[food news] Sam's Club, Costco limit rice purchases as prices rise

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Sam's Club, Costco limit rice purchases as prices rise

The move comes as U.S. rice futures hit a record high amid global food inflation

April 23, 2008: 9:52 PM EDT

 

(AP) -- The two biggest U.S. warehouse retail chains are limiting how much rice

customers

can buy because of what Sam's Club, a division of Wal-Mart Stores Inc., called

on

Wednesday " recent supply and demand trends. "

 

The broader chain of Wal-Mart (WMT, Fortune 500) stores has no plans to limit

food

purchases, however.

 

The move comes as U.S. rice futures hit a record high amid global food

inflation, although

one rice expert said the warehouse chains may be reacting less to any shortages

than to

stockpiling by restaurants and small stores.

 

Sam's Club followed Seattle-based Costco (COST, Fortune 500) Wholesale Corp.,

which put

limits in at least some stores on bulk rice purchases.

 

Sam's Club declined to say if this is first time it has restricted sales of bulk

foods. The

limits affect 20-pound bags, not retail-sized portions. Costco President and CEO

Jim

Sinegal declined to discuss the issue Wednesday with an AP reporter.

 

Sam's Club said it will limit customers to four bags at a time of imported

jasmine, basmati

and long grain white rice.

 

Higher prices ahead

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.

 

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.

 

A smaller chain, Natick, Mass.-based BJ's Wholesale Club (BJ, Fortune 500), said

it is not

imposing limits for now.

 

" At the present time, BJ's Wholesale Club is not limiting the amount of rice

purchases

made by our members, but, due to the current market situation, that could change

at any

time, " spokeswoman Sharyn Frankel said in a statement.

 

In New York's Chinatown, shop owners said that they haven't seen people stocking

up

amid fears of rice shortages.

 

At Bangkok Center Grocery, one of the main suppliers of Thai food products in

New York

City, manager Tom Pongsopon said the price of a 25-pound bag of Jasmine rice at

his

Chinatown store has gone up from $15 to $20 in a matter of months.

 

" We have enough for now, but I'm not sure about the future, " Pongsopon said.

 

The Sam's Club restriction is effective immediately at all locations where

quantity

restrictions are allowed by law. It does not apply to other staples such as

flour or oil.

 

" We are working with our suppliers to address this matter to ensure we are in

stock, and

we are asking for our Members' cooperation and patience, " Reed said in a

statement.

 

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.

 

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.

 

Investors react

U.S. rice futures soared to an all-time high Wednesday 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 severe shortages of

the 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 including Haiti, Senegal and Pakistan.

 

Most of the rice eaten in the world is consumed within 60 miles of where it was

grown,

said Nathan Childs, an economist and rice expert with the U.S. Department of

Agriculture.

Traditionally very little of it was traded in the world market.

 

But as populations crossed borders, the taste for specialty rices such as the

Indian

basmati, or Thai jasmine rice, which grow only in their areas of origin, spread.

 

U.S. production of long grain and medium grain rice is strong, and the global

crop is

larger than ever, Childs said. But with some of the principal exporters of the

higher-priced

rices, such as India and Vietnam, shunning foreign sales to control prices at

home and the

cost of food generally going up, the price of rice has been climbing to new

heights.

 

What adds to the price spike -- and the run on specialty products like basmati

-- is that

rice consumers tend to be very loyal. The market is highly segmented by type of

rice and

quality, and buyers will generally not take a substitute, Childs said.

 

" California's had a pretty good crop, but basmati and jasmine consumers have a

history of

not switching, " he said. " They could always have bought cheaper Calrose. But

they don't. "