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Publication: MyPaper, pp 4-5 Date: 13 November 2007 Headline: Increasing food prices

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in brief ...... I

PRICES of food in Singapore have risen about 3.7 per cent compared to the saw time last year.

Fwd prices are also rising all over the world - over 10 per cent in India; 6 per cent in the United Kingdom; and 6.7 per cent in the United States in the first six months this year.

Associate Rob Leung Hing Man at Singapore Mwgement Universi@'s SFhaol of Ewnomics said that global warming and changes in weather p a t t m have snrerely affected the pmduction of cmps. And ecodomists have mid that rising demnnds from developing wrmtries

are compoundmg the sh t age problem Howeva, o~normsk believe that nsrng fwd pnces mll

have less imp3 on Smgapre than other wuntnes h 1s because of the strong S~ngspore Dollar, relatively nch people, and the mde vmety of fwd sources

The Government bas a d that 11 d l not cnmol the pnces of fwd, as Smgapore ui a h e economy b foous wnbnnc to be helpmg the poa here

It also w d that ~t has managed to reduce unponed mils- tion by a l l m g the Smgapore Dollar to stremgihen ova the last few years

Source: MyPaper O Singapore Press Holdings Limited. Permission required for reproduction.

Publication: MyPaper, pp 4-5 Date: 13 November 2007 Headline: Increasing food prices

Associate Professor Leung Hing-Man and Assistant Professor Anthony Tay gave their views on the global phenomenon of rising food prices.

Prof Leung raised the issue that as more resources are needed to keep pace with world progress, we need to be mindful if we have sufficient food to sustain our people. He said that with global warming, climates have been altered and weather patterns become unstable. This has a serious impact on agriculture.

Prof Tay pointed out that more foreign countries are going into agriculture of corn and palm oil.

Prof Leung said that there is a time lapse between supply and demand. For supply to keep up with demand, a certain time period is required and during this time, prices will go up. It is not immediately felt when there is not enough supply. The market needs some time before the lack of supply is communicated to the source. Rise in food prices is one way of signaling to the source that supply is lacking.

Prof Leung also said that prolonged rise in prices can lead to a vicious cycle. Workers will then ask for pay increase and employers will pass the wage costs down to consumers of their services Consumers will consequently demand higher salaries, pushing prices up. Because of the severity of such an income, all the central banks and the United Nations are carefully observing the situation to avoid such an eventuality.

Prof Leung said that Singaporeans are generally more affluent, so increased expenses on food do not impact them too greatly compared to those in poorer countries. Singapore has a free market and there is a great variety of food choices. Therefore, the natural market competition would even out the price increases and provide reasonable prices for consumers.

Prof Tay said that compared with other countries who are developing at a different pace from Singapore, our prices are still quite low.

Prof Leung said that most economists would oppose any measures to control the market and trade. He cautioned that should the government control prices and bring them below the international average, there will be two consequences.

First, merchants will not be able to purchase their goods causing shortage and panic.

Second, if the government purchase goods high and sell them low, it will cost them a lot of money This will benefit the poor but will also subsidise the rich, creating an inbalance. Prof Leung added that rise in prices affect blue collar workers and retirees most greatly. Someone who earns $500 a month will feel the squeeze more than someone who earns $5,000 a month. Therefore, the government needs to focus on the needy.

Source: MyPaper O Singapore Press Holdings Limited. Permission required for reproduction.