If you go to Sam’s Club or Wal-Mart any time soon, you will be restricted to buying only 4 bags of rice per visit. Due to a global rice shortage and rising rice prices, retailers are resorting to rice rationing to maintain supply. How does this affect the average consumer? How does this affect a business?

I think the average consumer will remain relatively unaffected in the short term. I don’t know many people who are in the habit of buying more than 4 bags of rice at once, so rice rationing is not significant to the vast majority of consumers. Rice prices for the consumer at the retail level have not risen much, yet, although that future remains to be seen. But hey, rice isn’t very healthy for you anyway (except brown rice), so cutting back on your rice consumption is probably a good thing. Maybe the USA could use a little rice shortage to get healthier.

For a business, such as a retailer or a restaurant, rising rice prices and rice shortages could have a much larger negative impact. For example, a restaurant has to start paying more for rice, even though they can’t really cut down on their “consumption”—what their patrons are ordering. So, does the restaurant pass the price increase onto to their customers? In this slowing and worsening economy, most restaurants may not pass along those price increases, preferring instead to take the hit themselves. As one owner of a Vietnamese restaurant in Oakland, CA recently said, “With the economy down 10 percent, we don't want to increase prices, so we are going to wait another three months and see what happens.”

Refusing to pass along the price increases to the end consumers damages retailers’ and restaurants’ bottom lines. They have to make adjustments to compensate. Maybe they have to raise prices elsewhere, or cut back on costs. Maybe they eventually have to fire an employee. Either way, it puts an immediate strain on businesses, and that strain could result in a very negative domino-effect with far-reaching consequences.