New source of food supply from Anhui

Tuesday, July 12, 2011
Issue 1355, Page 2
Word count: 596
Published in: Macau Daily Times

By Poyi (Natalie) Leung & Tiago Azevedo

Director of the Macau Economic Services (DSE) Sou Tim Peng disclosed that “significant progress” has been made recently in opening up new sources of food supply from mainland China.

Speaking to reporters on the sidelines of a symposium yesterday, Sou said a cooperation agreement was signed with Anhui province, and the two sides will soon begin discussions regarding the types and quantities of products to be imported into the SAR.

“The government has been assisting the industry in finding new sources of food supply in mainland China and also in four to five Southeast Asian countries so far,” he said.

Yet Sou did not speculate when the effects would be reflected on local prices. He said “definitely the sooner the better”, stressing that the government will continue in close cooperation with the industry and mainland authorities in an attempt to ease the situation.

On the other hand, with China’s inflation rate reaching 6.4 per cent in June, the situation in Macau could also intensify as the city’s food imports rely significantly on China.

When asked whether Macau’s inflation rate may reach a higher level in coming months, Sou did not comment directly, but said that “soaring inflation is currently a trend worldwide and the government will continue to push forward to open up new sources of goods in order to provide more choices for the consumers in Macau”.

China’s inflation accelerated to the fastest pace in three years last month, with consumer price index (CPI) exceeding the previous month’s 5.5 percent and the government’s full-year target of 4 percent.

Analysts believe that the higher June reading in China’s CPI inflation, the better chance for it to peak.

Ting Lu, Hong Kong-based economist at Bank of America-Merrill Lynch, predicts China’s inflation will “fall steadily” after June to around 4 to 4.5 percent by the end of the year. It will probably stay at that level for a “couple of years,” Lu told Bloomberg.

Price pressure

However, Macau will still feel the impact of surging inflation in mainland China, said local economist Albano Martins.

Macau’s inflation rate in May was reported at 5.19 percent and even with new sources of food supplies the situation will not likely change.

“Rising global food prices and the Yuan appreciation, especially with the US dollar going down, would be the factors adding upward price pressure from imported sources,” Martins told the Macau Daily Times.

Since Macau has limited tools to deal with inflation, with no agricultural sector and an industrial sector that’s becoming increasingly smaller, the economist believes the territory will remain dependent on the prices of what it imports, particularly from China.

“Even with more sources of food supply the impact of inflation will still be directly felt by residents, because food and non-alcoholic beverages are the most important part of family budgets,” he said.

Diversifying food channels “only limits the winning margin of the importer because the number of suppliers increases and there is more competition”.

“But in fact it doesn’t have any impact on inflation whether Macau imports foodstuff from Guangdong province or from elsewhere in mainland China because prices are also going up there”.

Consumer prices in June were mostly pushed up by rising food and pork costs, which will become less of a problem in the second half of the year, Caijing reported July 9, citing Li Daokui, an adviser to the Central Bank.

China’s pork prices may fall beginning in July and August as more maturing pigs boost supply, Xinhua News Agency reported yesterday, citing Wang Zhicai, director of animal husbandry at the Ministry of Agriculture.

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