business news in context, analysis with attitude

Citing high demand and tightening supplies, Wal-Mart announced yesterday that its Sam's Club membership warehouse stores will begin rationing sales of several kinds of rice, including long grain white, basmati and jasmine. No similar rationing program has been announced for the company's Wal-Mart Stores, and the company has not announced the rationing of any other product categories at this time.

The Sam's Club rationing only is being implemented in areas where local laws allow retailers to limit the quantities of products that they sell.

Meanwhile, the Seattle Post-Intelligencer reports that Costco " is seeing higher-than-usual demand for staple foods such as rice and flour as consumers appear to be stocking up," but that the company has so far been able to manage supply without limiting how much consumers can buy. ""If we run out, we're usually back in stock the next day," Costco CEO Jim Sinegal tells the paper.

These trends seem to be just a small part of a much larger global food crisis, called a "silent tsunami" by Josette Sheeran, executive director of the World Food Program, who notes that the food crisis in plunging already desperate nations into deeper crisis and greater cultural, political and economic turmoil.

The price of rice has more than doubled in the past five weeks, and the World Bank estimates food prices in general have risen by 83 percent in three years.

The Post-Intelligencer writes, "Unrest over the food crisis has led to deaths in Cameroon and Haiti, cost Haitian Prime Minister Jacques Edouard Alexis his job, and caused hungry textile workers to clash with police in Bangladesh. Malaysia's embattled prime minister is already under pressure over the price increases and has launched a major rice-growing project. Indonesia's government needed to revise its annual budget to respond." And, former U.N. Secretary-General Kofi Annan said more protests in other developing nations appear likely," though "long-term solutions are likely to be slow, costly and complicated."

KC's View:
Not to get overly philosophical about this, but it seems to me that since this situation probably only will get worse, the people of this planet are faced with a choice – work together in a way that makes the world not just flatter but more cohesive, or continue down our current path, in which divisions seem deeper and the future, quite frankly, seems darker.

Unfortunately, I see little evidence that we are likely to find a better way. But maybe I'm just feeling cynical this morning.

In a more pragmatic sense, retailers and manufacturers in the US are going to have to start thinking about how they are going to explain these shortages to shoppers, who have largely become used to living in a land of plenty. Once again, retailers that create a sense of community with their shoppers – being a resource for information as well as a source of product – will find themselves having a differential advantage.