[R-G] Sam's Club rationing rice

[Anthony Fenton]

Sam's Club rationing rice
http://www.thestar.com/Business/article/417731
Many stores in the U.S. are limiting bulk sales of some kinds of the  
grain as supply fears leap
Apr 24, 2008 04:30 AM
Dana Flavelle
business reporter

In another sign the global food crisis is hitting North American  
consumers, Wal-Mart Stores Inc. says it is limiting sales of some  
kinds of rice at many Sam's Club warehouse-style stores in the United  
States due to "recent supply and demand trends."

Sam's Club customers can buy up to four bags of jasmine, basmati and  
other white long-grain rices, Wal-Mart said yesterday.

The news comes a day after Costco Wholesale Corp., the biggest U.S.  
warehouse-club operator, said customers worried about global food  
shortages were stocking up on rice and flour. Costco said it is not  
formally limiting sales but is watching supplies closely.

"There's been an increase in purchasing, but we think it's  
manageable," Costco CEO James Sinegal told Reuters news Agency. "At  
the moment, we think we have it relatively under control." If a  
customer "wants 10 pallets of flour, we'd probably say, `No, we can't  
give you that. We can give you one pallet,'" Sinegal said.

So far, no signs of shortages or hoarding have surfaced in Canada,  
spokespeople for Wal-Mart and Costco said yesterday.

Both Sam's and Costco cater to bulk buyers.



"While select Sam's Clubs in the U.S. have put some restrictions on  
very large purchases of specific specialty rice grains, we have not  
seen that need yet," said Kevin Groh of Wal-Mart Canada Corp.

Costco Canada said it hasn't seen any change in customers' behaviour.  
"There's nothing noticeably different in our business, except for the  
pressures on pricing," said spokesperson Ron Damiani.

The cost of basic grains, such as wheat, corn and soybeans, has been  
soaring due to demand in fast-growing economies, such as China and  
India, rising fuel and fertilizer prices, competition from biofuels  
and market speculation.

But rice is a different story.

Rice is not a biofuel, but the amount of available wet, flat land to  
grow rice in is declining due to increased urbanization and flooding  
by new hydroelectric dams in Asia.

The shortage is a worldwide food crisis that is hitting poor countries  
much harder than the developed world, noted David Dunne, an adjunct  
professor of marketing at the University of Toronto's Joseph L. Rotman  
School of Management.

"In the case of rice, the major cause is demand: with the rapid  
development of India and China and the growth of the middle class,  
demand for rice and other grains has skyrocketed, and prices have gone  
up accordingly."

In a bid to cool demand at home, some developing countries have  
imposed limits on exports, including India, Vietnam and Egypt.

Costco's Sinegal said he believes the recent jump in demand was  
prompted by media reports about food shortages in some countries. He  
cautioned against "creating a panic situation." If an item sells out,  
he said, it's usually back on store shelves by the next day.

Meanwhile, the price of wheat fell to six-month lows yesterday on  
speculation India, the world's second-biggest consumer, will produce  
enough to replenish stockpiles this year and reduce the need to import.

Wheat futures also declined on more favourable weather in the U.S.,  
falling 4 per cent on the Chicago Board of Trade to $8.315 (U.S.) a  
bushel for July delivery. However, the contracts are still up 68 per  
cent over this time last year.

With files from Reuters News Agency