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The Honolulu Advertiser
Posted on: Thursday, April 24, 2008

Sam's Club limiting rice sales

Advertiser Staff and News Services

Hawaii news photo - The Honolulu Advertiser

Jenna Liu bought her allotted one bag of rice yesterday from Costco in Mountain View, Calif. Hawai'i Costcos aren't limiting customers' rice purchases, but some Mainland stores are.

PAUL SAKUMA | Associated Press

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The global run on food that has led to shortages and riots from Egypt to Haiti in recent weeks has made its way to U.S. shores, including Hawai'i.

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

Sam's Club stores in Hawai'i have signs informing members of new limits on jasmine, long grain and basmati rice.

As of Tuesday, Sam's Club members in Hawai'i are restricted to four "units" of each type of rice, according to a Sam's Club official, who asked not to be identified because he is not authorized to speak to the media. Long-grain white rice comes in 25- and 50-pound bags and jasmine and basmati are each sold in 20-pound bags, the employee said.

Sam's Club followed Seattle-based Costco, which put limits in some of its stores on bulk rice purchases. Costco president and CEO Jim Sinegal declined to discuss the issue yesterday.

But Robert Loomis, manager of the Costco on Alakawa Street, said the company's Hawai'i stores have not imposed restrictions on how much rice customers can purchase.

"No Hawai'i Costcos are limiting rice sales in Hawai'i," Loomis said.

Sam's Club blamed the new limits on "supply and demand trends" and said it was working with suppliers "to ensure we are in stock."

The policy does not affect smaller retail packages sold at its sister Wal-Marts. Wal-Mart spokeswoman Deisha Galberth said Wal-Mart stores have no plans for restrictions similar to those at Sam's Club.

"We are not seeing any signs of concern in the supply chain that would cause us to limit the sales of any items," Galberth said.

HEDGE AGAINST PRICES

Earlier this week, Costco said it has seen sales spikes for flour, rice and some cooking oils.

By mid-afternoon yesterday, the Costco in Alhambra, Calif. — which has not placed limits on purchases — said it had run out of rice.

Michael Yang, manager of two Hawai'i-style barbecue restaurants, decided now is the time to stock up. Yesterday, he bought 46 50-pound bags of medium grain rice and loaded them into his white van outside a Costco in Alhambra, nine miles east of Los Angeles.

He paid $15.39 each, which he said was a bargain compared with premium brands from Thailand that have nearly doubled to $40 for a 50-pound bag recently.

"The price of everything — oil, sugar — has been going up for months, and rice has been an issue for a few weeks already. Everyone else is doing the same thing I am because they use up their rice so fast," Yang said in Mandarin.

RICE FUTURES SOAR

Sam's Club declined to say if this is first time it has restricted sales of bulk foods. The warehouse chain caters heavily to small businesses, including restaurants. Sam's Club spokeswoman Kristy Reed said she could not comment on whether the problem was caused by short supplies or by customers stocking up in anticipation of higher prices.

Sam's Club has 593 stores, compared with 2,523 Wal-Mart Supercenters that combine a full grocery section with general merchandise.

Costco has 534 warehouses worldwide, most of them in the United States.

U.S. rice futures soared to an all-time high yesterday as investors bet that surging world demand will continue to pressure already dwindling stockpiles. Rice for the most actively traded July contract jumped 62 cents to $24.82 per 100 pounds on the Chicago Board of Trade, after earlier rising to a record $24.85.

Relentless demand from developing countries and poor crop yields have pushed rice prices up 70 percent so far this year, raising concerns of potential severe shortages of a staple food consumed by almost half the world's population.

The steep increases have followed similar jumps in the price of wheat, corn and soybeans that have added to Americans' growing grocery bill and led to violent food riots in poor countries such as Haiti, Senegal and Pakistan.

NO U.S. SHORTAGE

USA Rice Federation spokesman David Coia said there is no rice shortage in the United States.

"It's possible that small restaurants and bodega-type neighborhood stores may be purchasing rice in larger quantities than they do typically to avoid higher prices," Coia said about the warehouse chain restrictions.

Runs on staples such as rice have consequences for the larger economy by adding to inflation and so 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 company Lord, Abbett & Co. in Jersey City, N.J.

More heavy purchases of rice will just move U.S. inventory from warehouses and store shelves into cupboards or the storerooms of small restaurants, putting pressure on both supplies and prices and "compounding the problem," Ezrati said.

Since last fall, large rice producers such as Vietnam, India and Egypt have banned or limited rice exports in an attempt to keep the lid on their domestic food prices. China, another big producer, has placed taxes on 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 past seven years. Because Americans consume just 10 percent to 15 percent of what residents of Asia's big rice-eating nations devour, there's plenty for domestic consumption, said Nathan Childs, a USDA market analyst.

Rice consumption in the United States is so low that as much as half of the domestic crop is exported.

Most rice is eaten within 100 miles of where it's grown. Just 8 percent of world production actually trades internationally, Childs said.

Advertiser staff writer Dan Nakaso, the Los Angeles Times and Associated Press contributed to this report.