How Guyana's 15% Rice Price hike heralds 50% drop thanks to Asian Rice Imports

You know that saying that Jamaicans have about something not being important unless it affects the price of Rice?

Well brace yourselves for a 10% To 15% increase in the price of Rice as reported in the article “Rice Price Going Up By 10 To 15 Per Cent”, Published Monday April 11, 2016, The Jamaica Gleaner.
 

So says Managing Director of Jamaica Rice Mills Derrick Nembhard who says that Rice imported form Guyana had already seen this increase in March 2016. Apparently the Guyana Rice Development Board has a pricing schedule for Jamaican importers that works as follows:

1.      US$400 per tonne once imports exceed 1,500 tonnes or more

2.      More than US$400 per tonne once imports are less than 1,500 tonnes

Jamaica imports the majority of its Rice from Guyana so importers plan to pass the increases on to Jamaicans consumers. Already some 80,000 tonnes of Rice has been slated to be imported from Guyana for all of 2016 by Jamaica Rice Mill. This curious pricing policy seems aimed at making buyers of Rice increase their Rice contracts above 1,500 tonnes.

So why is Guyana doing this?

Guyana increase price for low Rice contracts – Rice Price falling on Global Market

The reasonable logic is that drought would create a shortage in the supply of Rice, driving up demand as is happening in Jamaica as predicted in my blog article entitled “How the Drought of 2015 means higher prices for Jamaican Christmas 2015 and Easter 2016”. 

However, the fact that Guyana wants you to buy more Rice for less money but penalizing you with a higher price if you buy less than 1,500 tonnes suggests that there may be a glut on the global Rice market.

Currently in the Philippines, the price of Rice has been falling due to oversupply as noted in the article “Rice prices declining – Palace”, published April 11, 2016 By Delon Porcalla, The Philippine Star. 

87% of the world's total Rice production comes from the Far East, mainly:

1.      Bangladesh

2.      China

3.      India

4.      Indonesia

5.      Korea and Japan

6.      Myanmar

7.      Pakistan

8.      Philippines

9.      Thailand

10.  Vietnam

Guyana, feeling the pressure from the increase in imported Asian Rice and fearing the fallout of competition, may be trying to secure themselves. By imposing higher prices for smaller future contracts may be their way to stave off the inevitable flood of cheaper Asian Rice.

50% cheaper Asian Rice in 2016 – Rice Pudding trend on the horizon

So initially the price of Rice in Jamaica will increase by 10% To 15% and then fall spectacularly by up to 50%…….. as Chinese merchants switch to importing Asian Rice to avoid the more expensive Guyana Rice.

At least for those of us who shop downtown like myself as noted in my blog article entitled “KSAC and NWC and the Raw Sewage problem in Downtown Kingston – How to restore order by making Downtown safe for Vendors and Shoppers” this will be welcome relief but a death knell to Guyana Rice farmers.

So, Rice cakes as reported in the article “Forget cronuts - Rice pudding sales soar as it becomes 2016's hottest food fad”, published 10 APRIL 2016 by Helena Horton, UK Telegraph might move from being a fad to the latest food trend of 2016 in Jamaica with all that cheap Rice.

This as Guyana's Rice hike heralds Asian Rice, which is 50% cheaper than Guyana Rice, coming to flood the Jamaican market.