal-Mart, the world’s largest retailer announced last week that it would ration the rice each customer can purchase at it Sam’s Club stores because of recent “supply and demand trends”. “We are limiting the sales of Jasmine, Basmati and Long Grain Rice to four bags per member visit” the company said in a statement.
Costco, the USA largest warehouse retailer, last week made a public announcement stating it had seen increased demand for basic food staples as well like rice and flour. The company had a two 50 lb limit on rice purchases as well to keep people from hoarding and reselling the rice.

So how do we put the current rice situation into perspective?

The world has over 50 000 edible plants. Just three of them, rice, maize and wheat, provide 60 percent of the world’s food energy intake. Rice is the predominate staple for fifteen countries in Asia and the Pacific, ten countries in Latin America and the Caribbean, one country in North Africa and seven countries in Sub-Saharan Africa according to the FAO. This translates to the fact that rice is a staple food for close to 50% of the world’s population.

Over the past 3 months rice has surged from USD$400 MT in January to USD$770 in March. In the past week, the benchmark Pathumthani Thai rice was priced at $930/MT, which is up 52% in just a month, according to the Thai Rice exporters association.

Thailand, the world’s biggest rice exporter, has recently rejected selling some of its two million tones of rice stockpile as prices soar towards USD$1000/MT. As a result, global shortages and hoarding are emerging, with food riots recently in the Philippines, Haiti, Egypt and many African nations.
The UN warned in February that 36 countries, including China, face food emergencies this year as prices of rice and wheat soar, and world stockpiles of coarse grains fall to multi-decades lows.

So what is causing the increase in prices? Supply and demand? Yes, but what is behind this supply and demand equation.

There is no doubt that weather-related issues can take part of the blame however not all of it. Farmers in North America, Europe and some Latin American countries are switching to crops destined to the production of biofuels.

Government food subsidies paid to North American and European farmers have decoupled from production, this has put an end to an era of overproduction as global inventories keep coming down.

Global population keeps going up, the United Nations expect population to reach 8.13 billion by 2030, this is a 26% increase from 2005.

The industrialization of the Chinese economy is driving rise in per capita incomes hence an increase in living standards. So Chinese people have now more disposable income to buy food, the result is a change away from staple foods to include a more balanced diet of animal protein and dairy products. Nevertheless this dietary change has a multiplier effect on coarse grain consumption. Consensus is that two kilos of grain produce one kilo of chicken or one liter of milk. Three to four kilos of grain are required to produce 1 kg of pork and six to eight kilos are needed to produce 1 kg of beef.

So it isn’t only rice, it’s a bit more complex than just rice I would say. The effect of what is happening to staple foods in our global village is something worth considering since it is going to affect our pockets sooner rather than later.

Technorati Tags: Noon International, Rice, Food Riots, Wal-Mart, Costco

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Just recently I asked a friend of my in the China frozen food business about the new proposed draft law that is up for public comment. Below are their remarks which I find very interesting and shed light from a Chinese persons perspective.

As far as I see, Chinese Food Safety Law is mainly for domestic food safety control. I mean, that actually our exporting factories have been implementing much higher standard than the proposed draft law, long time ago. I think the highlight of the draft is the punishment for the producer of substandard food, they may face prison of up to lifetime in serious cases. Also the recall of un-safe food. However the draft only mentions very roughly about the recall. The detailed procedure has to be completed later after the Food safety law officially comes to effect. So I can not see what big changes to exporting factories yet. The only thing for sure is that China will control food safety more and more strict.

The above are my personal views only.

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China is getting serious about food safety. A new draft law released by the
China government will impose severe penalties, including jail time and possibly life imprisonment.

China is going all out to improve substandard food and penalize manufactures that are not up to par. They will be fined according to the severity of the offense or possibly jailed. The new initiative will implement new traceback systems to monitor food safety.

Some food companies (Nestle, Mars, and Coca-Cola to name a few) are complaining that the new standards will not change anything, but will just increase production cost.

Other countries are setting up their own systems to protect the imported product from China. The FDA (US Food and Drug Administration) is planning on opening a office in Beijing next month just to take such action.

Technorati Tags: Noon International, China, food safety

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Here is an interesting concept I just recently read in Garr Reynolds book presentationzen. Hara Hachi Bu - eat to 80% full is a slogan from Japan on dieting. This would be a good idea for us living in America the land of obesity.

Wouldn’t it be nice if we all ate to 80% full??

Imagine!!

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I found the following poll conducted by the Japan Youth Research Institute very intriguing. The poll indicates the following percent check for food safety:

• Chinese 41.6 percent
• South Koreans 19.9 percent
• Americans 17.5 percent
• Japanese 13.0 percent

My question is how do they check for food safety? I have never seen a sticker or other marking indicating the food is safe. Or does it mean that some societies just expect the food to be safe and there is no need to check for food safety. In Noon International dealings with frozen food exports we find that the Japanese border on fanaticism when it comes to food safety, why the disparity with the poll? Perhaps because we at Noon are not dealing with the end user.

The survey also asked if they bought food based on the health benefits, such as organic food. Again the results are interesting:

• Chinese 75.6 percent answered yes.
• Japanese 34.2 percent answered yes.

I know that through the centuries the Chinese have been conscious of health benefits. If you have ever been entertained by the Chinese, then you know how they will always tell you this food is good for such and such and this is good for that. So their response is normal. However seeing the Japanese response of only 34.2 percent seems strange. They always seem to go overboard if there are certain benefits derived from a food. If you tell them broccoli is good for cancer then they all run to the stores to buy broccoli. Fanatical.

What does it all mean?? It is just one of those mysteries.

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Here is an interesting email I received from a China colleague:

South Korea’s food safety authority said Friday that it is probing how a rat was found in a U.S.-made frozen vegetable products and demanded an immediate recall of the products.

“We would like to express our deepest apologies for causing inconvenience to our customers,” Costco’s Korean said at a statement.

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All commodity prices are soaring and rice is no exception. Rice is trading at an all time high as annual demand is increasing and outstripping supply. Several governments are curbing their exports.

Rice, is the major staple for about 3 billion people, has doubled in price over the last year on the commodity exchanges. It is estimated by the World Bank that 33 countries face potential social upheaval over such sharp price increases in rice and other basic staples. China, India, Viet Nam and Egypt have instituted curbs on exports with Indonesia most likely to join in on the curbs.

China experienced an 8.7 percent consumer price increase in February the highest in 11 years, while food prices jumped 28 percent, the most since last July.

The sharp rise in prices has put the 3rd world countries on edge and face potential social unrest if nothing is done to stop the soaring increases. The United Nations has warned that several countries face food emergencies this year as stockpiles are at a 26 year low for rice.

Will weather come to the rescue?

For further insight read the Bloomberg article, click here.

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Water chestnuts continue to be a major headache for importers this year. We have never seen pricing at this level in all our years dealing with China. Prices now have increased more than 30% over previous seasons.

What has happened? in addition to the rise in oil prices, labor cost, and the Chinese currency this year China was hit with one of the worst snow storms in its history. This natural disaster has had a major impact on agriculture products including pea pods, sugar snap peas and water chestnuts.

For water chestnuts the normal season is from ending November through March. Because the water chestnuts compete with pea pods, sugar snap peas and mushrooms during this same time period it is normal for the factories to produce the water chestnuts in November and early December and then again after Chinese New Years because they will produce the pea-pods, sugar snap peas and mushrooms between December and Chinese New Years. This year it didn’t work because of the snow storms damaging the crops. Consequently suppliers are facing sever shortages while prices are sky rocketing.

At present there is little inventory and quality of raw material is extremely poor. Based on this information, and with new crop 8 months away, it appears that pricing on water chestnuts has now were to go but up.

For those in pursuit of water chestnuts, now is the time to come to the plate.

Technorati Tags: Noon International, China, water chestnuts, pea pods, sugar snap peas

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