Food rationing returns to America

[editor]

Last time it happened was during World War II. Of course back then it was the government doing it. But now private companies are doing it:

"Sam's Club and some of the other big box grocery chains are rationing rice, cooking oil, and other staples because people are loading up as prices rise."

Feels a little like the third world.

[TheNiche]

Where's this going on? Why aren't they raising prices?

Gotta link?

[KatieDidIt]

Where's this going on? Why aren't they raising prices?

Gotta link?

Hmmm, I just bought two 5 lbs bags of rice from Randalls (big rice eaters, didn't know about riots and rationing) and it was the same price and plenty of it.

[editor]

Where's this going on? Why aren't they raising prices?

Gotta link?

Heard it on the radio. WINS/New York. The report said that it's effective immediately at all Sam's Club stores nationwide. There was a sound bite with someone in the restaurant business saying it makes sense, and that if his restaurant had a place to store it, he'd buy three months worth before the price goes any higher.

Glad I just bought rice (BTW: I always buy Texas rice.)

[TheNiche]

Heard it on the radio. WINS/New York. The report said that it's effective immediately at all Sam's Club stores nationwide. There was a sound bite with someone in the restaurant business saying it makes sense, and that if his restaurant had a place to store it, he'd buy three months worth before the price goes any higher.

Glad I just bought rice (BTW: I always buy Texas rice.)

Looks like the best source was this article.

The rationing only applies to imported long-grain rice.

[MidtownCoog]

That's OK. Rice is so "Third World".

Let them eat rice. They need it more than we do.

You know they have alreday been having food riots in India, Turkey and even Venesuela?

[Original Timmy Chan's]

Rice is so "Third World".

Worse than Third World...

[crunchtastic]

my bad, I posted the story links about 4:30, but like a dufus, in the oil thread. Enjoying the difference b/w the European/British and American coverage of the topic.

[cottonmather0]

Yeah, I don't get it. Why not just keep raising the price until you find the equilibrium point? If someone doesn't want to pay whatever higher price that is, then they can eat bread or salad or potatoes or whatever instead.

(and yes, I am aware that prices of all foods are going up, but the important point here is the relative price of the foods)

[westguy]

Worse than Third World...

I don't like Condeleeza either, but that is kind of rude.

[RedScare]

Yeah, I don't get it. Why not just keep raising the price until you find the equilibrium point? If someone doesn't want to pay whatever higher price that is, then they can eat bread or salad or potatoes or whatever instead.

(and yes, I am aware that prices of all foods are going up, but the important point here is the relative price of the foods)

Apparently, WalMart and Costco are trying to limit hoarding and black market selling of rice. It appears to be a move to allow the highest percentage of their customers to purchase at least some rice.

[TheNiche]

Apparently, WalMart and Costco are trying to limit hoarding and black market selling of rice. It appears to be a move to allow the highest percentage of their customers to purchase at least some rice.

Things are not always as they appear.

I call PR on them.

[westguy]

Raising prices too steeply during a temporary shortage would be perceived as gouging. If retailers are setting limits instead of raising prices, then the signal is that they also think this won't last very long. Since the article does not mention any cause, I'll just speculate that grains from China aren't fit for any consumption, so taking them off the market could've strained the rest of the supply.

[RedScare]

Raising prices too steeply during a temporary shortage would be perceived as gouging. If retailers are setting limits instead of raising prices, then the signal is that they also think this won't last very long. Since the article does not mention any cause, I'll just speculate that grains from China aren't fit for any consumption, so taking them off the market could've strained the rest of the supply.

Actually, they did mention a reason....poor harvests. Several of the rice exporting countries are considering restricting their rice exports because of the poor harvests, so that they have enough rice for their own citizens. Note the rationing only applied to imported rice, not US rice.

[N Judah]

I don't like Condeleeza either, but that is kind of rude.

They seem OK to me.

[RedScare]

Umm.....I think they are referring to the Rice OWLS.

[scottf]

I don't like Condeleeza either, but that is kind of rude.

I was unaware that Condeleeza blew goats. I'm not sure if that will help her chances to be picked as Mc Cain's VP candidate or not. I'm thinking maybe not.

[Porchman]

There was a very recent thread on genetically modified food (You know the one...The Niche and Mojeaux131, mano-a-mano) . While Mojeaux kicked it off with the Archer Daniels Midland conspiracy in the US (paraphrasing...somone has to), I was struck by how little was discussed about the global grain shortage. Not even Niche went there. Perhaps, it's because Niche isn't about awareness (or Prius's or Threatening to Move to Canada ). Seriously, though, this is a monumental crisis. We have several things happening:

-Developing nations like China have a growing middle class which consumes more meat, adding to heavy consumption in the western nations. It takes about 5 lbs. of grain to produce 1 lb. of meat.

-A bunch of western nations decided growing corn for energy was more important than growing grain for food.

-Population is booming.

-Global warming - our fair-weathered friend (if you're looking to sell palm trees in Prudhoe Bay) has ruined crops worldwide.

-Oh, and now we have Americans freaking out and hording food

I only mention this because with energy crisis on most minds, I don't see a lot of attention to this crisis. It is currently causing political instability in many nations and will stir yet more political unrest. Stay tuned!

[CDeb]

Global warming has ruined crops worldwide.

Has this been documented somewhere?

Thanks.

[Porchman]

Has this been documented somewhere?

Thanks.

Recent article:

http://www.reuters.com/article/environment...639116920070316

Oh, also forgot to mention water tables falling as another challenge to grain supply.

[lockmat]

Apparently Sam's isn't the only one doing it. This Costco is, too.

http://www.mercurynews.com/news/ci_9036860

[crunchtastic]

I only mention this because with energy crisis on most minds, I don't see a lot of attention to this crisis. It is currently causing political instability in many nations and will stir yet more political unrest. Stay tuned!

there is an enormous amount of attention to this story on the other side of the pond. Just not in the U.S media.

.....with the exception of this utterly boneheaded op-ed in the WSJ. Hmm, "market analysts" for the Quaker Strategic Growth mutual fund , dispensing food hoarding advice. This is offensive! Couching food hoarding as finanical advice in an enviroment where hoarding would cripple the supply chain.

http://online.wsj.com/article/SB120881517227532621.html

[Vertigo58]

You can only make so much out of Ramen soup right? Ramen casserole, Ramen lasagna, Ramen patties, etc.

[cottonmather0]

Apparently, WalMart and Costco are trying to limit hoarding and black market selling of rice. It appears to be a move to allow the highest percentage of their customers to purchase at least some rice.

Eh, so what if someone hoards? Isn't that the point of Sams Club selling 50lb bags in the first place? Raise the price and let them fill their whole garage with rice if they want to. Seems like it would be a good thing for the stores involved to sell everything they have at a higher price. All rationing does is provoke people to panic more.

Did anyone else notice some of these quotes? It's not that there isn't any rice, it's that the customers, particularly in California, are really particular about the kind of rice they eat:

"You can't eat this every day. It's too heavy," a health care executive from Palo Alto, Sharad Patel, grumbled as his son loaded two sacks of the Basmati into a shopping cart. "We only need one bag but I'm getting two in case a neighbor or a friend needs it," the elder man said.

http://consumerist.com/382141/costco-one-b...customer-please

The market is highly segmented by type of rice and quality, and buyers will generally not take a substitute, [uSDA economist Nathan] 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."

http://news.yahoo.com/s/ap/20080424/ap_on_...e/wal_mart_rice

[Porchman]

This is offensive! Couching food hoarding as finanical advice in an enviroment where hoarding would cripple the supply chain.

http://online.wsj.com/article/SB120881517227532621.html

Most Americans Money don't save money currently. So now they're going to save food?

He failed to deal with some of the other factors. Liquidity is probably good in a digestible sense. However, what about the risk in managing your cash this way? He totally failed to address weevils.

[cottonmather0]

Just as the energy squeeze SHOULD start putting pressure on consumers to consume less and producers to produce more, the food squeeze should do the same.

You know, with oil and natural gas, really big part of the blame right now lies with our own government, who prevents the building of infrastructure (refineries, pipelines, nuclear power plants) and the tapping of new domestic sources (drilling in ANWR, offshore florida). Similar speaking, agricultural subsidies and trade restrictions do the same thing for food.

For instance, the amount of arable land and cheap labor in Africa is tremendous, yet we don't allow most African crops into the country, or we tax them so much and subsidize our own farmers that their products are not price competitive to our domestic market. Similarly, the Russian and Ukranian Steppes are extremely fertile and capable of increasing production and we simply ignore those sources for our domestic production.

So yeah, the problem might be tight in the extreme short run, but in the long run there is plenty of excess capacity across the world if we would only be willing to tap it. And it would help plenty of poor people, too.

[Porchman]

Just as the energy squeeze SHOULD start putting pressure on consumers to consume less and producers to produce more, the food squeeze should do the same.

You know, with oil and natural gas, really big part of the blame right now lies with our own government, who prevents the building of infrastructure (refineries, pipelines, nuclear power plants) and the tapping of new domestic sources (drilling in ANWR, offshore florida). Similar speaking, agricultural subsidies and trade restrictions do the same thing for food.

For instance, the amount of arable land and cheap labor in Africa is tremendous, yet we don't allow most African crops into the country, or we tax them so much and subsidize our own farmers that their products are not price competitive to our domestic market. Similarly, the Russian and Ukranian Steppes are extremely fertile and capable of increasing production and we simply ignore those sources for our domestic production.

So yeah, the problem might be tight in the extreme short run, but in the long run there is plenty of excess capacity across the world if we would only be willing to tap it. And it would help plenty of poor people, too.

You're correct in that production and distribution are inefficient. That goes back to the whole issue of genetically modified food production - what downsides are we willing to accept. The dynamics are a little different, though. African nations are having a problem feeding their own people. Export is not exactly an issue for them right now.

Your comparison with the energy situation is valid. Taking it one step further, we know that production is not the only issue. Consumption is a significant factor. That's why China's middle class growth is a factor. Along with Americans, the Chinese are now putting their more carnivorous butts in Hummers, putting strain on food and energy.

[N Judah]

The dynamics are a little different, though. African nations are having a problem feeding their own people. Export is not exactly an issue for them right now.

I'd rather have Americans selling food to starving Africans than Africans selling food to starving Americans. (It sounds really cruel but I think it is true.) From my point of view I think agriculture is pretty much a national security issue.

[Porchman]

I'd rather have Americans selling food to starving Africans than Africans selling food to starving Americans. (It sounds really cruel but I think it is true.) From my point of view I think agriculture is pretty much a national security issue.

And energy?...like the oil we buy from the African continent for our energy (hem) starved nation?

It could pan out the way you devise, N Judah. Another 1930's-like-dustbowl just as everything is imploding economically for the U.S. Could be bad...ooh, could be soon, even. Hmmmm. Let's hope not. (Just in case, though, uh...Vertigo, will you share your Ramen recipes with us?).

[cottonmather0]

I'd rather have Americans selling food to starving Africans than Africans selling food to starving Americans. (It sounds really cruel but I think it is true.) From my point of view I think agriculture is pretty much a national security issue.

My point is that David Ricardo would tell Americans to focus on making pharmaceuticals (or bankings deals) and let the Africans grown the food. Agriculture is really the only real export product they've got (aside from natural resources) and America prefers to subsidize it's own farmers and block imports.

I realize that there are valid national security concerns and that the Africans themselves have infrastructure problems, but classical economics tells us that both countries (and I group 'Africa' as one big country for arguments sake) would benefit from freeing up agricultural trade. For the cost of our subsidies, the African nations would get much needed hard currency and investments and employment America would be able to devote more investment dollars to our comparatively advantaged industries (banking, pharma, entertainment, HAIF, etc etc).