Sam's Club, Costco Limit Rice Purchases
A surge in rice demand may be driven by reports of food shortages, riots.
April 23, 2008— -- NEW YORK, April 23 (Reuters) - Wal-Mart Stores Inc's Sam's Club warehouse division said on Wednesday it is limiting sales of Jasmine, Basmati and long grain white rice "due to recent supply and demand trends."
The news came as rice prices surged, with U.S. rice futures hitting an all-time high Wednesday on worries about supply shortages.
On Tuesday, Costco Wholesale Corp, the largest U.S. warehouse club operator, said it has seen increased demand for items like rice and flour as customers, worried about global food shortages and rising prices, stock up.
Sam's Club, the No. 2 U.S. warehouse club operator, is limiting sales of rice to four bags per customer per visit, and is working with suppliers to ensure the products remain in stock.
Warehouse clubs cater to individual shoppers as well as small businesses and restaurant owners looking to buy cheaper, bulk-sized goods.
With prices for basic food items surging, customers have been going to the clubs to try to save money on bulk sizes of everything from pasta to cooking oil and rice.
Sam's Club said is not limiting sales of flour or cooking oil at this time. Costco said some of its stores have put limits on sales of items such as rice and flour, but it was trying to modify those restrictions to meet customer demand.
Costco Chief Executive James Sinegal told Reuters that he believed the recent surge in demand was being driven by media reports about rising global demand and shortages of basic food items in some countries.
Food costs have soared worldwide, spurred by increased demand in emerging markets like China and India; competition with biofuels; high oil prices and market speculation.
The 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.
Rice prices have risen 68 percent since the start of 2008.
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. Rice is a staple in most of Asia.
On Tuesday, Tim Johnson, president-CEO of California Rice Commission, which represents growers and millers of rice in the state, said: "Bottom line, there is no rice shortage in the United States. We have supplies."