08s6f econ blog

MPs expect more people to seek food aid (ST 10 April 08, H2)

With rising food prices, they welcome help for needy from ComCare By Zakir Hussain

FOR the past year, MP Lee Bee Wah has been giving hampers with rice, instant noodles, bee hoon and canned food to the poor every week in her Nee Soon South ward.
The food is donated by Chinese temples in her ward, which is in Ang Mo Kio GRC.
But rising food prices have seen a 'sudden surge' in the number of people turning up for the gifts, doubling to more than 70 constituents.
'It could be that more know about this, but two weeks ago, I had to tell them to come on alternate weeks so there will be enough,' she said, adding that many are new faces.

There is a shortage of food vouchers as seen below due to increase in awareness.
Since, these are not commodities and there are no prices fixed to them, is the demand and supply graph still applicable?

MP Baey Yam Keng is seeing a similar situation in his Queenstown ward, which is part of Tanjong Pagar GRC.
'Many familiar faces are coming more often for food vouchers, about once a month compared to once in two months before,' he said.

Form of subsidy as government pays the retailers/producers to sell food at lower prices. Food is price price inelastic as they are necessities, so would the benefit to consumers be greater than to producers?

But six other MPs interviewed say they have yet to see a rise in the number of people seeking similar help. However, they foresee an uptrend should food prices continue to climb.
Said Marine Parade GRC MP Muhammad Faishal Ibrahim: 'If prices keep going up, I expect the number needing help to rise, especially among the low-income and retirees. The extra funds will come in handy.'
Like Dr Faishal, the other seven MPs saw the Government's recent announcement of a fund to help the needy cope with rising food costs as a 'proactive' move.
The price of rice has soared, hitting a record US$21.50 (S$30) per 45kg this week - double last year's average price.
Rising rice prices had caused some Singaporeans to stock up on rice, prompting the Government to assure the people that Singapore has an ample supply of the staple food.
Rice trader Jimmy Soh of Chye Choon Foods said Singaporeans can expect another hike in the retail price of rice in two to three weeks' time.

Equilibrium price increases due to increase in fall in supply.

1) As consumers expect prices to inflate, they will stock up on non-perishable food items and demand for food increases, causing the equilibrium price to rise further.

2) As suppliers expect prices to increase, they may decide not to sell large quantities of food.

However the price inflation has been kept to a minimum. Through the media, the government assures the public of ample supply of food [Remember all those rice on the news?]

Meanwhile, MPs are adopting the Government's targeted approach in giving help to needy residents.
MP Sam Tan has a programme for 120 public assistance (PA) recipients who are given 30 meal coupons a month for meals at hawker centres in his Radin Mas ward, in Tanjong Pagar GRC. Ms Denise Phua has a similar scheme for the needy in her Kampong Glam ward, part of Jalan Besar GRC.
Welfare groups have also pitched in, with free meals for the elderly, including PA recipients living alone who will see their monthly $290 aid from the Government raised to $330 from July.
But more help for the needy will be arriving 'very soon', Minister of State Yu-Foo Yee Shoon promised on Sunday.
At least $1 million from the national ComCare fund for the poor will be used to ease their food burden, said Mrs Yu-Foo, who is with the Community Development, Youth and Sports Ministry.
She did not give further details, but North West District Mayor Teo Ho Pin believes the aid will take the form of food or grocery vouchers.
He believes last year's buoyant job market, which gave jobs to many who were on social assistance, has kept numbers of those in need low.
The hardest hit will be those with little or no income, said Central Singapore District Mayor Zainudin Nordin. 'They spend most of what aid they get on food, and rising prices mean $1 is not $1 any more,' he said.
'Rather than react when they really feel the pinch, we can now be proactive in helping them with the funds from ComCare.'

Food is income inelastic; even if you have one million dolllars, you will not consume one million dollars worth of food before they spoil.

But MPs such as Dr Faishal and Sembawang GRC's Dr Lim Wee Kiak feel vouchers have to be accompanied by advice on how to spend wisely, which they now give to residents receiving help.
Ang Mo Kio GRC's Ms Lee said she has heard of some people exchanging vouchers for cash of lesser value.
'They can't do it if they get food directly, but you need storage space for hampers and people to carry them. So vouchers are the easiest way to help,' she added.

In contrast to the tutorial question, food vouchers and hamplets are benefial to everyone.