what the rice policy should be
Richard Hartung, Today Online 26 Apr 08;
WITH great fanfare, Minister of State for Trade and Industry S Iswaran told Singaporeans recently not to worry even if there is a ban on rice exports by some countries because there's plenty of rice in reserve.
According to him, Singapore's rice warehouses stock at least three months' worth of supplies.
A fundamental question, then, is whether a three-month national reserve is enough or too much.
To begin with, the concept of publicising a national food stockpile in Singapore seems to be a very recent initiative.
For quite some time, the Singapore Civil Defence Force (SCDF) has told us in its low-key manner that we should "stockpile according to (our) needs" at home with food supplies including rice, canned food and beverages.
The recent publicity seems designed to reassure Singaporeans and prevent panic buying amidst publicity about rice export bans. Regionally, Malaysia was actually one of the first to publicise its plans for national food stockpiles.
Deputy Prime Minister Najib Tun Razak announced in January that Malaysia would set up a national stockpile of essential goods such as rice and cooking oil to ensure that prices and supply would be stable. Governments in Thailand and other countries have since started to publicise their rice reserves
In terms of how much is enough, there is a wide range of research and policies on the size of food reserves needed.
At one end of the spectrum, Britain decided in 1993 to eliminate its food stockpile. Way back in 1976 in the United States, the Defense Technical Information Center (DTIC) determined that a reserve of about a one-month food supply would be sufficient to stabilise prices for 95 per cent of probable shortfalls, while also optimising costs.
Commercial organisations like supermarkets have also done their research, combining supply chain and cost analysis to develop a forecast of what's needed.
Supermarkets in Australia, which have about a two- to three-week supply of foods on hand, seem to match the DTIC estimate. Locally, NTUC FairPrice's director of integrated purchasing Tng Ah Yiam said FairPrice maintains a two-month supply of rice.
At the heart of some research is the question of the purpose of the reserve. If the reserve is to cover a potential supply disruption, similar to the situation now where a combination of increased demand and climate change have led to concerns about shortages, then a three-month supply seems sufficient.
Researchers at the University of Sydney found that a supply to last about three months "would allow a window of time for governments to put emergency action plans and food deliveries in place", though they suggest home stockpiling rather than government reserves.
If the reserve is to prepare for a pandemic such as Sars, where the public may need to stay at home, the researchers suggested that food supplies should last for about the six months it takes to discover a new vaccine.
Suggestions of reserves beyond six months seem to relate more to policy or social concerns, such as the Mormons suggesting three- to 12-month stockpiles for cases of adversity.
Based on this research and other studies, it appears that Singapore has a sufficient reserve in the event of supply disruptions.
If anything, the three-month reserve may result in a higher-than-optimal cost for well-prepared Singapore and a slight reduction in food reserves could still ensure a sufficient supply while reducing government costs.
Better promoting small reserves at home could help strengthen the buffer.
But this conclusion also leads to the question of whether the focus on a rice stockpile addresses the right issue.
While showing that there's plenty of rice on the island may forestall panic buying, focusing on price increases caused by the drop in global reserves actually seems more important.
Globally, the supply of grain has continually decreased since 1986 and grain consumption has outstripped production for the eight of past nine years.
The UN Food and Agriculture Organization (FAO) forecasts a continuing sharp rise in demand to result in declines in world grain reserves again in the 2007-2008 season.
Further, the drop in reserves refers to many types of grain and rice is not the only issue. Whereas the FAO forecasts the stock-to-use ratio for rice declining to 23 per cent this year, the ratio for wheat is just 11 per cent and reserves for other grains such as corn, barley and sorghum are also declining.
The good news is that world production of grains is forecast to rise more than 4 per cent this year. With reserves continuing to decline, prices are continuing to rise.
The more important focus would then seem to be on how to deal with higher prices.
The announcement by Mrs Yu-Foo Yee Shoon, Minister of State for the Ministry for Community Development, Youth and Sports, recently that an extra $1 million will be available to help the needy with rising food prices is a start, albeit a small one, and other measures may be on the way.
With the reserves of rice seeming sufficient, the core policy issue actually seems to be how to deal with higher prices and help those struggling to buy basic supplies rather than whether reserves should increase further.
The writer is a consultant who has lived in Singapore since 1992.
