What’s happening with Kilombero Rice?
We have been receiving lots of enquiries about rice and why we have been out of stock of brown rice for so long, when rice will be available to shops again and what is happening with the 90kg Challenge. This blog gives some updates that will hopefully help explain the situation.
What’s been happening with buying rice?
We started the process of negotiating a new rice contract with NASFAM (the national farmer association in Malawi) as far back as February 2022. At that point the dollar/sterling exchange rate combined with increased local sales in Malawi (giving rise to low rice stock levels there) meant the price was so high that buying then was not an option. We agreed with NASFAM that we would wait for new harvest rice, when supplies would be higher and of better quality, and the anticipated price would be lower. We knew this would mean there would be a period when we were out of stock of 1kg brown rice, but we had little option.
When we did agree a contract in summer 2022, it was for four full containers of rice, the most we have ever imported. None the less, the price was much higher than our previous imports, due to increased costs in Malawi linked to global impact of the Ukraine war, combined with the worldwide concerns around the increasing cost-of-living and the ongoing challenges with the dollar/sterling exchange rate. Unlike many businesses, a key part of any price negotiation for a fair trade business is ensuring that the producers (in this case rice farmers at KASFA) are being paid fairly and for us that meant accepting the higher price and working through the implications for the UK market.
Why is it taking so long?
The impact of the war Ukraine is felt by us and our suppliers, especially in terms of the cost of oil and gas. You will remember the huge spike in oil prices last autumn and each and every one of us continue to feel the implications of that. Well, in countries like Malawi and Sri Lanka it had the impact of shutting down supplies for power stations and transport as these countries could not afford to buy oil. For the Kilombero rice farmers this meant that the rice in trucks travelling to Lilongwe from Karonga where it is grown (700km north of the capital) actually got stuck at the side of the road – no diesel for several weeks. Then when it eventually got to Lilongwe for the final milling, because of electricity blackouts the milling took much longer than it should. A shipment of rice that should have reached us in October finally arrived in Felixstowe just before Christmas. After processing to ensure the product meets UK food safety standards, we received the first into rice into the warehouse in February 2023.
This has a huge impact on our business. As part of our fair trade credentials, we pay the producers 50% when we place an order and 50% on receipt of goods. The delays mean our capital is being tied up for much longer than normal (cash tied up for 9 months is very costly to any business). This obviously has a cash flow impact and means we can’t purchase other goods until some of that money comes back. This is where the fair trading model collides with our normal capitalist model – but if farmers were to be made to wait for nine months post-harvest they would starve.
So why do you still not have rice for shops?
The increased purchase price, combined with anticipated increases in logistics and UK processing costs, meant we had to look hard at the retail price of our rice. We felt the 1kg bags would be retail constrained (too high a price for most consumers). Most premium rice is sold in 500g bags and we decided it was time to follow the retail trend and move to 500g bags for our main retail pack. This has involved considerable work from the team in the design and planning of a new pack size. We expect to get the film from the manufacturers in later April and bagging will take place as soon after that as possible. We hope to rice in new look 500g bags by early May. Excitingly, this new rice film is recyclable, addressing the main point that the Ethical Consumer Magazine highlighted when they awarded Kilombero Rice “Best Buy” status in 2019.
We had some old film for 1kg bags which we obviously didn’t want to waste so we have bagged a limited amount of new rice into this old film and are selling this exclusively to schools, churches and community groups for the 90kg Rice Challenge, keeping the price as low as possible to make the challenge attractive as a educational fair trade activity.
We are really excited to show you the new look, recyclable 500g bags very soon – meantime we do have 3kg bags in stock and 25kg sacks too, available for sale. Please do sign up to our newsletter list if you are not already on it so you can be amongst the first to know when we are ready to take orders for the new 500g bags.
