Retailers, consumers and prices
Who knew a grain of rice would cause a global ruckus?
That situation has sparked food riots in several African countries, Indonesia, and Haiti. United Nations Secretary-General Ban Ki-moon has warned that higher food prices could hurt global growth and security.
But the effect of rising prices took a surprising turn this week– at least a surprising turn by U.S. standards — when it comes to sales of rice.
Rice prices in particular have surged this year as exporters curb supplies. Trade bans on rice have been put in place by India, the world’s second largest exporter in 2007, and Vietnam, the third biggest, in hopes of cooling domestic prices.
The move caused warehouse club operators Costco and Sam’s Club, which sell large bags of the staple item and have lots of small restaurant owners as their customers, to limits sales of rice.
Wal-Mart’s Sam’s Club warehouse chain said it was limiting sales of 20-pound (9 kg), bulk bags of Jasmine, Basmati, and long grain white rice to four bags per customer per visit, at all of its locations. It cited “recent supply and demand trends.”
Costco’s CEO Jim Sinegal said he thought the sudden surge in buying was being triggered by constant media reports highlighting food shortages and rising prices. He said the warehouse club was trying not to limits sales of the items.
“If it’s a Chinese restaurant who buys from us all the time we can’t tell them, ‘Why don’t you try french fries this week?” he said, “They need rice.”
If it does run out of supply, Sinegal said Costco is usually back in stock by the next day.
“We don’t want to create a panic situation,” he said.
Tell us … Have you been stocking up on certain items amid rising prices?
(Reuters photo and graphic)