Straits Times 26 Apr08;
Rice is nice - but surely not at today's boiling prices? LEE SIEW HUA asks rice-watchers if Singapore can put a lid on price jitters by adjusting our diet, the national mindset and sources of this essential of essentials.
AT FAIRPRICE supermarkets across the island, the staff see to it that shelves are speedily replenished with bags of rice.
This presents a picture of plenty. It is a simple strategy to highlight the availability of rice and persuade buyers not to hoard, which happened on a couple of days earlier last month.
'Panic buying has ceased,' says Mr Seah Kian Peng, managing director of the country's largest supermarket chain.
'We do more delivery runs from the warehouse to the supermarkets,' he tells Insight. 'Rice can be seen on the shelves.'
Keeping shelves full to reflect the reality of Singapore's ample supply is one response to the price rise.
Prices began a sustained upward turn in 2001 worldwide, says the International Rice Research Institute in Manila.
The cost of the world's favourite staple continued its rise through the years and jumped sharply in the first quarter of this year, prompting World Bank president Robert Zoellick to sound the alarm globally earlier this month.
'Rice prices have skyrocketed to near historic levels, rising by around 75 per cent globally and more in some markets,' he said, referring to the previous two months.
More volatility ahead is likely, he cautioned.
From a one-year perspective since March 2007, the market rate rose 100 per cent.
One bit of bright news is that there is no shortage of the premium rice enjoyed by Singaporeans, 60 per cent of which is sourced from the fields of northeast Thailand, where harvests are plentiful.
Thai officials have no plans either to curb exports, unlike India and Vietnam.
So rice is available. That is the bottom line.
The issue is whether people are prepared to pay the market price.
For now, rice-loving Singaporeans insist on their daily bowls of tender, fluffy, aromatic grains. But the pain of the price surge, if it persists, may have to be eased by adjusting the diet - and the national mindset.
This change can also encompass the way Singapore does business: new investments in rice ventures overseas and government-to-government contracts can be considered.
Perhaps access to Myanmar's high-grade grains or new sources can arise too.
The need to think outside the box
MEANWHILE, Mr S. Chandra Das, former managing director of Intraco, supplied a reality check.
One of Intraco's early roles was to source commodities to support Singapore's industrialisation.
He says Singapore went through a similar process to search for solutions during the 1972 rice crunch.
But Singaporeans were resistant to changes in rice quality.
He was sent to Pakistan to buy about 50,000 tonnes of rice on a government-to-government contract.
The first 10,000 tonnes, distributed to places like prisons, was rejected by inmates. Singapore cancelled the balance at a cost.
Mr Das, now the managing director of NUR Investment & Trading, also found that housewives - who were extensively polled - would rather sacrifice a meat or vegetable dish than drop fragrant rice from the menu.
Singapore also contemplated buying padi - unhusked grains which could last longer - to be stored until needed in their source nations.
'But most countries would not sell,' he recalls. In any case, if a country bans exports, any Singapore-owned rice will still be stuck there.
However, he likes the government action which has now built up the buffer stock of rice here slightly.
Normally, the Ministry of Trade and Industry requires all merchants who trade in white rice to maintain a stockpile that is twice their monthly import quantity. Singapore can draw on this supply if needed.
But the ministry listened to rice merchants and allowed them to import beyond their normal quantities to meet market demand, without an equivalent rise in their stockpile.
This reduces the merchants' credit exposure and adds flexibility to their daily buying or pricing decisions at a difficult time.
Looking ahead, there are scattered hopeful signs even if no one has settled on solutions.
Countries and institutions like the World Bank are more aware that a collective response is needed.
The Philippines is urging China, Japan and other Asian nations to attend an emergency meeting to try and reverse export curbs.
Food prices may not increase at the current pace, says Singapore Management University assistant professor Tomoki Fujii, who specialises in development economics.
'But that also depends on whether there is a next round of the Green Revolution, for countries to substantially increase their yield,' he says.
The chaotic rice market calls to mind remarks by civil service head Peter Ho about wild cards and black swans, which he made recently in reference to major surprises like the Asian financial crisis.
In a speech earlier this month, he said the Risk Assessment and Horizon Scanning (RAHS) system is a tool that may detect such events.
The system - which scans vast amounts of data for clues that could point to unexpected threats - has been looking at a range of issues, including food security, he tells Insight.
'Since late 2007, it has been picking up indicators of food crop supply problems and price surges,' he says.
'But the RAHS system is still very much in a prototype stage. A lot more work remains to be done before it can be used with some confidence to help provide early warning of emergent problems like rice shortages.'
The idea is there, and there are other seeds of solutions such as potential Chinese sources or a glimmer of G2G contracts.
But in the absence of a full solution, Singapore has to push on to think outside the box, or beyond the beloved rice bowl in this case.
