Importers' strategies of diverse sourcing and forward buying help shield consumers from price hikes
Neo Chai Chin Today Online 16 Sep 10;
SINGAPORE - Flour distributors and bakeries will feel the pinch of high global wheat prices from today, with Singapore's largest wheat importer Prima raising its prices by 5 to 10 per cent.
But retail customers will not be affected for now, as prices of its wheat flour in supermarkets remain unchanged, said Ms Lim Wee Ling, Prima's group marketing manager.
Global wheat prices are at a two-year high, after Russia imposed a grain export ban till next year because drought and wildfires destroyed much of its wheat stock.
Prima imports its wheat from the United States, Canada and Australia, but because "the cost of wheat has surged over the past three months, we now have to increase our prices to our distributors and institutional customers", said Ms Lim, responding to MediaCorp's queries.
The price hike came as no surprise to the Singapore Bakery and Confectionery Trade Association president Liow Kian Huat, who had been "mentally prepared" for an eventual increase since July.
Mr Liow, who runs two bakeries in Yishun and is a customer of Prima, said he would not pass on the increased cost to customers, adding that the latest increase is bearable as wheat prices had dipped by about 10 per cent late last year to $26 per 25kg.
"Wheat is just one of the cost pressures we are facing," said Mr Liow.
Sugar and butter prices have doubled in the last 12 to 24 months, and shop owners take into account all costs including rentals when pricing their offerings, he said.
While Singapore's consumer price index rose 3.1 per cent in July, some consumers said the cost of their daily necessities remain unchanged.
Homemaker and mother-of-three, Ms Lau Mui Ai, 39, has maintained the average cost of a home-cooked meal at $10 to $12.
Being flexible in food choices is the key, she said.
"If prawns are more expensive, then I'll just not eat them," said Ms Lau, who shops twice weekly at wet markets and supermarkets.
Retiree Michael Choy, 64, ensures reasonable prices by patronising the same wet market stalls regularly.
While he has not noticed any change in the cost of chicken, fish and vegetables, the price of rice has increased by about $2 to $15 for a 5kg pack.
"But we don't eat much rice, so it's okay," said Mr Choy, who goes marketing three times a week.
Supermarket chain NTUC FairPrice said diversified sourcing and forward buying have kept prices of basic products affordable.
For instance, its housebrand rice prices have remained unchanged for the past 12 months, said its managing director of group purchasing, merchandising and international trading, Mr Tng Ah Yiam.
Diversification has also worked for wet market stallholders.
"Our suppliers are very smart. If the supply from China is disrupted, they'll source from Vietnam instead," said Holland Drive vegetable seller Ang Hock Leong.
Flour price goes up but consumers are spared
Wheat shortage drives up prices by up to 10% for manufacturers but retail prices unchanged
Fiona Low Straits Times 17 Sep 10;
MANUFACTURING costs for the bulk of Singapore's bakeries and confectionery manufacturers have risen as flour prices increase following a global shortage of wheat. But the added cost is unlikely to be transferred to consumers.
Prima, Singapore's only flour miller and largest flour supplier, yesterday increased its prices by between 5 per cent and 10 per cent.
This increase will affect the company's distributors and customers, including bakeries, food manufacturers and hotels.
But people who buy from supermarkets will not be affected much by the move, as the company will not be increasing the
retail prices of its wheat flour sold in stores.
Prima - which supplies about half of the flour used in Singapore - imports wheat from the United States, Canada and Australia, which is then milled into flour. The company accounts for about 95 per cent of the wheat imported into Singapore.
Supermarket chain FairPrice confirmed yesterday that it has no plans to change its flour prices. In addition to buying flour from Prima, it imports from Australia, Malaysia and Turkey.
Its spokesman said there has been no increase in flour prices from any of its suppliers.
Global production of wheat has plummeted since last month, following a drought in Russia - one of the world's largest wheat exporters - which led to an export ban from the country.
A spate of bad weather affecting crops in Kazakhstan, the European Union and Canada further worsened global shortage of the grain.
Although Singapore does not import wheat directly from Russia, the impact is still tangible as prices have been driven up all over the world by the reduced supply.
But despite the increase in costs, Singapore Bakery and Confectionery Trade Association president Liow Kian Huat said that most of its 150 members are unlikely to raise consumer prices.
'We knew there had been weather problems, and prices had been increasing in other countries. We expected that there would be a rise in prices in Singapore eventually as well,' said Mr Liow in Mandarin.
He now pays $28 for a 25kg bag of wheat flour from Prima, up from $26 previously.
The impact will not be too significant as the price increase is quite minimal, said Mr Liow. As a result, most businesses are unlikely to pass on the additional cost to consumers, choosing instead to absorb it.
Consumers are glad that prices are set to remain the same.
Said Ms Penny Ong, 50, a manager in a trading company who buys about 1kg of flour a week to bake recreationally: 'It is a relief for me that flour prices are not going up because that will help me save some money.'
