Rice situation in Singapore

Supplies flowing in despite price uncertainty
Jessica Lim, Straits Times 2 Apr 08;

RICE prices may now be volatile, but importers of the grain say supplies are still coming in without a hitch.

Chye Choon Foods managing director Jimmy Soh, who supplies rice and noodles to supermarkets and about 700 provision shops, said shipments from rice-exporting countries, including Thailand, are arriving on schedule.

But he said he hopes the current high prices will spur planting of bigger crops to beef up supply and dampen the prices.

Some importers are worried major exporters like Thailand will cut exports.

Rice importer Goh Hock Ho, managing director of Saga Foodstuffs Manufacturing, said: 'Thailand has not said anything about stopping exports, but they are feeling the pressure because of the overwhelming demand.'

A statement issued by the Ministry of Trade and Industry yesterday said current adequate supplies make it unnecessary to draw on Singapore's national rice stockpile.

The stockpile is a result of the Government's requirement that all rice traders maintain an amount equivalent to twice their monthly imports.

Importers say the stockpile, enough to see Singapore through three months in an emergency, is stored in three government warehouses.

Meanwhile, importers are ensuring supplies remain stable by sourcing rice from alternative sources.

Apart from Thailand, major rice importer FairPrice, for example, brings in the grain from Australia, India and Vietnam.

It has not stopped looking for other potential suppliers.

Singapore imported 326,854 tonnes of rice last year - 60 per cent from Thailand, another 30 per cent from Vietnam and India and the remaining 10 per cent from about 15 countries.

Some consumers, expecting prices to rise more, have begun to build their own stockpiles. FairPrice supermarkets, which have seen more bags sold since last weekend's news reports on the shaky global rice supply, have been restocking shelves.

Staff at FairPrice's Ang Mo Kio Hub outlet noted that consumers who normally buy a bag or two are now buying four or five.

Mr Chew Dor Keong, 38, for instance, said: 'I see prices going up so high, I feel I have to do something.'

Ang Mo Kio GRC Member of Parliament Inderjit Singh said panic is unnecessary.

He said: 'We have a lot of sources of imports... My advice to Singaporeans is not to panic. Strong reserves are top priority for us, so in times of crisis, we will survive.

'In the past, when scenarios like this occurred, we never ended up in a situation of shortage.'

NO NEED TO DRAW ON NATIONAL STOCKPILE

The current adequate supplies make it unnecessary to draw on Singapore's national rice stockpile. The stockpile is a result of the Government's requirement that all rice traders maintain an amount equivalent to twice their monthly imports.
MINISTRY OF TRADE AND INDUSTRY

Hawker stalls, restaurants seek ways to cope with rice prices
Some hawker stalls dish out smaller portions; bee hoon makers switch to Myanmar grains
Jessica Lim, Straits Times 2 Apr 08;

YOU will probably not taste the difference, but more of the rice noodles, or bee hoon, served these days are made from Myanmar grains, rather than the more expensive imports from Thailand.

This is how bee hoon manufacturers here, who together make about 80 tonnes of the rice noodle daily, have responded in recent weeks to global increases in rice prices.

'Supplies seem stable for now, but the world's demand is on Thailand's shoulders,' said Saga Foodstuffs managing director Goh Hock Ho.

This month, his firm is expecting about 350 tonnes of white rice from Myanmar after buying none in March. 'To safeguard, we are sourcing supplies elsewhere,' he said.

White rice from Myanmar is about $200 cheaper per 50kg bag than its Thai counterpart, he said.

Mr Jimmy Soh, managing director of Chye Choon Foods, now uses about 10 per cent less Thai white rice in his bee hoon than a month ago. He is also in the midst of 'securing exports from China', something 'everyone is now trying to do'.

This is the result of rice shortages across Asia, as producing countries curb exports to ensure adequate domestic supply.

Last Thursday, the price of Thai rice, a global benchmark, jumped 30 per cent to an all-time high of US$760 (S$1,030) per tonne after Egypt, a leading exporter, imposed a formal ban on selling rice abroad in a bid to stabilise soaring prices at home.

Restaurants and hawker stalls are also looking for ways to cut costs.

A Straits Times check of 15 restaurants and hawker centres found seven had taken action. Some cut back on labour and electricity and are dishing out smaller portions. Others stock up or switch to lower grades of grain.

Mr Badrol Hisam Ramli, owner of Boon Lay Power Nasi Lemak, has enough 50kg bags of rice piled up in his stall's kitchen to last him 20 days. He usually stocks only a day's worth.

The 42-year-old, who recently raised the price of his nasi lemak from $2 to $2.20, said: 'Suppliers tell me prices of my next order will rise, so I buy more now. I bought as much as I could store in my kitchen. If not, how to keep prices affordable for my customers?'

He is also considering giving smaller portions and has tried recipes with lower grades of rice to cut costs.

Over at Jalan Bukit Merah, the owner of Guan Guan Claypot Rice has decided not to hire extra help despite being short-handed.

But not all changes have worked. The owner of a chicken rice store in Bukit Batok, Mr Teo Jew Kit, got complaints from customers after he switched to a lower grade of rice last month. He said: 'They started complaining the rice tasted less fragrant, so I switched back after three weeks. I did not want to lose them.'

ADDITIONAL REPORTING BY LEE PEI QI AND LIM HENG LIANG

Food price hikes: No simple solutions
Neo Chai Chin and Alicia Wong, Today Online 2 Apr 08;

IN THEORY, importing food from many sources sounds like a good way to keep rising prices in check — apart from hedging one's bets against supply disruptions due to, say, natural disasters.

But reality is rarely so simple.

With food prices going up around the world, economists point out, diversification will not be enough to avoid inflation in Singapore, which imports about 90 per cent of its edibles.

The theory works only if there is a "disconnect between two markets", said Forecast's economist Vishnu Varathan. For instance, if Australia is facing a drought, dairy prices here can be kept stable if imports are still coming in from other regions.

That's not the case with the brewing Asian rice crisis, however. Noting shortages reported from Cambodia to the Philippines, rice importer Hong Lian Gim Kee said: "How can you negotiate prices?"

Yesterday, the World Bank said that inflation poses a bigger challenge to East Asia than the current credit crisis does. For one, it has led to higher fuel prices — which leads to higher freight costs that could negate cost-savings from food sourced further afield, said a spokesman from the Singapore Cereal Oils Foodstuffs and Native Products Import and Export Association.

Said Mr Varathan: "We can get some limited relief from inflation by changing consumer patterns, but unless we have a backyard to plant some crops, there's little we can do."

But, how far are consumers here willing to adapt?

Importer See Hoy Chan's operations manager E K Lim believes "people want higher quality rice". For instance, Vietnamese rice is often too rough, and Chinese, Australian and American rice too sticky for the fussy Singapore palate.

NTUC FairPrice's director of integrated purchasing Tng Ah Yiam said sales of its house-brand rice from Vietnam have doubled since its launch last October, partly because it is 20-per-cent cheaper than Thai rice.

Yet there are those like housewife Pauline Wong, 59, who would "switch to a cheaper brand of Thai rice" easily but fuss over the standards of Vietnamese rice. It is difficult for consumer tastes to change within a short time, said associate research fellow Ng Sue Chia of the S Rajaratnam School of International Studies.

Likewise, diversifying food sources may also take time. Sheng Siong supermarket will "definitely" look for other rice suppliers, but it could take years to build a working relationship if mutual benefits cannot be found, said its international business development deputy general manager Wong Heng San.

Coversely, it only took two to three months to form a working relationship with Thailand's rice suppliers as the supermarket has worked with them before.

Meanwhile, what Singapore can do seems to have already been done.

According to the Ministry of Trade and Industry (MTI), the Government requires all white rice traders to stockpile twice their monthly import quantities. The growth dividends and GST credits to be paid out later this year will also help to offset inflation, an MTI spokesperson told TODAY.

Also, said Assistant Professor Tomoki Fujii of the Singapore Management University's School of Economics: "With little control over the price of food it buys from other countries, the Government can let the Singapore dollar appreciate against other currencies to mitigate inflation -- which is indeed being done."

FairPrice – the island's largest supermarket chain -- said it tries to help consumers by being the last retailer to adjust prices. While it raised the prices of three in-house rice brands last Friday by 10 to 15 per cent, it eliminates middlemen costs by importing directly from countries like Thailand and Vietnam, said Mr Tng. FairPrice is also studying setting up budget outlets for the needy, possibly next year.

Sheng Siong supermarket – with 21 outlets – imports some of its rice directly, and will keep promotional prices for rice constant until stocks run out.

Prof Fujii suggested coping with short-term price fluctuations by making long-term contracts with food-exporting countries.

Freezing food prices, like what Thailand is considering, would create a "disastrous situation" with insufficient food to meet demand. But increasing food subsidies for the poor could be considered, he said.

Prof Fujii also mooted the idea of imposing a tax on restaurants for food wastage, with the money going to the poor. Households could also be taxed according to how much waste they generate. But such an idea would be hard to implement, he admitted.