This week saw major retailers restricting commodity sales as supply lines crumpled in the face of rising demand. The Chicago Tribune warns that bakers are running low on rye flour, and the Wall Street Journal suggests “it’s time for Americans to start stockpiling food.” So what the hell is going on and how does it affect you?
The week of rationing was caused by demographics ganging up with bad public policy. China and India, with their billion-strong populations, want to eat real food, boosting demand just as supplies are diminishing. Tack on the price of oil, rising like a lost balloon, coupled with the government-induced ethanol high our farmers are enjoying, and you have yourself a mess.
The market processed all this data last week and had itself a conniption. Not “the market” as comprised of Lamborghini-driving Wall Street types, but the purer market made up of individuals acting to protect their economic interests.
Commercial bakers say they are stocking up on specialty rye and gluten flour because of fear that supplies are dwindling. And Costco’s chief executive said the big-box retailer is thinking twice about letting customers buy multiple pallets of flour to preserve supplies.
Restaurants and other large-scale customers appear to be buying so much rice that Costco, Sam’s Club and other wholesalers have put limits on the amounts they sell, leading some consumers to stock up. This has resulted in some individual stores in places like California reportedly running out of rice.
This isn’t Joe consumer doing the stockpiling, unless Joe consumer owns a bakery and an Indian restaurant. People are looking at supply chains and prices and independently determining that now is the time to stockpile because things are going to get worse, not better.
So what should you do? The New York Times offers anecdotal proof that you already know how to react:
Burt Flickinger, a longtime retail consultant, said the last time he saw such significant changes in consumer buying patterns was the late 1970s, when runaway inflation prompted Americans to “switch from red meat to pork to poultry to pasta — then to peanut butter and jelly.”
“It hasn’t gotten to human food mixed with pet food yet,” he said, “but it is certainly headed in that direction.”
Wal-Mart Stores reports stronger-than-usual sales of peanut butter and spaghetti, while restaurants like Domino’s Pizza and Ruby Tuesday have suffered a falloff in orders, suggesting that many Americans are sticking to low-cost home-cooked meals.
Over the last year, purchases of brand name cookies and crackers have fallen, according to Information Resources, which tracks retail sales.
The Wall Street Journal, that towel of smiles, boils down the essentials of surviving rising food prices and a Soviet/Sino attack:
You can’t easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.
Have you changed your buying patterns yet? Tell us in the comments.