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Thursday, April 24, 2008

Wal-Mart Rations Rice, Warns of 'Supply and Demand' Concerns

By Ken Sweet

FOXBusiness

Wal-Mart, the world’s largest retailer, said Wednesday that it would ration the amount of rice each customer can purchase at its Sam's Club warehouse stores because of recent “supply and demand trends.”

“We are limiting the sale of Jasmine, Basmati and Long Grain White Rices to four bags per member visit,” the company said in a statement. “This is effective immediately in all of our U.S. clubs, where quantity restrictions are allowed by law.”

Wal-Mart (WMT) is the second-major grocer to limit the purchasing of a commodity because of the recent run-up in prices. The company said it is not limiting the purchase of other basic food products like flour or oil.

The price of rice, which is the primary foodstuff for the majority of the human population around the world, rose to $894 a metric ton according to the Thai Rice Exporters Association. That’s compared to the $327.25 a ton average price in the same month last year.

In Chicago, the price of export-quality rice rose to $24.745 per 100 pounds on Tuesday.

The run up in price in rice is primarily related to poor harvests and countries curbing exports. Thailand, Asia’s largest exporter of rice, said it may curb exports.

The World Food Program called the recent run up in prices of rice and other basic commodities a “silent famine.”

Wal-Mart did not say when the rationing would end, but it was “working with our suppliers to address this matter to ensure we are in stock, and we are asking for our members' cooperation and patience.”

Costco (COST), the nation's largest warehouse retailer, said yesterday that it had seen increased demand for basic food staples as well like rice and flour. The company had a two 50-lb limit on rice purchases as well to keep people from hoarding and reselling the rice.

Jordan Mandelberg of FOX Business said a San Francisco-based Costco has basically sold completely out of its supply of rice. Only one pallet of white rice was left by the late morning in California.

Joe Morris of the California Rice Commission said the supply concerns stem from imported long-grain rice, not the domestic medium-grain rice grown here in the states.

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