Fresh food business feels the squeeze

Friday, July 15, 2011
Issue 1358, Page 2 & 3
Word count: 1365
Published in: Macau Daily Times

By Poyi (Natalie) Leung

Times are certainly tough at the moment, for both consumers and people with their own businesses. Prices have been rising rapidly in Macau, where a lot of necessities including food products are imported from the mainland.

Inflation in China climbed to a three-year high in June, accelerating to 6.4 percent mainly attributable to surging food prices in particular types of meat. Inevitably the situation is also a concern in Macau. The most recent official statistics showed that the city’s inflation rate in May was 5.19 percent, a significant jump from 2.76 percent when compared to the same period in 2010.

Stall owners in local fresh food markets have also been hit hard by the continued appreciation of the renminbi. Increasing prices seem to be the only way to survive but it doesn’t necessarily mean a higher profit, because many consumers may choose to buy less or have become “less generous” when paying their daily visits to the markets.

Mrs Tang has been running a vegetable stall ‘In Kei’ in the São Domingos Market in Senado Square for some 20 years now. She says the import prices of all the green vegetables, carrots, pumpkins, tomatoes and mushrooms have all increased mainly due to the appreciated Chinese currency.

A carton of choy sum weighing 14 catties (a traditional Chinese unit of mass equivalent to around 600 grams) for example, costs MOP 250 now, up from MOP 180 before, she tells the Macau Daily Times.

A pack of three baby Chinese cabbages used to sell at MOP 6, but the import price has now raised the price to MOP 7 and so the sale price also needs to change to MOP 9.

“The profit is down by over 10 percent nowadays,” Mrs Tang says, disclosing that she didn’t raise her prices too much as she is worried that it might “scare the people away”.

“Almost every customer complains about the prices, but what can we do?” she adds.

In addition, she says fewer people come to the wet market during the summer vacation and even when they do come, they tend to buy less because of the “expensive prices”.

The SAR Government has pledged to open up more sources of food supply in order to ease the increases in import prices. But Mrs Tang is doubtful over this initiative.

“Vegetables in Hong Kong are cheaper because they have a lot more wholesale markets, whereas in Macau there is only one [Nam Yuet wholesale market]. I don’t understand how it’s going to work […] it’s going to be very difficult,” she says.

Mrs Tang also deems that import prices are unlikely to ease anytime soon, “unless the renminbi depreciates”, which she says is not possible in the foreseeable future.

In June, pork prices alone lifted China’s consumer price index by 1.4 percentage point, surging 57.1 percent, while meat and poultry prices also rose by 32.3 percent.

Mrs Leong’s Seng Fat butchery has been in the São Domingos Market for almost three decades. And she says these days are probably the hardest time for her business.

Since July 1, the import prices of pork per 100 catties rose by MOP 100, but she refused to disclose how much it actually cost.

“Many customers say the pork is very expensive and will buy less,” she says, adding she rather earns less than raising the selling prices too much.

The butcher can sell about two whole pigs per month, at MOP 35 per catty.

“As long as the business can support my basic living then it’s fine for me,” Mrs Leong tells the MDTimes behind the pork hanging on the dozens of hooks.

On the ground floor of the market, a woman in her 60s is discussing the fresh fish prices with a friend. She chose not to be named, but says she has to spend “a couple more hundred per month” buying food, pointing out that she feels the increase in the price of pork is the most notable.

“If I use a bit more money to buy food this time then I’ll try to use less next time,” she explains.

Profit down by half

Apart from meat and vegetables, a sharp increase in egg prices has also been felt. In one of the dried food stalls at the Iao Hon Market, Mrs Hung says import prices already began to rise after the 1999 handover, but the growth has been particularly fast in the past two to three years because of the ‘rising labour and transportation costs and the appreciated renminbi in the Mainland”.

She points out that the prices of ‘Chinese bacon’ – a popular type of processed pork meat in Chinese communities – and eggs have soared most significantly.

“The import price of Chinese bacon went up from MOP 30 to MOP 45 per catty, while that of a carton of 360 eggs jumped from MOP 260 to MOP 320,” she says.

As a result, the selling price of the Chinese bacon per tael (equivalent to 1/16 catty) is now MOP 3.5, an increase from MOP 1.5. Eggs are also sold at MOP 1.1 each, but the cheapest price was MOP 0.7 or MOP 0.8 in the past.

“The Chinese bacon should have been sold at MOP 3.8 to MOP 4 per tael. But we don’t want to lose our customers […] It’s hard to do business. We have already lost some customers because they felt it was too expensive,” Mrs Hung says.

She also says the profit from selling the Chinese-style salty fish has plunged from MOP 20 to less than MOP 10 per catty nowadays.

Peanuts used to have an import price of MOP 5.5 per catty about three years ago, but now it has more than doubled to MOP 11.5.

She says the stall’s profit has declined at least 50 percent. “When the import prices weren’t that high, we could make as much as MOP 4,000 a day. Now we can only make around, or even less than MOP 2,000.”

Meanwhile, a middle-aged woman who just bought some clams in a stall tells the MDTimes she has to use two thirds more money to buy food nowadays.

She says she will choose to buy more ‘middle-priced’ fresh produce, adding that pork and fresh fish have become more costly now.

‘Not dare’ to raise prices

Fruits are another necessity to the daily diet and any notable increases in prices significantly affect people’s lives.

According to Mr Lao, who sells a variety of fruits such as oranges, apples, water melons, bananas and mangos in a shop outside of the Red Market, says that soaring inflation has had a huge impact on his business.

The import price of oranges from the USA rose from MOP 150 two years ago to MOP 195 per carton.

A carton of 100 apples, also imported from the USA, cost MOP 270. Yet, Mr Lao sells them at MOP 10 for three, meaning that he earns slightly over MOP 0.6 for each of the apples he can sell.

Dragon fruit, imported from the mainland, costs MOP 150 a carton, an increase from MOP 100.

However, he says the import prices of fruits fluctuate frequently depending on market demand.

“It’s like the prices of seafood, changes from one day to another,” he adds.

Mr Lao admits that he did “not dare” to reflect all the increases in his prices, fearing that he may lose more business at the end of the day.

“I rather try to sell more but earn less. No one will come to buy if I raise the prices further,” he says, adding that his daily profit is down by about MOP 300.

Mrs Hui is also complaining about the increases in food prices. “Before I could buy a lot of different fresh food with just MOP 100 in hand, but now the same amount can barely buy anything,” she tells the MDTimes.

She used to spend less than MOP 1,500 a month buying ingredients to prepare meals for her family of four. This expense has now soared to at least MOP 3,000 but she says she is buying more vegetables and fruits than fresh fish and meat because of the prices.

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