Rice and the fear factor

Chua Lee Hoong, Straits Times 12 Apr 08;

WHO would have thought rice could hog headlines the way it has recently - continuously, for days on end?

Who would have thought rice could become the topic of so much discussion, even at yuppie cocktail parties?

People who never once gave a thought to the price of rice can now recite the prices of the different brands, and for 5kg and 10kg bags to boot.

They do calculations to see which is better value, and then they buy - often two or three bags at a time.

Government exhortations that they need not hoard, as there are sufficient supplies, are falling on deaf ears: A lot of people are buying more not because they fear supplies dwindling, but because they fear prices shooting up further.

The run on rice began two weeks ago, before the Government came into the picture.

On March 31, I saw for myself the after-effects at my local NTUC FairPrice supermarket. Where bulging bags of rice of myriad brands used to droop off the shelves, only a handful lay forlornly in that entire aisle.

It was a strange sensation.

I was reminded of my day trip across the Berlin Wall into East Berlin in 1988. There's nothing like a visit to the local supermarket to understand a place, so I asked for directions to one. There, I was greeted by the sight of many empty shelves. Stale bread, some canned food, that was about it. And yes, a surly cashier.

The rice shelves at FairPrice are now decently full again. But while the supply issue has been resolved, another issue remains, that of price.

The price of rice has risen 30 per cent within the past three months, and is expected to rise further. Food prices in general are also rising, fast.

Whatever the reasons - rising demand from China and India, dwindling supply due to diversion of land for food crops to biofuel crops, high oil prices feeding into higher cultivation and distribution costs for food, or simply commodity traders driving up prices with their speculative buys - the fact of higher prices is a reality that has to be dealt with.

We can be thankful that because of Singapore's wealth, higher food prices will not lead to riots the way they have in a number of poorer countries.

As National Trades Union Congress (NTUC) secretary-general Lim Swee Say pointed out, rice took up 22 cents of every $10 spent at FairPrice supermarkets last year.

Having said that, does that mean politicians should sit back and let the rice situation take care of itself?

Someone asked me this earlier this week, and I must say it's a good question.

On one side you have these arguments:

# One, the market will self-correct. As rice becomes more expensive, farmers will find it more worthwhile to grow it. The price will then come down.

# Two, those who hoard rice will soon find it not worth their while, because rice that's kept for more than three months or so will attract rice weevils, a small beetle that feeds on the internal portions of grains. They will multiply and the rice will spoil.

# Three, by talking too much about the rice situation, political leaders risk panicking the people more.

As one posting on a local blog said: 'I...feel that the Government has given too much attention to the issue of rice supply recently and hence bringing about more attention to the situation. After all, some Singaporeans have the mentality that since the Government is talking about it, something will go wrong very soon.'

Should the Government have done nothing then? All those visits by ministers to rice warehouses, the attempts to assuage people's fears, and exhortations not to hoard - were they unnecessary?

I think not. Two reasons:

# One, the importance of rice to Singaporeans. Rice is the staple food of an overwhelming majority, as a recent survey by the bilingual free daily my paper found. Most can't live without it, even if it becomes more expensive.

For poorer Singaporeans, it is even more of a staple. There are no cheaper substitutes - certainly not bread, noodles or potatoes. In any case, the prices of these have also risen.

The only viable alternative is to switch to a lower-grade rice - AA instead of AAA, say.

And even if people don't buy rice direct from the supermarket, they buy it indirectly, from the hawker centres and coffee shops.

# Two, the unprecedented nature of the recent price hikes. There is no parallel in recent world history.

There have been sharp price hikes caused by supply shortages before, but these were geographically isolated. A diversion of supply from somewhere where rice is plentiful, and the problem is solved.

What is happening now is a worldwide phenomenon - from Peru to the Philippines, rice is equally dear, and the issue politically volatile.

Singapore's political leaders have moved rapidly to alleviate the impact of the rising prices on poorer Singaporeans.

The Ministry of Community Development, Youth and Sports (MCYS) yesterday announced it was bringing forward by almost two months its plan to raise the financial aid given to those on public assistance, from July 1 to May 5.

A day earlier, NTUC announced its $4 million scheme to help lower-income union members by giving them discount vouchers to be used at FairPrice supermarkets.

The 5 per cent discount is meant to offset the estimated 5 per cent inflation this year.

If poor Singaporeans who are non-union members feel left out, they can see their MPs. The latter can apply to use ComCare funds from MCYS to buy these discount vouchers for their needy residents.

Unionists can help their members - and grassroots leaders their poorer residents - know exactly how to get these vouchers and other available help.

In fact, instead of waiting for these poorer folk to approach them, why not seek them out, door-to-door if need be? Most of them will not be clued in to the news, and will not be aware that these help schemes are available.

Meanwhile, there's the overriding need to help these folk get over the fear factor. Many are from the older generation and lived through periods when rice and other foodstuffs were scarce, and so have a tendency to hoard at the first sign of trouble.

They need to be assured that the times are different today, that there is sufficient rice for everybody.

And, contrary to the blogger who wrote that talking about the situation only gets people more worried, assure everyone that these assurances are to be taken at face value and not a sign that 'something will go wrong very soon'.