Food crisis hits local supermarkets

As global rice prices jump in fear of rice shortage, effects just beginning to be felt in Israel.

supermarket 88 (photo credit:)
supermarket 88
(photo credit: )
As worldwide rice prices are hitting record levels in fear of a shortage of rice, the knock-on effects are just beginning to be felt in Israeli supermarkets. Shoppers at some branches of supermarket chains Supersol and Mega on Friday and Saturday were amazed to find signs limiting purchases to two kilograms of rice per customer. In a statement released Sunday, Supersol explained that its policy was an outcome of record rice prices, leading to concerns that hoarders might try to purchase significant stocks of rice and sell them once supplies dwindle. "The Supersol chain has limited the sale of rice to prevent merchants from hoarding the product and making a fortune at the expense of consumers," said Supersol in response to the move. As the limit was put on two packages of each variety of rice, the limit was not expected to have a major impact on the average consumer. Although by Sunday the restrictions were lifted, Supersol said that it was possible that the restrictions might be put into place again in the near future. Meanwhile Mega said the chain had no policy of restricting rice sales. At the end of last week, rice prices in Chicago advanced above $25 per 100 pounds for the first time on speculation more countries may introduce export curbs, reducing supplies needed to combat shortages and cool inflation. Rice, the food staple for half the world, has more than doubled in a year as China, Vietnam and Egypt curbed sales to safeguard domestic reserves. The gains have spurred social unrest in countries including Haiti and Egypt and prompted Wal-Mart Stores Inc.'s Sam's Club to limit rice purchases to four bags a visit in all US stores. David Finkelstein, CEO of Sugat, which imports 70% of Israel's rice, said that while no shortage was expected, the company was forced to raise prices as commodity prices surged. "We didn't want to raise prices earlier because of Pessah," said Finkelstein, showing consideration for the holiday during which Israelis traditionally rack up the largest food bill of the year. "But the prices will be going up in the coming days. In other countries, such as the US and Great Britain, the price of rice has already been raised by as much as 60% two months ago." The rice prices are just one aspect of the rising food bill which is being footed by the Israeli consumer, as a result of rising world food prices and energy costs, which affect the cost of food transportation. Finkelstein said he realized price increases were going to have a serious effect on many Israeli consumers, especially the country's poor. "It's not just rice; its potatoes and pasta and everything else," said Finkelstein. "There are no alternatives." Still the crunch is not having the effect seen in some of the world's poorest countries. For the past months riots have been breaking out in countries from Egypt to African Senegal to the Phillipines. Finkelstein attributed the price increase, which he said was part of the global food crisis, to four major factors. "China and India are growing major middle-class sectors, and as vast numbers of people in these and other developing nations are becoming more wealthy, they are consuming more meat and less grain. Since the stocks needed to feed livestock are vastly greater than the caloric output (one estimate has 700 calories of feed to produce 100 calories of beef) the total grain consumption in these countries is growing tremendously," said Finkelstein. Meanwhile, the areas used for agriculture in these countries are being depleted, with growing cities and industrial areas taking up more and more of the land. Furthermore, the spread of population and manufacturing is taking its toll on the water supply, which also leads to deteriorating harvests. Lastly, Finkelstein said the environmental policies of Western governments were having an effect on food prices. "As the governments of the United States and Europe move to adopt more ethanol and other biofuels to replace oil, farmers are sending more crops to refineries to supply the "cleaner" fuels," said Finkelstein. "More crops for biofuels means less for food, leading some to worry that the good intentions of environmental activists may leave some of the world's poorest people without food." But Guy Rotenberg, CEO of MarketPlace, points to another factor which is pushing up prices, one which has no connection to either farmers or consumers, but rather to the markets that bridge between them. "Today there are no good alternatives for investments," said Rotenberg in a GlobesTV interview. "So there is a very heavy flow of capital into the commodities market. I believe that this is the main factor driving up prices. World rice exporters, including India and Vietnam, have taken the matter into their own hands, curbing exports in order to ensure adequate domestic supply. That has forced prices up even farther." Bloomberg contributed to this report.