Rice price set to rise as Thailand floods hit exports
The price of rice is due to rise as flooding in Thailand - Hong Kong's biggest supplier - cuts into exports.
The flood could destroy six to seven million tonnes of paddy rice, the Thai government projected.
Sellers predict exports will tumble from a million tonnes to 550,000 tonnes this month, while prices could increase 20 per cent by the end of this year.
Wholesaler Lee Kwong-lam said Thai exporters are now proposing a price one-fifth higher than before the flood, but Hong Kong buyers have yet to agree. Prices in the city have not been affected yet, but are likely to be in a few months as stocks of older, cheaper rice run out, he said. The flood is just the latest factor to destabilise the complicated rice market.
Since new Prime Minister Yingluck Shinawatra proposed a rice subsidy scheme earlier this year, Hong Kong importers have been paying one-tenth more, Lee said.
To safeguard farmers' incomes, the Thai government pledged to buy unmilled grain at a price 40 per cent higher than the market level.
The scheme began this month, but fewer farmers than expected have joined due to the floods.
Eric Chu, director of importer Lick Sang Rice, said the flood had destroyed farms growing low- to mid-priced rice, and a 20 per cent import price rise is being proposed.
The top quality jasmine rice preferred by Hongkongers is less likely to be affected because it is not grown in the flooded areas, he said.
But its price has been climbing slowly since the Thai government proposed the subsidy scheme.
The subsidy's full effect cannot be assessed yet because the flood has disrupted it, but prices are likely to rise further, said Kenneth Chan, a representative of the Hong Kong Rice Importers and Exporters Association.
In the first nine months of this year, Hong Kong imported 153.7 tonnes of rice from Thailand - 61.8 per cent of the city's rice imports.
Meanwhile, Cathay Pacific has cancelled two regular flights - CX701 departing for Bangkok and CX702 returning to Hong Kong - for today, Sunday, Tuesday and Wednesday.
Affected passengers can rebook tours without paying extra fees.
The percentage of world rice exports Thailand was due to account for this year. But floods have hit 14 per cent of its paddy fields