Rice pressure causes price hike for Beneo-Remy

By Jess Halliday

- Last updated on GMT

Related tags Rice Cereal

Beneo-Remy has announced a price increase of 40 per cent across its
rice-derived ingredients portfolio to help counter the pressure of
greater demand on rice supplies and higher costs.

Rice prices have skyrocketed in the last year.

Since Beneo-Remy's operations are based entirely around rice - its food ingredients are rice-derived starches, flours, proteins and stabilised rice bran - the present situation has inevitably resulted in greater costs.

It says it had already worked to manage these costs internally, including making improvements to efficiencies.

But it calls the current story a "force majeur" - that is, out of its control.

Although prices vary on exporter and rice type, the International Rice Research Institute gives monthly exporter figures for Thai rice 5 per cent unbroken as a guide.

Between April 2007 and April 2008, the price of this commodity has rise from US$317 per tonne to a staggering $907.

The root causes of the rice price increase are manifold.

Droughts in Australia and floods in Bangladesh have meant that recent harvest have been below requirements.

In addition, as the price of other grains such as wheat have increased, people have turned to rice as a more cheaper alternative.

This has had the effect of increasing demand which, in turn, impacts on price.

And to compound this, some rice-producing countries have implemented export tariffs or restrictions in order to safeguard supply for their own populations.

This approach, adopted in Vietnam, India, Egypt, China and Cambodia, has been roundly criticised by international policy-makers, since it actually exacerbates the global problem.

According to Beneo-Remy, intervention stocks in Europe are already close to depletion.

It is also uncertain how global needs will be met between July and October, as 80 per cent of Europe's most recent harvest has already been used up.

Vincent Caluwaerts, sales and marketing manager for Beneo-Remy, told FoodNavigator.com that the company sources rice raw material from all over the world.

Throughout its 150 year history, this has enabled it to ensure quality and supply throughout the year.

For its baby food quality product, Beneo-Remy sources rice only from Europe, which allows it to have full control over traceability, right back to the farmer.

However Caluwaerts said that all its rice is subject to stringent quality controls, and standards will not be lowered in the face of high costs.

"We pride ourselves in providing our customers with the highest quality ingredients and will therefore not compromise this in the future," he said.

The increase, made public today, actually came into effect on May 1.

Caluwaerts was not able to comment at this time on whether prices for Beneo-Remy's ingredients will go down in the future, as the rice market stabilises.

In any case, the current situation is not expected to improve significantly in the next two to three years.

Beneo Remy, which is part of the Sudzucker-owned Beneo group (along with Beneo-Orafti and Beneo Palatinit) has production facilities in Belgium and Italy, and its sales base covers some 45 countries.

In addition to food, which makes up between 90 and 95 per cent of its business, Beneo-Remy also supplies rice derivatives to the cosmetics, pharmaceutical, textile, and paper industries.

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