Rice flour cost hike alert adds to food inflation forecasts

Rice flour is mainly used as an ingredient in common food products, from baby food, desserts and soups to stews, coatings and batters. It is also used widely in gluten free products. Rice flour is usually derived from broken rice grains fractured during the milling process. The broken grains are deemed inferior and so are separated from the whole grains and sold as ‘Broken Rice’. 

Jason Bull, director, Eurostar Commodities warned several crucial factors had combined to create a European shortage of rice flour. “We are experiencing a severe shortage of rice flour right now, in Europe. 

“There are 50% less ‘brokens’ available due to problems in the Far East, namely the Myanmar coup and the COVID-19 pandemic in India, which have slashed production in half. On top of that we have a shortage of container and breakbulk vessel availability, increased freight costs as a result and taxation rates. 

‘Increased hospitality and foodservice demand’​ 

“We also have a new increased demand in the UK from the hospitality and foodservice sectors as we reopen. New TCA​ [EU-UK Trade & Cooperation Agreement] regulations since Brexit also decree that rice flour brought into the UK has to be made from European origin ‘brokens’. 

“To meet demand we are seeing manufacturers making rice flour by milling long grain rice at a ridiculous price which can only lead to massive price hikes on items like baby food that rely on rice flour as a key ingredient.”​ 

Clive Black, head of research at Shore Capital, noted recent ‘smoke signals’ across the global food chain, including from grocery giants Nestlé, Unilever, Kellogg and Danone flagging upward pressure on costs. Danone had stated price inflation in milk, ingredients, packaging and logistics, for example. 

Source: foodmanufacture.co.uk