Commodity Trading on the International Market-Basmati rice and the word ‘premium’


The line on rice said: “For instance, it has imported a new brand of prepacked premium basmati rice at R16.25 for 1kg, while at STC loose-packed premium basmati rice costs R30 a kilo, the new price from last month.”

The Seychelles Trading Company has responded, claiming that the comment on the premium basmati “is misleading the public”. 
The article did say that consumers had not been told whether the difference in prices could be attributed to sourcing, quality or brand authenticity.

The STC has sent an email on the subject of price comparison and quality, which reads: “There is a wide range of basmati qualities and blends, and each will be tailored based on the price that one is willing to pay.

“The word ‘premium’ is not an objective parameter to compare rice. Any grade of basmati rice can be called premium, depending on what each importer wants to call it. So comparing the word premium with price alone, as if it means a standard quality, does not give the correct picture. In fact it will further confuse consumers and make them view the pricing of the STC’s good-quality rice with doubts.”

It is only after cooking that consumers will be able to compare the quality of Deenu’s rice to that of the STC. Experience and testing also help to determine the difference in quality. For the time being, consumers have the freedom of choice, to match affordability. 

It was expected that after trade liberalisation, the country would be open to different brands, varying grades and qualities of goods.

World rice trade needs another 10 million tonnes

Global rice trade needs to be increased by at least 10 million tonnes a year if prices for the staple grain are to be stabilised in the long-term future, the Philippines-based International Rice Research Institute (IRRI) said this week.

“If we can get 10m to 15m tonnes from somewhere else outside Asia, that can really help in terms of stabilising the market,” Samarendu Mohanty, head of the IRRI’s social sciences division, told Reuters, adding that surplus stocks from Asian exports have been dwindling over the years.

Four of the top five rice exporters, which combine to take a 70% share of total global rice trade, are Asian and include Thailand, Vietnam and India, all of which prioritise domestic food security over the need to trade and export.

“We need countries which will produce rice primarily for export, so there is no domestic security issue. South America is a possibility, but it has already over-utilised its land. I see more potential in Africa. If they have enough investment, they have the land and the water to produce it,” said Mr Mohanty.

Currently, around 7% of the world’s total rice production is traded globally, amounting to around 30m tonnes a year.
Since the turn of the millennium the global rice buffer inventory stands at around 85m tonnes, down by around 42% from the 2000/01 inventory stocks of 147m tonnes.

“I think we’re in a situation where we have low buffer (stocks) and we’re basically eating whatever we’re producing,” he said.

Is the worst of the economic downturn over?

The worst troughs of the global economic downturn could be over, although there remain risks ahead, according to the man who spearheaded perhaps the most complete study yet of the genesis of the current financial crisis.

Thomas F. Cooley is dean of the NYU Stern School of Business, which delivered its swift response to the financial turmoil, a collection of 18 papers examining different aspects of the phenomenon, to 100 leading US policymakers, including those inside the Obama administration, Congress, the Federal Reserve and financial regulators, bringing an appreciative response.

Cooley, who organised the production of the papers by 33 members of the Stern faculty over a period of just six weeks, told CNN he believed recent sharp rises in stock markets could herald the beginnings of a wider recovery.

“There are distinct signs of a recovery in the US economy, parts of Europe and elsewhere. There is a definite sense that the worst is over,” he said. “But there are still many risks in the system, and we need to be cautious in what we evaluate because a lot of the problems aren’t being addressed.

“For example, the recovery of the labour markets will be slow, partly because of the effects of monetary policy and the stimulus package.”

In another expression of guarded optimism, Cooley says that while the initial crisis was the worst since the Great Depression, the wider picture is very different.

“The economic consequences are not as severe, nor will they be, as compared to the 1930s,” he said. “That is because we have a better understanding and better tools, and because governments and central banks around the world have been very proactive in addressing issues.”

And now to the big question – how did the banking crisis happen at all? One element, Cooley says, is the sheer complexity of many modern banking techniques and the lack of proper oversight in how they operated.

“Many in upper management at the banks didn’t fully understand the risks involved,” he said.



Crude oil prices

As at 14/04/09

Nymex Crude Future                             56.85 dollars per barrel
Dated Brent Spot                                    56.23 dollars per barrel

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