Scouring the world to keep food in Singapore affordable

Jessica Lim, Straits Times 28 Mar 08;

PORK from South Africa. Fish from Namibia. Eggs from the United States.

These are not the usual sources of produce sold in Singapore, but with prices from traditional suppliers heading ever upwards, importers are expanding their horizons.

The reason: If prices get too high, consumers stop buying, and importers' bottom lines take a hit.

So importers are casting their nets far and wide for everything from staples like rice to meat and vegetables.

Meat merchant Jack Koh, 59, used to get his supplies from Malaysia and Thailand. Now he imports from Canada, Brazil and New Zealand as well.

He said: 'We try to explore new sources all the time. It's a contingency plan, even if we do not buy from them in the end.'

Checks showed that at least 10 meat importers have widened their supply sources in the past year.

Mr Koh is the president of the Meat Traders' Association, whose members are scouring Vietnam, Sabah, Sarawak and South Africa for suppliers.

'We must spread out from the north, east, south, west, to everywhere. Anything can happen, and if we do not make sure prices stay down, our customers will stop buying meat. When they suffer, we suffer too,' he said.

When the hunt is over, what results is a fresh platter of chow.

Already, Namibian fish is available at NTUC FairPrice outlets. The chain was the first to bring in a seven-tonne shipment from the south African country last year. And recently, it also started stocking Vietnamese rice, which is about 20 per cent cheaper than that from Thailand.

More supplies from non-traditional sources are on the horizon. In time, eggs - 90 per cent of which come from Malaysia now - might be imported from the US.

Mr Tan La Huah, the former chairman of the Eggs Import/Export Trading Association, said that importers here are holding discussions with US egg suppliers and at least one importer has already turned to the US for its supply.

'We are comparing prices before we decide if we should import American eggs,' said Mr Tan, who brings about 72,000 Malaysian eggs into Singapore every week.

'If we do, another 20 tonnes of these eggs will be available here every month.'

Even the Agri-Food and Veterinary Authority (AVA) has got in on the act.

Its spokesman, Mr Goh Shih Yong, said that the AVA 'works with the industry to facilitate the imports of food from diverse sources at competitive prices' and makes efforts to keep the 'market accessible so traders can bring in food items'.

So far, the agency has given new suppliers in Belgium, Brazil, China, France, South Africa and Taiwan the green light to export frozen pork to Singapore.

It also recently approved Taiwan as a new source of frozen duck.

Supermarket chain Cold Storage works with more than 200 suppliers from all over the world to produce the 1,600 items on its shelves.

The massive effort to locate new sources is motivated to a large extent by rising food prices worldwide.

The prices of staples such as rice, wheat, corn and soya beans have all risen sharply, hitting record highs.

Wheat price increases have pulled up prices of flour-based products like bread and noodles. Prima Food - which supplies about 60 per cent of flour to manufacturers here - has raised its flour prices twice in the past three months.

Rice prices have risen, and supermarkets here have upped the price of a 10kg bag by about $2.

Consumers are feeling the pinch.

Mr Augustine Chua, 56, a production manager who earns about $1,500 a month, said: 'I buy house brands now and more frozen food than before.

'I also eat more tofu and less meat. But now the price of tofu, and even rice, is also going up.'

Importers have to look for new sources or risk a repeat of the Great Vegetable Throwaway: About a month ago, many wet-market stallholders had to throw out greens imported from China, after customers baulked at buying because prices almost doubled after severe weather in the country affected supply.

But how does sourcing food from afar help to bring prices down?

There are two ways, said Mr Koh.

When importers diversify their sources, they are no longer at the mercy of one supplier.

Having a choice of suppliers means the buyer's bargaining power goes up, said Mr Koh.

Also, when exports from one place are stemmed - say, because of weather or a bird-flu epidemic - importers and manufacturers can switch to other suppliers easily, and are not held hostage to high prices caused by supply shortages.

Of course, all this is good for the businesses' bottom line as well.

'By searching for cheaper food sources, importers manage to keep their profit margins up,' said Mr Thomas Pek, the managing director of Tai Hua Food Industries.

'It is a win-win situation - our customers benefit from cheaper products and keep coming back to us.'

But however hard the suppliers look to diversify their sources, more price hikes are on the horizon.

A recent United Nations assessment predicted that food prices would continue to increase for the next few years and would, in fact, 'rise in 2008, 2009 and probably at least until 2010'.

In the meantime, consumers will have to hope for news of the sort provided by Mr Png Geo Lian, the chairman of The Association of Chinese Wheat Flour Merchants of Singapore.

He says that importers are moving away from the 'conventional supplies of wheat from places like Canada, America and Australia' and tapping sources in China, where 'wheat is cheaper by about $10 per 25kg bag'.