Price rise

By Jessica Lim & Lee Pei Qi, ST

That bowl of rice is going to cost more, following a worldwide jump in grain prices.

Supermarket chain NTUC FairPrice, the island’s biggest with 80 stores, which had been holding out on raising prices of its house brand rice, gave in yesterday as global grain prices shot up 30 per cent overnight.

It raised the prices of three inhouse varieties by 10 per cent to 15 per cent, the first hike since the middle of last year, when the goods and services tax went up, said a spokesman.

A 5kg bag of FairPrice Thai White Fragrant Rice now costs $5.30, up from $4.70, and a 10kg bag of Double FairPrice Thai Hom Mali Rice now goes for $17.90, up from $16.25.

Prices of non-house brand varieties of rice at FairPrice and other supermarkets have gone up, as and when suppliers had adjusted prices.

The latest adjustment follows skyrocketing world grain prices, which have jumped 50 per cent over the past two months and at least doubled since 2004.

On Thursday, the prices of Thai rice, a global benchmark, jumped 30 per cent to an all-time high of US$760 (S$1,050) per tonne after Egypt – a leading exporter – imposed a formal ban on selling rice abroad in a bid to stabilise soaring prices at home.

Prices now fluctuate with each shipment, say importers here.

Previously, exporters used to keep prices unchanged for three to six months at a stretch, said the owner of rice importer Chye Choon Foods, Mr Jimmy Soh, who supplies rice and noodles to supermarkets and about 700 provision shops.

‘For us now, prices change each time we get new supplies. Exporters also ask us to top-up prices stated in old contracts,’ he added.

He and four other companies that import rice and manufacture rice noodles or bee hoon have already told customers to expect prices to go up again next Tuesday by about 20 per cent.

Last year, Singapore imported 326,854 tonnes of rice, with close to 60 per cent of it coming from Thailand.

Vietnam and India make up another 30 per cent, with the rest coming from another 15 or so countries, including just over 2,000 tonnes from Egypt.

But as more countries impose export restrictions, importers here are worried about securing supplies.

Said rice importer Goh Hock Ho, managing director of Saga Foodstuffs Manufacturing: ‘Countries are tightening their supplies. Vietnam is now not renewing their contracts to small companies like us. Now the whole world depends on Thailand.’

The price hikes have already reached hawker stalls.

A bowl of rice at Madam Han Yei Liang’s chicken rice stall went up from 50 cents to 60 cents two days ago.

It is the first time she has raised prices at her two-year-old stall, even though her costs have jumped every week over the last month, she said.

She now pays $12 more per 50kg bag of rice, compared to a month ago, and was warned that the price would go up again by $3 next week.

Said the 50-year-old owner of Rui Kee Hainanese Chicken Rice on North Bridge Road: ‘I try to absorb the price first because I do not want to lose customers. But the price increase over the last month is just too much and too scary.’

Scouring the world to keep your food affordable

By Jessica Lim, ST

Pork from South Africa. Fish from Namibia. Eggs from the United States.

These are not the usual sources of produce sold in Singapore, but with prices from traditional suppliers heading ever upwards, importers are expanding their horizons.

The reason: If prices get too high, consumers stop buying, and importers’ bottom lines take a hit.

So importers are casting their nets far and wide for everything from staples like rice to meat and vegetables.

Meat merchant Jack Koh, 59, used to get his supplies from Malaysia and Thailand. Now he imports from Canada, Brazil and New Zealand as well.

He said: ‘We try to explore new sources all the time. It’s a contingency plan, even if we do not buy from them in the end.’

Checks showed that at least 10 meat importers have widened their supply sources in the past year.

Mr Koh is the president of the Meat Traders’ Association, whose members are scouring Vietnam, Sabah, Sarawak and South Africa for suppliers.

‘We must spread out from the north, east, south, west, to everywhere. Anything can happen, and if we do not make sure prices stay down, our customers will stop buying meat. When they suffer, we suffer too,’ he said.

When the hunt is over, what results is a fresh platter of chow.

Already, Namibian fish is available at NTUC FairPrice outlets. The chain was the first to bring in a seven-tonne shipment from the south African country last year. And recently, it also started stocking Vietnamese rice, which is about 20 per cent cheaper than that from Thailand.

More supplies from non-traditional sources are on the horizon. In time, eggs – 90 per cent of which come from Malaysia now – might be imported from the US.

Mr Tan La Huah, the former chairman of the Eggs Import/Export Trading Association, said that importers here are holding discussions with US egg suppliers and at least one importer has already turned to the US for its supply.

‘We are comparing prices before we decide if we should import American eggs,’ said Mr Tan, who brings about 72,000 Malaysian eggs into Singapore every week.

‘If we do, another 20 tonnes of these eggs will be available here every month.’

Even the Agri-Food and Veterinary Authority (AVA) has got in on the act.

Its spokesman, Mr Goh Shih Yong, said that the AVA ‘works with the industry to facilitate the imports of food from diverse sources at competitive prices’ and makes efforts to keep the ‘market accessible so traders can bring in food items’.

So far, the agency has given new suppliers in Belgium, Brazil, China, France, South Africa and Taiwan the green light to export frozen pork to Singapore.

It also recently approved Taiwan as a new source of frozen duck.

Supermarket chain Cold Storage works with more than 200 suppliers from all over the world to produce the 1,600 items on its shelves.

The massive effort to locate new sources is motivated to a large extent by rising food prices worldwide.

The prices of staples such as rice, wheat, corn and soya beans have all risen sharply, hitting record highs.

Wheat price increases have pulled up prices of flour-based products like bread and noodles. Prima Food – which supplies about 60 per cent of flour to manufacturers here – has raised its flour prices twice in the past three months.

Rice prices have risen, and supermarkets here have upped the price of a 10kg bag by about $2.

Consumers are feeling the pinch.

Mr Augustine Chua, 56, a production manager who earns about $1,500 a month, said: ‘I buy house brands now and more frozen food than before.

‘I also eat more tofu and less meat. But now the price of tofu, and even rice, is also going up.’

Importers have to look for new sources or risk a repeat of the Great Vegetable Throwaway: About a month ago, many wet-market stallholders had to throw out greens imported from China, after customers baulked at buying because prices almost doubled after severe weather in the country affected supply.

But how does sourcing food from afar help to bring prices down?

There are two ways, said Mr Koh.

When importers diversify their sources, they are no longer at the mercy of one supplier.

Having a choice of suppliers means the buyer’s bargaining power goes up, said Mr Koh.

Also, when exports from one place are stemmed – say, because of weather or a bird-flu epidemic – importers and manufacturers can switch to other suppliers easily, and are not held hostage to high prices caused by supply shortages.

Of course, all this is good for the businesses’ bottom line as well.

‘By searching for cheaper food sources, importers manage to keep their profit margins up,’ said Mr Thomas Pek, the managing director of Tai Hua Food Industries.

‘It is a win-win situation – our customers benefit from cheaper products and keep coming back to us.’

But however hard the suppliers look to diversify their sources, more price hikes are on the horizon.

A recent United Nations assessment predicted that food prices would continue to increase for the next few years and would, in fact, ‘rise in 2008, 2009 and probably at least until 2010′.

In the meantime, consumers will have to hope for news of the sort provided by Mr Png Geo Lian, the chairman of The Association of Chinese Wheat Flour Merchants of Singapore.

He says that importers are moving away from the ‘conventional supplies of wheat from places like Canada, America and Australia’ and tapping sources in China, where ‘wheat is cheaper by about $10 per 25kg bag’.