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Saturday, December 22, 2007

Dec 20, 2007 Food Supply Crunch in Sg

Dec 20, 2007
Beware food supply crunch
THE extent of reduced food inventories in Singapore and the link to rising prices of groceries and meals out are becoming more apparent. This is not yet a crisis situation, and a straight comparison with the worldwide food supply shortage is not completely relevant. The diversion of a good portion of the American corn crop to ethanol production is feeding through in circuitous ways in higher grain and meat prices across parts of the global supply chain. Costlier animal feed is being compounded by higher meat consumption in new middle-class markets, like China. All that is having a peripheral effect on prices in Singapore, as shoppers in supermarkets and food court patrons have noticed. But Singaporeans' staples of rice, fish, poultry, fruit and vegetables - much of these imported from within the region - have not so far been buffeted by excessive price spikes. There is reasonable confidence there will be no supply disruptions either. Floods and the occasional animal disease outbreak in the supply sources of Thailand, China and Malaysia have brought seasonal supply fluctuations. Singaporeans have grown accustomed to these.
But the margin of market protection is getting thinner as worldwide consumer demand, reduced arable land, bad weather and costlier energy are coming together to constrict supply worldwide. The question consumers and the Government should mull over is how long it will be before the full force of dwindling world food stocks strikes this region, in the form of supply disruptions and sky-high prices. The Food and Agriculture Organisation has given ominous warning of its food price index having risen by 40 per cent this year, against only 9 per cent last year. Wheat stocks are at their lowest since 1980. Corn stocks are also low, thanks to a push towards renewable-energy use in the United States. Incidentally, this is a part answer to the problem of global warming.

Food price hikes here can be tackled with administrative measures, like government aid to low-income families. The NTUC FairPrice supermarket chain is helping customers with discounts on house brands of food and household products, on top of the GST hike it absorbed for six months. But if world supply trends look like heading towards a prolonged crunch, Singapore may find it strategically necessary to increase what food production it can manage. It has had success with space-saving vegetable growing, the hydroponic way. Crops are clean, a premium in these times of questionable production methods. An incentive to increase 'clean' fish farming could also arise, considering the polluted waters of supply regions and the use of banned growth hormones in fish culture.

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