Rice Shortages Hit US

“It can’t happen here.” Zappa

Run on rice makes its way to U.S.

“The global run on food that has led to shortages and riots in Egypt, Haiti and other nations has made its way to U.S. shores.

“Concerned about rising prices and limited supplies of staples such as rice and flour, customers across the country have been cleaning out the shelves at big-box retailers, including Wal-Mart Stores Inc.’s Sam’s Club and Costco Wholesale Corp. stores…

“This week, Costco said it had seen sales of flour, rice and some cooking oils leap. Some Costco stores already have held customers to just two bags of rice a day, but the chain doesn’t plan to limit sales nationwide.

“By midafternoon Wednesday, the Costco in Alhambra — which had not placed limits on purchases — said it had run out of rice.

“Prices for many foods, including beer, bread, coffee, pizza and rice, are rising rapidly as the nation contends with its worst bout of food inflation since 1990. The cost of groceries is climbing at an annual rate of about 5% this year.

“Retail experts said there was little evidence of “panic” hoarding by the public. It appears that restaurants and smaller retailers have been buying up most of the stock on the expectation that prices will continue to rise.

“Still, shoppers’ actions have taken some stores by surprise.

” ‘It is like a run on the bank. We don’t think there is a shortage, it is just increased shopping by customers who think there is,’ said Richard Galanti, Costco’s chief financial officer. For now, the retailer is allowing managers of stores with short supplies to set their own rules…

“Internationally, shortages of basic commodities — including rice, wheat and some oils — have led to protests and riots in recent months, prompting concern about food security in many poor countries.

“Runs on staples such as rice have consequences for the larger economy by adding to inflation and making it harder for the Federal Reserve to cut interest rates to ease problems in the financial and housing markets, said Milton Ezrati, an economist at investment firm Lord, Abbett & Co. in Jersey City, N.J…

“Since the fall, large producers such as Vietnam, India and Egypt have banned or limited rice exports to keep a lid on domestic food prices. China, another major producer, has taxed rice exports.

“But there is no dearth of rice in the United States. The Department of Agriculture projects U.S. rice supplies this year will be 8.3 million tons, nearly unchanged for the last seven years. Because Americans consume just 10% to 15% of what people in Asia’s big rice-eating nations eat, there’s plenty for domestic use, said Nathan Childs, a USDA market analyst. Rice consumption in the U.S. is so low that as much as half of the domestic crop is exported.

“Most rice is eaten within 100 miles of where it is grown. Just 8% of world production actually trades internationally, Childs said. So these new export limits and taxes have had an outsize effect on prices, he said…”

(Unabridged article)

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