Recently, we saw a private label rice bid increase the entry price of jasmine rice twice in two weeks, and we may see the bid increase even more before the bid close date. While this type of activity is not unheard of, it does beg the question: What is going on with the price of jasmine rice, and why?
In the past 3 weeks, the FOB Thailand price of jasmine rice and scented rice has increased 5% – 7%, and specialty rice has increased 18% – 63%, depending on the variety.
Two reasons for this price increase:
Currency Exchange increased 4%-5%, a double whammy for Canada:
- Canadian currency has depreciated against the US dollar.
- Thai currency appreciated against the US dollar and increased the export price accordingly.
- Jasmine rice production decreased 30% due to a recent draught.
- Farmers hold off the stock and wait for the government to purchase at a higher price.
The current stockpiles of Thai government rice pledge scheme are about 22 million metric tons with some stockpiles approaching 4 years old (well passed any reasonable storage time for this variety of rice.) Furthermore, the mismanagement in private inventories has made the quality even less accountable. Many buyers are concerned about quality deterioration and possible food safety issue.
We are taking extreme caution to guard the quality of our products, particularly the private label products we sell to grocery chains. It’s our mandate to protectand build our clients’ private brand.
Private brand should grow more than the category growth, if done properly. That means right product variety, pricing and most importantly, accountable quality. One chain’s private label rice share has decreased three years but is showing double digit growth with mostly repeat sales since we began supplying them in November 2011.
Consumers want value, not just low price. Consumers now are sophisticated in product knowledge and quality awareness. They often know more than the buyers!