Global Food Shortage Impact Felt in US as Wal-Mart Restricts Bulk Rice Purchases

The impact of rising food prices as a consequence of food shortages at a global level are being manifested in the United States as well, with Wal-Mart barring bulk sale of certain types of rice in its cash-and-carry businesses. Sam’s Club, the bulk supply division of Wal-Mart, announced it would put a cap of four rice bags per customer.

Sam Club’s announcement follows the announcement by rival chain Costco Wholesale Corp. that it would limit the number of bags of rice and flour to be sold per customer in California. The announcements about the upper ceilings follow concern over massive bulk purchases by customers owing to the rising cost of staple food globally.

Prices of staple foods have risen by two times over the last month, leading to the large-scale buying. There has, however, been still no indication that customers were indulging in ‘panic buying.’ The smaller retailers and also restaurants have, however, been acquiring grain stocks in large volumes, fearing further increases in food costs.

A spokesman for the Californian Grocers’ Association, Dave Heylen, said, “What you’re seeing is people who buy in larger quantities, who have a restaurant or a corner store, stocking up because of media reports that prices could go higher.”

Sam’s Club has issued a statement citing the reason for the restrictions. The statement says the restrictions have been placed considering the recent trends that have emerged in supply and demand. The restrictions are however limited only to Sam’s Club, and not to the regular Wal-Mart stores in the country.

Costco CEO James Sinegal said his firm would enforce the restrictions only in the case of unusually large purchase attempts. Trying to define

The geographies that would most feel the impact of these limitations would be California and Mexico. Both these areas have large populations of Asians and Mexicans, for whom rice is a staple food item.

According to Jim Degen, a food consultant and principal of Templeton, California, based food industry marketing consulting firm J.M. Degen & Co., “The warehouse clubs are doing it to protect their business customers, like smaller restaurants, caterers, nursing homes, day-care centers. The business members are the most important members in warehouse clubs because they generate so much more revenue per member.”

Prices of rice have been escalating rapidly after a World Bank official expressed fears that Thailand was likely to contribute to the food crisis spreading across the globe by limiting its rice exports. Thailand is currently the largest rice exporter. Already, countries like China, India, Vietnam, and Egypt have placed restrictions on rice exports to combat inflation locally and also ensure domestic supplies remained unimpaired.

James Adams, the vice president of the East Asia and Pacific department of the World Bank, said, “If a key exporter like this (Thailand) limits foreign sales, it would be very much like Saudi Arabia reducing oil exports.” In an interview Monday, Adams said the possibility of Thailand imposing restrictions on rice export would be directly influenced by the decision of other rice-producing countries.

There are other concerns as well. A World Bank Food Program official said Monday that there was a very real threat of a ‘silent famine’ in Asia, as escalating food costs could mean the poor no longer had access to even basic food products.