News flash: Walmart rations rice to Americans

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The global food crisis reached the United States yesterday as big retailers began to ration sales of rice in response to bulk purchases by customers alarmed by rocketing prices of staples.

Wal-Mart’s cash and carry division, Sam’s Club, announced it would sell a maximum of four bags of rice per person to prevent supplies from running short. Its decision followed sporadic caps placed on purchases of rice and flour by some store managers at a rival bulk chain, Costco, in parts of California.

The world price of rice has risen 68% since the start of 2008, but in some US shops the price has doubled in weeks.

Retail experts said there was little evidence of panic hoarding by the public but that restaurants and smaller retailers were buying up stocks at wholesalers in the expectation that the cost would go even higher. Shops said Filipino residents in the US were also making large purchases to send to relatives in the Philippines, where a shortage of supplies is causing concern.

“What you’re seeing is people who buy in larger quantities, who have a restaurant or a corner store, stocking up because of media reports that prices could go higher,” said Dave Heylen, a spokesman for the California Grocers Association.

The price of staple foods has been rising at an accelerating rate across the world, driven by what the United Nations has called a “perfect storm” of rising demand from developing countries such as China and India, the impact of climate change and policy responses by governments.

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15 Responses to News flash: Walmart rations rice to Americans

  1. Pete Smith says:

    Don’t panic, Mr Mainwaring! Uncle Sam will just ban all food exports. get the wagons in a circle guys, let the rest of the world starve.
    http://environmentdebate.co.uk/2008/04/24/us-food-shortages/

  2. matt says:

    Hmmm, wonder if this will happen here in the UK. Maybe it already is. I know someone who owns a restaurant who is very worried indeed. At some point people will stop coming to her little establishment if she increases her menu prices by too much. Unchartered waters … at least in recent times in the ‘west’.

  3. Pete Smith says:

    Wouldn’t do any harm to get in a few extras, just in case. Buy stuff with a LONG shelf life that you know you’ll use anyway. Baked beans, rice, flour, sun dried tomatoes, curry paste, cooking oil, cat food, gin.

  4. Pete Smith says:

    A Sam’s Club press release says the ‘4 bags per member’ rationing applies to 20 pound bags of imported jasmine, basmati and long grain white rice. This temporary restriction does not apply to retail-sized rice for sale in Sam’s or elsewhere at Wal-Mart stores. For some reason, it also doesn’t apply in New Mexico or Idaho.
    http://pressroom.samsclub.com/News/8226.aspx

  5. Dave, The Void On Fire says:

    Wow, I always said this would happen, but I’m still a little surprised now that it has.
    Readers of this blog probably already know all about how biofuels are responsible for pushing food prices, and about some of the droughts and crop failures we can certainly link to climate change.
    Another really major factor is speculation; traders fleeing the falling dollar and and the bursting-bubble housing market go for “safe” investments. This is pushing up the price of gold, but also more importantly the price of food.
    It remains the case that there’s enough for everyone’s need, even if there isn’t enough for everyone’s greed. Rationing is certainly something we have to talk about.

  6. the Grit says:

    Hi y’all,

    Well this just goes to show the value of keeping a year’s supply of whatever you can keep! Fortunately, for me, rice and pasta are on my list πŸ™‚ By the way, it’s within my rights to smile considering how many times I’ve been laughed at for the practice!

    Hi Pete,

    Of course we’d let others starve before our ow people suffered the same fate! If you think any other Government would do otherwise, then you need counseling.

    Hi Dave,

    Never fear, the value of the dollar, interest rates, and the housing market crisis are results of the current election cycle. Our two political parties are, rather stupidly, locked into a life and death struggle for power, and we small people have to suffer until the issue is settled. Unfortunately, our petty political squabbles affect the rest of the world, but that can hardly be blamed on us! As to climate change, the only trend we’ve seen lately is that the world is cooling off, but don’t worry, our politicians and Big Businesses have already bought into the scam, and massive, although fruitless, changes are on the horizon.

    Which brings me back to the need to stock up on non-perishable items…

    the Grit

  7. Pete Smith says:

    Hi Grit,
    Can’t argue with you. When all this fuss about food forces economies round the world to pull their horns in and look after their own, the anti-globalisation and local food crowds will get what they want.
    Pete

  8. neath says:

    If you are Wal Mart perhaps the real concern is getting “rice” to the Asian factories to fuel the people who make all their products.

  9. matt says:

    Good point neath!

    And yes Dave you are correct in that investment into food commodities by speculative sources running from a weak US economy/dollar are part of the reason food prices are spiking. China has recently capped prices of essentials. Pity the UK government bangs on about the wonder of free markets. Perfect storm.

  10. the Grit says:

    Hi Pete,

    Well you could at least try πŸ™‚

    Hi neath,

    You have an interesting idea, except that Wal*Mart doesn’t grow rice and that we grew more rice in America this year than last. The problem, almost certainly, assuming that some Secret Society isn’t involved, is rising prices due to fuel costs and the falling value of the dollar. While a 25% increase in rice price isn’t going to force my family into bankruptcy, it’s not inconsequential to the budget of small restaurants or large families, and these people are trying to save a bit of cash by stocking up now, before the prices go even higher. You also have to understand that one of the principle ways Wal*Mart and other large retail outlets save money is by efficient stocking practices. That means they go to a lot of effort to predict how much of each item they are likely to sell on a given day, and only buy and ship that amount. While this process only saves them a penny or two on each individual item, with the volume they handle that runs into some really serious money. It also means that they are not in a position to handle unexpected demand for a particular item, like bulk rice. Much the same thing would have happened if the population at large had taken the Government’s advice on how to deal with chemical & biological terrorist attacks, and suddenly tried to buy up all the plastic sheeting and duct tape.

    Hi matt,

    You’re most correct about the speculative market thing. You should also note that, here in the US at least, it’s becoming clear that this is the driving factor in the insanely rapid rise in oil prices. Our Government, in their massive wisdom, is now forming plans to correct this free market trouble. Heaven help us.

    On the other hand, it’s equally valid to look at these problems as being caused by the speed of modern communications. Considering that it would be much easier and less expensive to impose limits on free communication than on free trade, take a look at the China-Google deals, I would think we should all keep a watchful eye on developments in this area!

    the Grit

  11. matt says:

    I read this week that farmers in places like SE Asia now have more up to date information at their finger tips via things like the internet, including current market pricing for commodities like rice. They are at the moment holding back a bit because they know that prices are on the up!

  12. neath says:

    All good. But part of my point is that WalMart does not actually produce anything, it just buys, sells, commissions, etc. It exploits the producers while underwriting them regardless of where they are located…

  13. the Grit says:

    Hi matt,

    Farmers over here aren’t that fortunate πŸ™‚ Almost all commodities, like corn and rice, are, by extremely complicated law, priced at a national level, so corn from Tennessee brings exactly the same income per bushel as corn from Nebraska, and the individual farmer can’t demand more for his individual harvest. The only difference to the grower is what State taxes, on property and income, will snatch out of his/her check, and how much Government subsidy money he’ll get. On top of that, there is also a futures trading market, where the bold and daring can bet on what the sell price will be, and wager massive amounts of money on it. Most large scale farmers find it advantageous to use this economic device to cover their potential losses, the cost of which in turn reduces their profits in good years.

    What, and I’ll tell you even if you don’t want to know, really ticks me off is that no one told me how complicated farming was before I choose my college path! I grew up thinking that it was simple – stick a seed in the ground, collect whatever part of the plant someone wants to buy, repeat. Dang, if I’d know then what I know now, I’d have jumped into the field in high school! While we only have a small farm, it gives me the perspective to see that running a large farm would be a real blast! Beyond that, you get to drive a tractor! Until you get to do this, you aren’t likely to imagine how much fun it is. Still, I’ll try to explain.

    My tractor, a John Deer 6200, is only of modest size, but it does have an enclosed cabin, with heating, air conditioning, and a driver’s seat that has more adjustments than any luxury car. You need those because the thing has no shock absorbers built into the suspension. It also has 12 forward gears, and 4 reverse! Consider that in light of its 90 horsepower engine, and you can’t help but be impressed with its pulling power, which has allowed me to rip large trees from the ground and free loaded semi-trucks from our heavy clay mud, and you may get a sense of the heady power available to the driver! On top of that, I have the front loader attachment, which adds a mechanical arm to the front, that can be fitted with a multitude of implements, and which can lift two tons, or an average car. Love it! On the other hand, I am not at all fond of $4+ prices for diesel fuel!

    Hi neath,

    You can also state that as, Wal*Mart acts as a broker between the consumer and the manufacturer to insure that goods are produced and distributed as efficiently as possible, giving the consumer the best deal possible. As to the rules of international trade, Wal*Mart, or any other business for that matter, doesn’t have any control over them. If you have a problem with the current US trade deals, you should contact your Government representative and mention that they should get up off their asses and DO SOMETHING! At the moment, we have the opportunity to turn most all of the countries in North and South America into one huge trade block, which easily has the potential to kick China to the curb, while opening better markets to our products, but our Congress is playing stick-my-thumb-up-my-bum instead of taking the actions that will insure the future of generations to come. Thus, we buy cheap crap from China, and Wal*Mart distributes it in a most efficient manner. If the cheap crap comes from Mexico, they’ll do exactly the same thing. It would seem that the old saying of, “don’t blame the messenger,” is most appropriate.

    the Grit

  14. matt says:

    Grit, you’ll be glad to hear I’ve had the pleasure of driving tractors during agricultural work, one being a very big racy beast, which with me at the wheel became a little dangerous! πŸ˜‰

  15. the Grit says:

    Hi matt,

    Cool! The worst I’ve done so far was to take out a corner of the barn. Of course, the reason we inherited the farm was that the previous owner, my wife’s uncle, was killed in a tractor accident, by the one I drive. I was so cautious of the thing when we moved in that it took two days of sitting in the cab, reading the manuals and memorizing the controls, before I got up the nerve to start it. I’m still extremely cautious with it.

    The other large equipment items I’m anxious to drive are combines and bulldozers. Oh, and tanks πŸ˜‰

    the Grit

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