Costco: One Bag Of Rice Per Customer, Please
The NY Sun says that Costco has resorted to "rationing" bags of rice in California and flour and oil in New York due to limited supply:
The bustling store in the heart of Silicon Valley usually sells four or five varieties of rice to a clientele largely of Asian immigrants, but only about half a pallet of Indian-grown Basmati rice was left in stock. A 20-pound bag was selling for $15.99.
"You can't eat this every day. It's too heavy," a health care executive from Palo Alto, Sharad Patel, grumbled as his son loaded two sacks of the Basmati into a shopping cart. "We only need one bag but I'm getting two in case a neighbor or a friend needs it," the elder man said.Rice prices have skyrocketed in the past few months. Marketplace says prices are up 60-70%:The Patels seemed headed for disappointment, as most Costco members were being allowed to buy only one bag. Moments earlier, a clerk dropped two sacks back on the stack after taking them from another customer who tried to exceed the one-bag cap.
"Due to the limited availability of rice, we are limiting rice purchases based on your prior purchasing history," a sign above the dwindling supply said.
Shoppers said the limits had been in place for a few days, and that rice supplies had been spotty for a few weeks. A store manager referred questions to officials at Costco headquarters near Seattle, who did not return calls or e-mail messages yesterday.
An employee at the Costco store in Queens said there were no restrictions on rice buying, but limits were being imposed on purchases of oil and flour. Internet postings attributed some of the shortage at the retail level to bakery owners who flocked to warehouse stores when the price of flour from commercial suppliers doubled.
International demand is greater than the supply of available rice. That's led several key rice-growing countries to impose export restrictions -- resulting in even tighter supplies. Prices are also being driven by some of the same forces boosting all commodities -- a weak dollar and high fuel prices.Are the high rice prices hitting your home?
Food Rationing Confronts Breadbasket of the World [NY Sun] (Thanks, Ryan!)
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OK, so no basmati, but what about the sushi rice we grow in California and export to Asia?
A bag of brown rice at the regular grocery store has gone up. Where I live isn't a major rice consuming area most likely. I did notice that Sams Club quit carrying Dakota Maid flour and now only carries its own brand in much smaller bags. My guess is Dakota Maid is either raising prices or having issues filling orders since they are primarily a servicer for bakeries. Sams also changed the brands of olive oil they sell, ditching Colavita for some no name brand.
This price increase on rice is really annoying. We switched to eating more rice since everything else has gotten more expensive.
Like I've mentioned before here, I work at a Costco in Canada.
I actually work in the food aisles and so far, nothing has been out of the ordinary for rice/flour/oil save for the rise in price. Can't imagine it staying like that very long though, when something happens to the US stores, we soon see it happening up here.
What are you talking about "priced correctly"? At any given moment a commodity is generally ALWAYS priced correctly because that price point is the result of supply and demand. The prices of food commodities have been going up because demand has been going up while supply isn't keeping up. So I don't know what you're spilling on about with "true" market values. It's not like one day everyone decided to raise prices for no reason.
Gas is more expensive in Europe due to taxes...blahhhh
You know what, nevermind. I forget not everyone knows basic economics.
European gas prices are so high because European gas taxes are much higher. While I don't disagree that the current price of gas may not reflect the true price, including externalities, the European price doesn't actually give us any additional information.
In other news, the Costco in Queens issued quantity restrictions on lace-trimmed drapes, hair gel and aftermarket car spoilers.
@doireallyneedausername: Im sorry but the idea that gas SHOULD be 6 dollars is a completely false observance of two completely different areas of the world.
The reason why American gas is so cheap, has a LOT more to do with our Natural Gas infrastructure being very robust and widespread across ONE country. In Europe your talking about multiple countries many of which have little to no gas production facilities whatsoever, and where even the production capable ones couldn't come close to comparing to the production capacity of just say New Jersey.
We have cheap gas because our money WENT to making it cheap. Our production costs are lower and our capacity to produce is much higher here.
Add on to that fact that unlike Europe, our gas is not taxed to death.
So no gas shouldnt REALLY be 6 dollars. If anything it should be CHEAPER, but thats a different story.
Mind you this has no baring on my idea that we should get away from natural gas. But I am tired of people comparing the US to Europe or elsewhere without ever taking into consideration the reasons WHY things are different and just compare them like they are on a equal footing.... Dont even get me started on the myth that American public schools are worse than European....
True prices for gas? It costs Saudia Arabia about 50 cents a barrel to stick a straw into the ground and get the oil out. The profits are HUGE. The "true" price of gas is certainly far less than $3.50 a gallon.
As for rice rations - I don't things are that bad out there yet. I think everyone is getting a little carried away. Our food is not going to run out. Will it be too expensive to buy? that is another question.
@Falconfire: Also, in Europe you get education and health care from the government. Those taxes help pay for that.
We all pay for it. It's just that in the US you more directly pay for it instead of paying the government which then provides the services.
It's tiring to watch people whine about the taxes and not think about the reason behind it.
The U.S. government also pays a boatload of our crude costs via our mad crazy military spending. What this has to do with the price of rice is beyond me, though.
@doireallyneedausername: I think the reason the Europeans pay much more for gas, ultimately, is because the people did not do anything to stop it. Granted, there are many reason why gas (and other things) are more expensive- but it all boils down to whether the populace takes it in the ass, or decides to stand up for their rights.
I refuse to pay more for gas simply because "its much higher in Europe". Since when has it been ok to do things because other people are getting it done to them?
(Of course, our gas is increasing in price, which goes to show that many of my countrymen like having Corporations shoving it in).
@Falconfire: Natural gas, which I use to heat my house, and gas (a.k.a.: gasoline?), which I use to fuel my car...are two different things. Right?
This was featured on the Glenn Beck radio show this morning... Glenn made a great comment, how about having the US Government stop paying farmers NOT to grow grain?
Also, all of this farmland being devoted to ethanol-bound corn is unfortunate -- the farmers are making a killing and I can't really blame them, but they are not making enough people-food.
The U.S. is not Soviet Russia -- why are the retailers rationing instead of raising prices to curb demand?
That is all we need now, Costco deciding what we can and cannot buy. I certainly did not vote for them. Instead I stopped my membership 9 months ago and this Saturday I joined Sam's Club where they are now having a free open house to celebrate 25 years, where the staff is equally friendly, the prices are about the same as Costco's, where the lines are shorter, and where the membership costs less.
@falconfire -if you factor in the money we spend keeping the supply of oil secure, six bucks might still be a bargain.
And for being told what to do you pay $50. Go to the free open house at Sam's Club this week, and see that the prices are about the same, the staff equally friendly, the lines are shorter, and membership is $10 less.
@JiminyChristmas: Yes. My dad is a tax attorney who overseas a lot of natural resource deals, so I got him to explain it to me once, but basically what I remmeber are a) gasoline (an oil byproduct) and natural gas are different, and b) they're transported different ways.
Um..... OK, a store is low on something, and the limit the supply a customer can get.
This makes sense to me. Why is this a Consumerist issue?
When the Nintendo Wii came out, I was limited to just buying one.
Back in the 70's when gas was in short supply, the limited the amount you could buy at some stations.
When a store has a good sale, they also limit the amount you can buy at that price.
So again, why is this a consumerist issue?
Costco seems to have a very good price. The price of rice in Thailand just hit $950 a ton, up from $200 in 2004.
This whole Ethanol craze is a GOOD thing! Look at it this way, in a year or 2 they will realize it was a dumb idea, and go back to planting FOOD. So you get a forced crop rotation! Voila! More productive farm land. See, silver lining in everything.
I actually saw this on Saturday and thought it was a bit odd. I was at the Richmond, CA Costco and there was a 2 bag limit.
Yes, the price of gas is whatever the market says it is: oil extraction + transport + refining + distribution + commodity market factors.
That said, getting at the "true" price of gas means reflecting externalities in the price of fuel. The market does not do this. Society as a whole bears the cost of things like air pollution or our military presence in the Middle East.
Gas taxes should be high enough such that all of the market externalities are included in the price. Ergo, the user pays.
@Caveat: I think you're missing the point...Costco isn't doing this because it's a policy of theirs to tell people what they can't buy, it's because they don't have the supply.
"HA! Exxon charging $4 for a gallon of gas. Good thing I only get my gas at Shell...oh wait."
@timmus: Because there is nothing in the constitution that says we are a pure market economy. Costco's quantity restrictions (rather than raising rice prices until nobody wants it anymore) restricts greed--Costco doesn't have to worry about greedy customers buying up all the rice, and Costco doesn't have to be accused of greed for increasing its prices. And as somebody else has already commented, it appears that Costco was doing an end-run around bargain-hunting commercial buyers who would otherwise have bought out all the staples.
Loved the comments from Mr Patel in TFA where he makes this silly comment about how one can't eat rice as it's too heavy, and that he's buying the extra rice in case somebody else wants it. He reeks of bad rationalization. Did you know that studies of garbage dumps in the U.S. have shown that more food is wasted when it is in shorter supply? People hoard it, and then waste it and toss it.
Not that I am defending Costco's specific practice here, but rationing is a way to control speculation and price bubbles.
If people notice that rice prices are going up too much or think they will, people will be inclined to buy more rice than they need (e.g., Patel) for hoarding. This creates a vicious cycle as the increased (and artificial) demand drives up the price even further, creating a bubble that eventually pops when people realize that they ultimately need to sell their extra bags of rice.
Rationing, when done well, curbs the excessive speculation, since obviously there are not many easy ways to sell short the bags of rice like you can do with shorting inflated stock.
Excessive rationing will, of course, create an alternative speculative bubble in the black market.
@doireallyneedausername:
Rice is a food staple, especially in Asian cultures. Its renewable, sustainable, and has always been inexpensive compared to other food. Gas is a luxury, and cannot be grown. I cant believe you are comparing rice to gas.
@timmus: They can't raise prices becuase that's called price gouging, which is not in most if not all states. Costco paid a price to get the rice, what they can sell it for is a function of that price. My informed guess is costco simply can't get more rice at any price, since rice exporting countries have stopped exporting them.
$15 for a sack of rice? Screw that. The real asian grocery stores here are still selling the back-breaking size sacks for $4-8/sack.
Sounds like Costco needs to get their supply chain fixed. If the little mom & pop asian stores can pull it off, they should be able to as well.
@lockers: Where in the USA has a state of emergency been declared recently? Most of the state laws I've seen only call it gouging when people jack up prices after a state of emergency has been officially declared.
@lockers: correcting myself:
"which is not in most if not all states."
should read:
"which is not legal in most if not all states."
@ChuckECheese: rice is one of those things that you can't really waste though. the same with things like flour or corn meal. things like that can be kept for ages if it's in a sealed container in a dry location. same with things like frozen vegetables, you've got at least a year on anything you keep frozen. i wonder when america starts really going hungry...
@ChuckECheese: Restricts greed?! Wrong. Restricts demand. Correct.
Which is odd, since they are supposed to be on the supply side of this equation, but they are putting the brakes on the amount people can get, thus artificially reducing demand.
@ThinkerTDM: "Granted, there are many reason why gas (and other things) are more expensive- but it all boils down to whether the populace takes it in the ass, or decides to stand up for their rights."
No, it boils down to whether 1) you decide certain things are government functions (resulting in higher taxes) or individual functions (lower taxes, more cost to individuals) and 2) where and how you allow costs to be externalized. For example, we pay a lot less for food in the U.S. than in many parts of the world, but those costs are merely externalized to our taxes -- we pay for those cheap grains in the form of enormous subsidies that come out of our tax dollars.
If you remove those tax subsidies (leaving aside for a moment the problem of inefficiencies and perverse incentives created by the subsidies), your taxes will go down but your food prices will go up. I'm sure in that case you would complain that you were "taking it in the ass" from the farmers, whereas when they have subsidies, you will be complaining that you "take it in the ass" from the government. Feel free to stand up for your rights to refuse to participate in the economy at any moment by CEASING TO EAT to protest the fixed costs of food.
Calling it "taking it in the ass" doesn't change the fact that prices are not (entirely) arbitrary.
Europeans pay more for gas so they can pay less for other things.
@Fuzz: "So you get a forced crop rotation! Voila! More productive farm land."
Unfortunately, a lot of farmers were doing a corn-on-corn rotation in ethanol country even before the ethanol craze. Corn is wildly oversubsidized, so it's wildly overplanted.
@FLConsumer: That's a fair point. I would prefer to hear an official explanation from Costco. They may just have a blip in their supply chain, and for the time being may only have enough to cover so many months worth of sales. Price increases are emotional issues to people, and raising them for a temporary supply issue can bring all sorts of unwanted action (boycotts, hoarding and lawsuits). If they were buying rice at 200% of what they were selling it for, prices would increase accordingly.
@hejustlaughs:
So...sugar is priced correctly, to take one? 'Cause I've always been under the impression that US sugar subsidies distort the world sugar markets.
@snidelywhiplash: taxes taxes. Sugar is heavily taxed in the US, thats why US sugar is much more expensive than anywhere else.
Its actually our corn subsidies which made HFCS end up taking over for sugar for us.
@timmus: In the case of Costco, rationing may be the only option. Costco adheres to a pretty strict, self-defined code of corporate ethics and values. One of those is a policy that no item may be sold at higher than 14% markup.
@Caveat: Unless Sam's has changed drastically in the last few years, they don't sell what I want to buy.
Remember, people, Tuesday is Soylent Green Day!
@Falconfire:
The US doesn't subsidize sugar, Congress has been bribed by the cane sugar producers in Florida, Louisiana & Texas, & the beet sugar growers in the Dakotas to keep out cheap foreign sugar.
It costs more to grow sugar beets in Florida than Cuba & even more to make it from sugar beets.
But the Cubans are getting the last laugh as all of our candy & cookie companies are moving to Mexico & Canada so they can buy cheap sugar, currently about 6¢ a pound vs. 25¢ in the US.
Either the WSJ or NYTimes recently had a great article on the rising prices of staples like rice. A big factor now is governments taxing or doing other methods to prevent the net export of rice outside their borders. This, in turn also raises the prices higher especially for countries that have to import their grains.
I didn't see the costco signs in my area but a number of local cafe's and bakeries have signs up saying things like "our flour costs have gone up 60% this year; forcing us to raise prices ...". This is just the tip of the iceburg as (a) commodity prices go up and (b) fuel cost hikes make shipping and delivery far more expensive.
Just found one of the NYTimes articles "A Drought in Australia, a Global Shortage of Rice" :
[www.nytimes.com]
In that article they say that rice crops require too much water. Farmers are switching over to growing wine grapes. Grapes take far less water and make an order of magnitude higher profit for the farmer.
@failurate: In the NY Sun article gently referenced in this thread, a person purchased what amounts to about a three year supply of rice for a single person eating a half pound of rice a day. That is greedy. He is simply diverting supply to himself at the expense of others. Costco members pay for the opportunity to shop there, and expect goods to be available, not to have others purchasing up years of supply.
It is bad PR for Costco to allow individuals to buy up all the supply of something and deprive others of goods that they rely on Costco to provide. Therefore Costco restricts supply, which restricts greed, which is good PR. The only people who seem disappointed by this are those who put their own advantage and desires ahead of everybody else's. Can your argument have any other rationale? Costco rightly does not want to be associated with greedy people buying up all their staple foods and depriving others.
It is more likely that large quantities of food, purchased by people unaccustomed to storing such large amounts, will be lost to insect and environmental damage than that it will be eaten--this is what previous studies of the matter have shown, and has occasionally been proven in my own kitchen. I doubt that this will change unless supplies become so restricted that there isn't enough supply to hoard.
@chrisdag: I love this thread. One of the reasons dairy has become so expensive is because we're exporting it as world demand increases. For example, dried milk used to be a bargain item for people too cheap to buy fresh milk. No more--it costs about the same as fresh, since so much of it is exported.
The reason some of these lucky nations (lucky because they have enough food to withhold) are restricting exports is because they don't want to invite domestic food riots, which are happening all over the world lately, as prices increase and supplies chase the highest price. The UN and international development wonks are starting to hate on grain-based ethanol production, and consequently on the U.S. Yaay! We have another reason for the world to turn against us.
Maybe rice wasn't correctly priced before...like gas. I wonder what the TRUE market value of all of these commodities are? Like, we know gas SHOULD be around $6/gallon (looking at Europe). But what is the true value of the other staples that we buy?