Supply's fine, but U.S. shoppers snap up rice
— -- The run on rice in the USA that prompted warehouse clubs last week to limit purchases appears to be a reaction mainly to concerns about its rising price, rather than to a real shortage of the staple.
There's enough U.S. rice for now, but both domestic and international stocks are tightening.
"I don't believe that we're anywhere near any kind of shortage of rice for the domestic market," says Dwight Roberts, president and CEO of the US Rice Producers Association in Houston.
The Agriculture Department projects that U.S. farmers will plant 2.8 million acres of rice this year, up slightly from last year.
However, that's the second-smallest crop in nearly two decades, and carry-over stocks of rice are expected to decline sharply as U.S. exports rise to meet world demand. Worldwide, U.S. rice stocks have fallen by nearly 50% from record levels of 2001.
Exporters are hoarding rice and importers are building up their supplies even though, "USDA data suggest that the availability of rice is just as plentiful as it was the last two years," says economist Bruce Babcockat Iowa State University.
Roberts says the worldwide outlook is nerve-wracking. "When you have the lowest world stocks in (wheat and rice) since the '60s and the '70s and you add some population with that," he says, "you're headed for a train wreck sooner or later."
High food prices and shortages have led to riots in some impoverished parts of the world.
At Marina Food, an Asian supermarket in the Silicon Valley suburb of Cupertino, Calif., manager David Tsaisays that the wholesale price of jasmine rice from Thailand has suddenly shot up more than 50%. That's forced him to raise his retail price sharply to $22.99for 20-pound bags.
If the world's rice supply shrinks, many Asian stores and restaurants would have a rough time. Tsai's supply is adequate for now, and Marina's customers who like jasmine rice have switched to lower-priced rice from Japan and northern China.
"It's just like gasoline," Tsai says. "The prices go crazy, and customers cannot afford it."
Limits on purchases at warehouse clubs
At Sam's Club, Wal-Mart's warehouse chain, members cannot buy more than four wholesale-size 20-pound bags of imported jasmine, basmati and long-grain white rices. The restriction does not apply to smaller retail bags of rice sold in Sam's Clubs or Wal-Mart stores in Idaho and New Mexico.
In a statement Friday, Sam's Club said the limits aim "to prevent large distributors or wholesalers from depleting our stock." The company said it is working with suppliers to manage inventories.
Costco, which also has limited sales of some types of rice at some outlets, could not be reached for comment.
The unusually high demand for rice may also reflect increasing consumer nervousness about food prices.
A recent USA TODAY/Gallup Poll found 73% of consumers concerned about surging food bills. The Agriculture Department now predicts consumer food inflation could hit 5% this year, on top of a 4.5% increase in 2007. In comparison, food inflation averaged about 2.4% earlier in the decade.
Price increases are due to a number of factors, including increasing worldwide demand, bad weather in some producing nations, rising costs for energy and fertilizer and the booming ethanol industry, which is set to consume 30% of the coming corn crop.
In a sign of escalating food politics, Texas Gov. Rick Perry on Friday asked the federal government to attack "skyrocketing" food prices by cutting in half federal mandates for corn-based ethanol. Perry, a Republican, argued that higher corn prices were hurting consumers and Texas' large cattle and poultry industries.