Panic over rice prices hits California + US stores forced to ration rice (panic buying)

apr 25, 2008

---------- Forwarded message ----------
From: ven

Cheap food era is over, says ADB
P. S. Suryanarayana

"Impact of rice price increases in Asia is very, very serious"
SINGAPORE: The rice stocks across Asia "are the lowest in decades" but
there is no cause for a "doomsday picture of huge scarcity," according
to the Asian Development Bank (ADB).
http://www.hindu.com/2008/04/25/stories/2008042555841400.htm

Panic over rice prices hits California
http://www.azcentral.com/news/articles/2008/04/24/20080424ricepanic24-on.html

US stores forced to ration rice
http://www.theaustralian.news.com.au/story/0,25197,23595722-2703,00.html

Asa Wahlquist | April 25, 2008

THE panic over global food shortages and rising prices gripping
developing nations has spread to the world's wealthiest countries,
with giant US-based retailer Wal-Mart rationing rice sales.

Wal-Mart's warehouse chain Sam's Club became the second retailer in
the US to limit bulk purchases of rice this week, citing "recent
supply and demand trends". Earlier in the week, Seattle-based Costco
Wholesale Corporation imposed limits in some stores on bulk rice
purchases.

The extraordinary move constitutes the first time food rationing has
been introduced in the US. While Americans suffered some rationing
during World War II for items such as petrol, light bulbs and
stockings, they have never had to limit consumption of a key food
item.

World rice prices have more than doubled in the past year as demand
has outstripped supply, with the drought-ravaged Australian crop
blamed for contributing to the problem.

Australia's rice production has collapsed, with many farmers given a
zero water allocation from the Murray River. This year's crop will be
the smallest since 1960, with exports barely a 10th of recent years.

Until 2002-03, Australia exported on average 620,000 tonnes of rice a
year - or 80 per cent of what it produced. But figures compiled by the
Australian Bureau of Agricultural and Resource Economics show the
2007-08 export crop will be 70,000 tonnes, with no improvement the
following year.

Around the world, countries are restricting exports of rice and other
grains as food prices rocket and nations move to ensure their own food
security. The international price of rice has risen 118per cent in the
past year despite world rice exports rising from 22.7 million tonnes
in 2000 to a forecast 29.6 million tonnes this year.

Gary Helou, chief executive of Australian rice exporter Sunrice, said
the accusation that the drought in Australia was causing food
rationing in the US was "terribly ill-informed", saying Australia was
a small player in the global rice market.

Ricegrowers' Association president Les Gordon agreed, saying prices
were high due to "a straight-up case of supply and demand". "Supply
has been slowly dwindling all around the world for the last 10 years,
and it became apparent to our grain marketers 12 months, two years ago
that it really was heading for a very low level," he said.

He is bemused by US supermarkets blaming Australia for shortages. "I
can understand them having a run on rice in the supermarkets, but how
they could tag that to drought in Australia is ... nonsense. None of
our rice goes to America."

In Britain, rice is being rationed by shopkeepers in Asian districts
to prevent hoarding.

Wal-Mart said Sam's Club, which sells food to restaurants and other
retailers, had limited each customer to four 9kg bags of long-grain
white rice per visit.

Sam's Club spokeswoman Kristy Reed would not comment on whether the
problem was caused by short supplies or by customers stocking up in
anticipation of higher prices.

"We are working with our suppliers to address this matter to ensure we
are in stock, and we are asking for our members' co-operation and
patience," Ms Reed said in a statement.

US Rice Federation spokesman David Coia denied there was a rice
shortage in the US and suggested the panic run was due to small
restaurants and retailers buying rice in larger quantities than usual
to avoid higher prices.

Sam's Club has 593 stores, compared with 2523 Wal-Mart Supercentres
that combine a full grocery section with general merchandise. Costco
has 534 warehouses worldwide.

Costco Wholesale, the largest warehouse operator in the US, said this
week that demand for rice and flour had risen, with customers
panicking about shortages and hoarded produce.

Tim Johnson, of the California Rice Commission, said: "This is
unprecedented. Americans, particularly in states such as California,
have on occasion walked into a supermarket after a natural disaster
and seen the shelves are less full than usual, but we have never
experienced this."

In the past three months, wholesalers have experienced a sharp rise in
demand for food items such as wheat, rice and milk as businesses have
stocked up to protect themselves against rising prices.

Global rice prices have risen about 70 per cent this year, partly
because countries such as China and India - whose economies are
booming - are buying more food from abroad. Poor crop yields have
contributed to the trend, raising concerns of severe shortages of the
staple food consumed by almost half the world's population.

Food prices have also been driven up by increased demand for corn -
the grain that is fermented to produce ethanol, the biofuel. Similar
jumps in the price of wheat, corn and soybeans have led to riots in
Haiti, Senegal and Pakistan.

Key rice producers have banned exports of rice to ensure their own
people have access: India, China, Vietnam and Egypt have blocked
exports and so demand for rice from countries such as the US has
increased.

Additional reporting: The Times, AP