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Rice shortages in America? Unbelievable

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Reports that Wal-Mart Stores Inc.'s (NYSE: WMT) Sam's Club and Costco Wholesale Corp. (NASDAQ:CSCO) were placing limits on the amount of staples such as rice and flour that customers can purchase have left me stunned. It makes me think of the food rationing that went during World War II.

Food inflation is getting out of control. Prices for everything from cereal to pastries have jumped. Pizza shop owners are getting squeezed by soaring costs for milk, flour and cheese. Rice prices alone have soared 68 percent since the start of the year, according to Reuters. Think of that the next time you order takeout from your favorite Chinese restaurant. No wonder demand for Food Stamps is at a record.


Riots over food shortages are breaking all over the world as farmers have found it more profitable to plant corn for ethanol instead of food crops. The corn-based fuel additive is a bad deal for both the economy and the environment, according to many experts.

People are getting pinched every time they go to the supermarket, which is why they are stocking up at the warehouse stores where they can buy in bulk. At least they were until now. The companies, though, are trying to put a positive spin on the situation.

'Sam's Club said the large-sized bags of rice subject to the limits are typically purchased by its restaurant owner or food service customers," Reuters reported, adding that there were no plans to limit sales of flour and cooking oil "at this time." The news agency reports that some Costcos have put "limits on sales of items such as rice and flour, but it was trying to modify those restrictions to meet customer demand."

My guess is the businesses who buy their supplies at Sam's Club or Costco are probably too small to meet the minimum purchase requirements of food wholesalers. Of course, they will pass on their rising costs to the consumer.

The head of the California Rice Growers Association insists that supplies are adequate to meet demand. That may be the case for now, but you have to wonder what the future holds for rice and other food staples.

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Last updated: July 06, 2009: 01:31 AM

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