If costs climb further, consumers may have to pay more at the shops
Jessica Lim, Straits Times 17 Jan 09;
THE new year has brought with it higher wholesale prices for rice, wheat and soya bean, which have been climbing steadily for the last several weeks.
While rising prices for middlemen have not yet translated into mark-ups on supermarket shelves, some importers say that could soon change.
Faced with uncertain harvests and fluctuating currencies, some warn that the cost of importing rice could rise further.
'We have been paying more for rice for months now and if this continues we might have to increase prices again soon. When we do, supermarket prices will go up too,' said Mr Jimmy Soh, managing director of Chye Choon Foods.
The price of Thai fragrant rice, which importers say accounts for about 70 per cent of the market here, started inching up in November last year. A tonne of the staple now costs US$888 (S$1,320), 12 per cent more than two months ago.
The increase has been driven by a strengthening Thai baht against the US dollar, higher demand during the run-up to Chinese New Year and the Thai government's practice of buying grain from local farmers at above-market rates.
However, some experts expect prices to fall in the coming weeks.Thai Rice Exporters Association president Chookiat Ophaswongse expects wholesale prices to 'come down a little' - about US$50 a tonne - after Chinese New Year.
Still, some supermarkets are looking to keep a lid on prices as shoppers contend with a slowing economy.
NTUC FairPrice chairman Ng Ser Miang said the rise in wholesale prices is not yet enough to trigger a price increase in stores. He said FairPrice would try to defer any hikes as long as possible.
'We have a stockpile that will help us defer price adjustments,' he said. 'I think we can definitely ride out these recent increases.'
Meanwhile, prices of soya bean and wheat are inching upwards. Soya beans are now US$9.80 per bushel, up from an average of US$8.49 last month, though still well below their peak of US$16.50 per bushel last July.
Wheat has jumped about 30 per cent since last month to US$4.40 per bushel, though it remains far from a peak of US$12.30 last February.
The reason behind these increases, said Rabobank International general manager Goh Chong Theng, is a supply crunch after floods destroyed harvests the mid-western United States.
'Things will be unpredictable until the next harvest in March. If that harvest is bad, then consumers will be certain to feel it,' he said.
Importers are not looking forward to the day when they have to raise prices.
'We are scared. Prices are rising and we don't know how business will be next year. It has already fallen 5 per cent in the past four months,' said Mr Thomas Pek, owner of Tai Hua Foods, which makes soya sauce. 'A price increase is the last resort because it drives away customers.'
In the meantime, consumers are keeping their fingers crossed.
'I really hope this doesn't mean more expensive food products again,' said Madam Clara Lee, 48, a mother of three. 'People are getting pay cuts; how can they pay more for essentials at the same time?'
