Flour ban could see stocks running out within a month

Importer warns mainland action may be disastrous

One of the largest flour suppliers in Hong Kong is rejecting orders from new customers, and estimates its stock could last no more than one month in light of a mainland ban on flour exports meant to stabilise domestic supply.

The warning came after the Ministry of Commerce introduced a new quota and permit policy this month on wheat, corn and rice flour exports.

The customs authority imposed the ban, although details of the policy are still being worked out.

A ministry official would not say yesterday when the ban would be lifted, but the Commerce and Economic Development Bureau said it was in close contact with mainland authorities on the ban.

"We hope the exports can be resumed as quickly as possible," a bureau spokeswoman said.

The policy change has not just further stretched flour supplies but also might further increase the price after a tax of 5 per cent to 25 per cent on 57 types of grain products, including flour, was earlier imposed by the Ministry of Finance.

The Shiwo Trading Company, one of the largest suppliers of flour from the mainland and Japan, made the one-month estimate on its supply and said it would be disastrous if the ban was not lifted by then.

"We have rejected new customers, and we might not accept extra orders from existing ones," the firm's managing director, Leung Yiu-kam, said.

"I have also heard that other suppliers already have been having difficulty meeting demand."

While the company pledged not to raise prices, Mr Leung said food producers relying on low-quality mainland flour would suffer much more than others using more reliable Japanese flour, even though it cost 50 per cent to 80 per cent more.

Of the more than 156,000 tonnes of wheat imported in the first 10 months of last year, about 61 per cent came from the mainland and 28 per cent from Japan. Mainland flour is priced at between HK$100 and HK$120 per 22kg bag.

Lam Soon, the largest flour importer, said supplies to its customers remained normal but did not say how long stocks would last and whether it had adjusted its price.

Winner Food Products, a local instant noodle producer, and Garden, the dominant bakery products supplier, said their production had not been affected because they had a diversified source of flour. The price of noodles, however, had already increased.

Maxim's Caterers also said it was reviewing prices for its bakery products due to a surge in prices of other ingredients. Taipan bakery said yesterday that although it was using Japanese flour, it had experienced a 40 per cent rise in the costs of other raw materials, which forced it to raise bread prices by up to HK$1.

A spokesman for Tai Cheong Bakery, known for its egg tarts, said that although the flour supply had been stable so far, "we can't stock up too much flour as it will become damp if kept too long. We have to order [a new supply] every day to replenish the stock".

SCMP Jan 5, 2008