Malaysia: Flour shortage next?

Carolyn Hong Straits Times 9 Jan 08;

KUALA LUMPUR - WITH global wheat prices at a record high, Malaysia runs the risk of running short of flour. Restaurant owners are complaining of being unable to get stock at old prices.

Datuk Ramalingam Pillai, president of the Malaysian Indian Restaurant Owners' Association, told the New Straits Times: 'We have run out of flour and are finding it tough to secure further supply at reasonable prices.'

The Malaysian Muslim Restaurant Owners' Association has also complained that its members have to pay more for flour.

The situation is a result of the rapidly escalating price of wheat globally, said Flour Millers Association secretary Thong Kok Mun. He told The Straits Times that the government price controls were set more than 10 years ago, when the price of wheat was about four times lower.

The price of flour for household use, generally that sold in 1kg packets, is fixed at RM1.35 (60 Singapore cents) per kg. Flour for commercial use is not subject to price controls and costs RM2.30 to RM2.90 a kg. 'There is a big difference in price,' he said, noting that this might encourage big users to buy up small packets.

He said there was no real shortage of flour, as demand and supply had remained steady at 75,000 tonnes a month for the last one year.

But millers began warning last year that a flour shortage could arise as they were losing money on every bag of flour sold because of the price controls, making it tough for them to purchase new stocks of wheat. It now costs more than RM2,000 to produce a tonne of flour, while the retail price is RM1,350 a tonne.

Any shortage is unlikely to affect Singapore. Mr Thong noted that Malaysia exported only small quantities to the Republic.

Domestic Trade and Consumer Affairs Minister Shafie Apdal yesterday stressed that the situation would be resolved soon as Malaysia's biggest miller, the Federal Flour Mills, had agreed to increase its production of price-controlled flour.

Datuk Ramalingam was reported to have met Datuk Shafie and asked for flour and cooking oil for his members.

He promised that the association would not increase food prices as it was getting new stocks.

CAROLYN HONG