Expect to pay up to 10pc more for your rice
Rice prices will go up this year, traders say - perhaps by as much as 5 to 10 per cent.
Strong demand for the grain, coupled with production shortfalls in key countries and a weaker US dollar, will probably mean Hong Kong people will have to pay more for the staple food, and for meals in general.
'The price of rice will go up in the coming months and I think the increase will be about 5 per cent [this year],' said James Foo Che-fuk, the managing director and chairman of rice importer Kwong Sun Hong.
'It's possible it will surge by as much as 10 per cent,' said Foo, who is also a member of the government's advisory committee on rice. 'But it will not rise more than that because Thai fragrant rice - the type of rice Hong Kong people eat most and is of better quality - is more expensive. Its [import price] is about US$1,100 per tonne now.'
Demand for the staple has outstripped supply with countries such as the Philippines and India suffering from production shortfalls, he said. In recent months, the Philippines increased imports after typhoons cut production, while India, the second-largest grower, suffered a drought and may become a net importer for the first time in two decades.
Anthony Lam Sai-ho, a director at key rice supplier Golden Resources Development, said the situation worsened after Myanmar announced two weeks ago it would halt exports to secure domestic supply.
Although the production of Thai fragrant rice is steady, Foo and Lam say its price would be affected by the supply of other rice varieties.
Lam also said the US dollar, the trading currency for rice, was expected to further weaken and boost the price of the grain.
He is unsure, however, if there will be a repeat of the sudden price increase seen in Asia two years ago, when panic drove Hong Kong consumers to rush to supermarkets to buy all available rice.
'I don't see the [supply] situation has improved,' Lam said. 'The issue seemed to have died down in 2009 only because the focus shifted to the financial crisis and the economy.'
According to Trade and Industry Department data, Hong Kong people eat more than three million tonnes of rice every year.
After price surges in 2008, the city's import of all types of Thai rice fell from 90.5 per cent of the total in 2007 to 81 per cent in the first 11 months of last year. Meanwhile, buying of slightly cheaper Vietnamese and mainland rice has risen.
The average retail price of Thai fragrant rice rose from HK$6.57 per kilogram in 2006 to HK$9.74 per kilogram in 2008, trade department figures showed.
In the first 11 months of last year, it rose to HK$10.36. If the retail price surges by 10 per cent in the future, consumers will have to pay HK$5.17 more for a five kilogram bag of rice, which costs about HK$50 on average.
According to trade department figures, the average Hongkonger ate 48 kilograms of rice in 2008, equal to spending of HK$467.50 per person last year on Thai fragrant rice.
Ken Chan Wing-on, the managing director of Tai Hing Roast Restaurants, which has about 40 outlets in Hong Kong, said the group expected food costs would rise 10 per cent to 15 per cent this year, or an increase of about 3 per cent in overall operating costs.
'Apart from rice, oil and sugar are getting more expensive and we believe the price of meat will surge too,' Chan said.
Rising rent and labour costs would lead to increased charges on set meals of HK$1 or HK$2 after the Lunar New Year, Chan said.
And what can consumers do to avoid paying more?
Lam said: 'Perhaps ... they can buy a few bags of rice as reserve now. If stored in vacuum bags and kept in a cool place, it can last quite a while.'
Lee Kwong-lam, the president of Hong Kong and Kowloon Vermicelli and Noodle Manufacturing Industry Merchants, said the price of Thai rice had increased nearly 20 per cent to more than US$1,000 a tonne in the previous two months.
'We still have stocks so we want to wait and see. But even if we want to buy now, exporters are holding back stocks as they expect prices will surge,' Lee said.