Rice prices to tumble with the lifting of 50-year import restrictions
Rice prices are set to tumble in the New Year after import quotas are lifted, with one supermarket already cutting prices by up to 50 per cent in anticipation of increased competition.
Under current rules - introduced to stabilise supply during the Korean War in the 1950s - the SAR's 55 licensed rice importers have weight quotas set by the government.
However, restrictions preventing importers operating as wholesalers, and vice-versa, ended last year.
From New Year's day, large corporations, including supermarkets Wellcome, ParknShop and CRC, will be allowed to import rice directly as the half-century restriction ends.
CRC has already dropped the price of some brands of rice by up to 50 per cent, while discounts at Wellcome are between 10 to 30 per cent.
'When you compare it with the original price you will realise that the sale price is close to a 50 per cent discount,' a CRC spokeswoman said.
Raymond Chan Shu-hung, director of CRC, said the chain was able to drop prices so quickly because it imported the discounted brands itself.
He added that when the quota is dropped the whole market would follow.
'With the market opening we can negotiate a better price with the suppliers and we can now calculate that it will cost less to import rice. When the market opens there will be a lot more room for prices to be adjusted downwards,' Mr Chan said.
He added the 10 per cent drop in prices predicted by market experts was too conservative and that CRC planned to keep prices 20 per cent below that of previous sales for the next few months.
'Unless the countries from which we import the rice suffer bad harvests, the cost of rice should be much lower than before,' Mr Chan said.
Diane Chiu Man, marketing development manager for Wellcome, said the price of the grain, which has been falling steadily in recent years, will become far more competitive when the market opens.
'The supply of rice will increase greatly when the quota is lifted but the demand will not change. This will make the market much more competitive,' Ms Chiu said.
'Rice has always been a promotion-driven product because people only buy it when it's on sale. We expect the profit margin will drop after the quota is lifted.'
She added that, with over 30 importers, the market was bound to change. 'The quality and range of rice will have to improve and prices will have to become more competitive,' she said.
A ParknShop spokesman said discounts were possible but that no decisions would be made until the chain had an idea of what prices suppliers were offering.
Under the new system a reserve stock of rice will continue to be kept for emergencies. The stock has been reduced from 45,000 tonnes before 1998 to 13,500 tonnes this year as Hong Kong has not been faced by the threat of war.
Hong Kong consumes about 320,000 tonnes of rice every year, with 180,000 tonnes used by restaurants.