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Sze Hian scrutinises the prices of rice at NTUC FairPrice.

The rise and fall of rice

Leong Sze Hian

Uniquely Singapore

After reading the news reports about FairPrice not allowing customers to buy more than five 10-kg bags of rice, consumers may be flocking to Fairprice, thinking that it has the cheapest rice and stocks may run out.

Restricting consumer purchase may not protect consumer interest, and may have the opposite effect of causing even more buying to hoard rice which in turn would cause rice prices to increase further.

I refer to MP Seah Kian Peng’s reply in the Straits Times, ("FairPrice items still among the cheapest", May 6) to Mdm Lily Cheong's letter, "Puzzled over stiff weekly price rises at FairPrice" (ST, May 1).

Mr Seah is the Deputy CEO & COO, NTUC Fairprice Co-operative Ltd. (Parliament)

Mr Seah said:

While global rice prices have increased by more than 100 per cent since March last year, FairPrice has held its rice prices. Our house-brand rice prices have increased by 15 to 25 per cent since March last year ...

Due to the low price of FairPrice house-brand rice, sales of our rice more than doubled in March and this has depleted our rice stockpile. To make sure we provide a reliable supply of rice to consumers, we have replenished our stock with rice bought at prevailing market prices.

On 6-7 May, the same day Mr Seah’s letter appeared in the Straits Times, FairPrice was selling its cheapest housebrand, Fairprice Thai Fragrant Rice (5 kg), at $6.60.

Wasn’t its cheapest housebrand fragrant rice $26.80 a week ago and $17.50 about two weeks prior to that?

So, my question is how this is possible at all – given that, as Mr Seah explained, FairPrice “depleted our rice stockpile” in March and that FairPrice had "replenished our stock with rice bought at prevailing market prices"?

Simply put, does it mean that:

Price of FairPrice’s cheapest fragrant rice (10 kg) was:

Original price: $17.50

Later part of April: $26.80.

6-7 May: $13.20 ($6.60 x two 5 kg bags) (After Mdm Lily Cheong’s letter to the Straits Times on May 1.)

Why did the prices vary so much?

Since "global rice prices have increased by more than 100 per cent since March last year", why is it that Fairprice was selling its cheapest housebrand FairPrice Gold Superior Fragrant Rice (10 kg) at $16.20 in June 2007 (source: Case survey of household items prices, July 2007), compared to $13.20 for its cheapest house-brand fragrant rice now?

Was FairPrice's rice over-priced by about 23 per cent in Jun 2007 ($16.20 divided by $13.20)?

100 per cent global rice in price – but 23 per cent cheaper at FairPrice?

The statement, "Our house-brand rice prices have increased by 15 to 25 per cent since March last year", does not seem to make much sense, as it appears to have decreased by 23 per cent now, compared to June 2007.

I am puzzled as to how a 100 per cent increase in global rice prices since March 2007 can translate into rice today which is about 23 per cent cheaper than in June 2007? Was FairPrice's profit margin higher in June 2007?

In view of this "yo-yo" pricing, I would like to suggest that FairPrice give Singaporeans more detailed information about its pricing policies.

I also refer to the article "Quick buck on rice: FairPrice acts" (Today, May 10), and media reports that customers were not allowed to buy more than five 10-kilogramme bags of rice per shopping trip from FairPrice.

Fairprice said they suspected that traders or small businesses were taking advantage of their low pricing, and the restriction is to protect consumer interest.

I was at Giant on 10 May, and it was selling Thai White Rice (5 kg) at $5.29.

On 10 May, Fairprice was selling its house-brand Thai Fragrant Rice (5 kg) at $6.60.

On 11 May, Sheng Siong's website priced its Happy Family Whole Grain Rice (5 kg) at $5.20.

So, the cheapest rice at Giant and Sheng Siong was actually about 20 and 21 per cent cheaper, respectively, than the cheapest at Fairprice.

(Even though fragrant rice and white rice are different, for lower-income Singaporeans, the cheapest rice that they can buy may be more important to them.)

Golden Phoenix and Golden Peony

With reference to the Case Rice Price Survey released on 15 May, why is it that the entire Straits Times article (“Supermarkets cry foul over Case's rice survey”, ST, May 16) and the Case press release are focused on the housebrand Golden Phoenix Fragrant Rice?

The ST article states that:

The cheapest Golden Phoenix rice: $13.30 for a 5 kg bag at Fairprice and $18.80 for a 10 kg bag at Prime.

Note that the comparison is for a 5 kg bag and a 10 kg bag of the same rice.

Why would anyone buy two 5 kg bags at FairPrice for $26.60, when one can buy a 10 kg bag from Prime for $18.80? The two 5 kg bags cost 41 per cent more than the 10 kg bag!

This brand curiously happens to have the highest price in the price variation range, of all the fragrant rice in the Case survey, with a price range from $13.30 to $15.00 (5 kg bag).

Why wasn’t the cheapest-range rice, Golden Peony Fragrant Rice (price range from $9 to $12.80), highlighted instead?

Wouldn’t consumers be more interested in the cheapest fragrant rice, rather than the costliest?

So, how does FairPrice fair for Golden Peony Fragrant Rice, the cheapest in the range?

The answer:

The Case survey shows “a dash” ( - ) for Golden Peony Fragrant Rice at FairPrice, and the lowest price was $9 for a 5 kg bag at Cold Storage. What does the dash mean? That FairPrice does not sell this brand, or was it out-of-stock on 6-7 May?

Finally, why did the survey not cover White Rice, which is cheaper than Fragrant Rice (which the survey said was selected because it was more popular)?

Even though White Rice may be less popular, it should not mean that we do not cover it at all.

After all, maybe the cheaper White Rice is more popular with lower-income Singaporeans?

Read also:

The Unions, the Press and the People by Leong Sze Hian and Choo Zheng Xi.

CASE's relationship with NTUC by Leong Sze Hian.

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