Rationing Rice

I spotted this story earlier but it seems to have disappeared from the UK newspapers. Ah well:

Reuters is reporting that "Sam's Club, the No. 2 U.S. warehouse club operator, said it is limiting sales of Jasmine, Basmati and long grain white rice 'due to recent supply and demand trends.'"

The story also says that Costco Wholesale Corp, the largest U.S. warehouse club operator, said yesterday that it has seen increased demand for items like rice and flour as customers stock up. Apparently, riots have broken out in other countries over food shortages and rising food prices.

Sister papaer, LATimes reports that Sam's Club "customers will no longer be allowed to purchase more than four bags of jasmine, basmati and long-grain white rice per visit. The policy involves only bags of 20 pounds or larger and does not affect consumer packages." The policy is in effect at stores across the nation.

This isn't really, about a shortage of rice nor of price rises. This is Northern Rock, all over again, but this time with food. That is, it's a liquidity crisis, not a solvency one.

The way those two companies have been able to reduce prices over the years is by making the supply chain more efficient. There's less food in the back of the store, less in total on their trucks, less in their regional warehouses, simply less food throughout their distribution chain. Exactly analagous to Toyota, just in time delivery and lean manufacturing.

So, if the hoi polloi turn up demanding 10 sacks of rice each, there simply isn't that quantity there: there will be in another few days, but not today.

Umm, actually, exactly like Northern Rock.

So obviously we should send Darling and Gordon over there to show them how to deal with such liquidity crises: gets them out of our hair for a bit, anyway.