CURBS ON EXPORTS AND ILLEGAL HOARDING OF RICE

CURBS ON EXPORTS AND ILLEGAL HOARDING OF RICE: 9.

Er Lee Bee Wah asked the Minister for Trade and Industry in view of moves from some rice exporting countries to curb their exports (a) how will this impact the supply of rice to Singapore; (b) whether there is any government-to-government contact to secure supplies for Singapore should the situation worsen; and (c) whether there is any special government task force monitoring the situation.

10.

Mdm Cynthia Phua asked the Minister for Trade and Industry what steps have been taken to ensure that there is no illegal hoarding of rice by unscrupulous traders or retailers to take advantage of the rising prices.

The Senior Minister of State for Trade and Industry (Mr S Iswaran) (for the Minister for Trade and Industry): Mr Speaker, Sir, may I have your permission to take Question Nos. 9 and 10 together, please?

Mr Speaker: Yes.

Mr Iswaran: Sir, the global price of rice has risen substantially since the beginning of 2008. This is driven by a multitude of short and long-term factors such as increasing global demand, adverse weather affecting crops, falling yields of farmland and underinvestment in farming technologies in rice producing countries. Some rice producers like Vietnam and India have reduced or curbed rice exports to ameliorate the impact on domestic prices. However, these export restrictions are primarily on white rice and not the premium rice that we mainly consume in Singapore. As such, these moves have not disrupted our rice supply.

More importantly, our rice merchants are still receiving their rice orders and there is no curtailment in import of rice.

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Thailand, which is a major source of rice for us, has not limited its exports and has pledged to continue meeting global orders. Its rice harvest last year was healthy, leading to a significant 72% increase in its exports in the first three months of this year.

Singapore’s demand for rice is also very small compared to total global rice production. For example, we account for only 2% of Thailand’s total rice exports.

Over the years, Singapore’s rice imports have also been well-diversified across several countries which help to mitigate the effects of any supply disruptions in a particular source country.

Given the market volatility and global developments, MTI is monitoring the situation closely in consultation with other agencies like MND, AVA, MFA and IES as well as market players.

Mdm Cynthia Phua’s Question has a more domestic focus. MTI has been monitoring the rice market closely. Our rice importers have been conducting their business responsibly and maintaining normal supplies to consumers, despite the volatility in global markets. There is no evidence or report of rice importers colluding to restrict supplies and drive up prices. In fact, the importers have requested to bring in more stock to meet increased demands from consumers. MTI is supportive of this move.

MTI has responded to our rice importers’ request to allow additional imports of rice with more flexibility to their mandated stockpile requirements. By doing so, the Government aims to facilitate those who are keen to import beyond their normal quantities to meet market demand. This will also help ensure that Singapore has a slightly bigger buffer of rice than at present, so as to cushion us even more against any future supply shocks.

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It is not in the interest of rice importers to indulge in any form of anti-competitive behaviour. We have a competitive rice market with more than 30 importers. Any attempt by errant importers to withhold supply and increase prices will result in loss of customers and market share to other market players.

Also, as a condition of their licence, rice importers are not allowed to engage, directly or indirectly, in price fixing or other unfair trade practices relating to the import or sale of rice. We view such anti-competitive behaviour very seriously, and will not hesitate to take action against any errant businesses.

Er Lee Bee Wah (Ang Mo Kio): Sir, I would like to ask whether MTI monitors the price increase over the last few months and what is the percentage of increase and how do we prevent profiteering.

Mr Iswaran: Mr Speaker, Sir, as far as price increases are concerned, we can look at it at the international level and also at the domestic retail level. At the domestic retail level, which is probably most pertinent for Singaporeans, I can give a couple of examples. For a 10-kg bag of Thai fragrant rice – I am told the Royal Umbrella is one of the high-end brands – the price has gone up from January to April this year by about 10%-15% ($2). We can expect there will be some volatility and there will be some adjustments in future, but this is based on what the retailers tell us as of now.

As far as the home-brand of NTUC FairPrice is concerned, the price has gone up by a similar order or magnitude, say, about 10% but a 5-kg bag of this rice will cost maybe about $4.50 today compared to under $4 before. These are some of the retail level prices. I am sure there are some variations across different types of

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supermarkets but this gives you a sense of what is happening.

At the international level, when you look at the prices at which things are being traded, in fact, there have been very sharp spikes and these are due in part to specific countries going into the market and placing very large orders. For example, the Philippines has gone to the market to ask for tenders for up to half a million tons in one go and this has created a significant squeeze in the market. What is apparent is that supply is available but the prices have gone up significantly. To give one example of it, for white rice, I am told that in a recent bidding exercise that the Philippines asked for, the price has gone up to over US$1,000 per metric ton. To give you a reference point, compared to, say, early this year or late last year, this is at least a 50%-60% increase.

As far as profiteering is concerned, at MTI we remain open to any reports of profiteering. We have no reports of any profiteering or any anti-competitive behaviour by our rice importers. As I said earlier, they have been very responsible. They have continued their supply and they have asked for permission to be able to bring in more without the imposition of mandatory stockpiles. However, if Singaporeans in general see any evidence where they feel that there has been some anti-competitive behaviour, then they should make a report, whether it is to MTI or CASE, and we will take appropriate follow-up action.

Mdm Cynthia Phua (Aljunied): Mr Speaker, Sir, I just want to ask whether there is constant monitoring of the stockpile of each of the importers to ensure that there is really no illegal hoarding in terms of the normal stockpile that they have.

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Mr Iswaran: Mr Speaker, Sir, by licensing requirements, the importers have to maintain a minimum of twice their monthly import quantity. That is the requirement. There has been no drawdown on that stockpile. They have maintained that, and there is an aggregate for each of these importers. Beyond that, what they keep in their inventories as part of their trading practice is something beyond the scope of Government monitoring. However, as we understand it, there has not been any major change in their approach. The importers continue to want to have a reasonable buffer in their own inventories so that they can meet the needs of their regular customers without interruption. There is no major shift other than the sudden spike in demand a few weeks back but that seems to have come down.

Mdm Ho Geok Choo (West Coast): Sir, I would like to ask the Senior Minister of State whether there are plans to change and influence the consumer habits of Singaporeans where staple food is concerned, and whether his Ministry is looking into alternative sources of staple food so that in the event we are faced with a crunch we are ready for such a switch in consumer behaviour.

Mr Iswaran: Sir, food, in general, is not under MTI but, as far as rice is concerned, I think Singaporeans are very intelligent consumers and they know the range of options available. Even for rice, there are different grades and they can just switch from the high-priced grades to the low-priced grades and continue to maintain your preferred carbohydrate content. In general, if they want to switch beyond that, I think the options are also available. We have not really embarked on any major preference changing exercise as of now but I think, in general, the market signals and what is available in terms of price and quantity should serve as a sufficient indication for Singaporeans to make educated choices.