Class: F.4A
Name: Prudence Lachica (14)
Shalom Ho (12)
Economic: News Analysis
Source:
Standard
Date:
11th, November, 2008
Price of eggs to remain high as supply tightens
Hong Kong housewives will keep paying inflated prices for fresh eggs in the foreseeable future,
according to the government and traders.
This is because mainland eggs, which account for 60 percent of the Hong Kong market, are being
thoroughly checked to ensure they are melamine free, Secretary for Food and Health York Chow Yatngok
said yesterday.
Higher prices were confirmed by Hong Kong Egg Merchants Association spokesman Young Kam-yin,
who said supply from the mainland has dropped by between 70 percent and 80 percent, forcing up
wholesale prices to HK$260 a pallet from HK$230.
Young said the mainland is also conducting more melamine tests on other products, including chicken
feed.
``Everybody wants safe eggs, but if the testing time can be shortened the suppliers will not be as
nervous,'' he said.
Chow said mainland egg supply will remain tight while testing continues.
``The central authority has indicated it wants to ensure the food supply in Hong Kong is safe,'' he said.
``So the suppliers are very careful to screen the source of the eggs before they are imported to Hong
Kong.
``This is a temporary arrangement which will certainly result in a temporary shortage.''
But he said it is difficult to say how long the shortage will last.
``Our eggs come from different provinces and areas of the mainland, so it will take some time.''
There has been no change in the cost of eggs sold in Hong Kong that are not imported from the Mainland
and this should help stabilize prices, Chow said.
A representative from a bakery, which uses three pallets of eggs each day, said that although it faces
higher costs it will not pass them on to customers because it does not want to lose business in what are
already tough times. And the owner of a traditional-style restaurant said that the higher prices are not
having a serious impact on his business. Meanwhile, Albert Chan Wai-yip of the League of Social
Democrats
asked Undersecretary for Food and Health Gabriel Matthew Leung during yesterday's Legco panel
meeting on health services why the government is reactive rather than proactive in dealing with the
melamine saga.
Leung replied that the government has handled the issue efficiently since September 11 when the
news broke and that milk samples are collected within a day and tested within two days.
In addition, the testing of melamine in food was gradually extended from milk products to also include
snacks, eggs and meat.
Describing the issue:
The issue is about the increased price of eggs in Hong Kong market because the government has to
check the melamine content in the eggs. Less supply of eggs were provide so the price of eggs then
increase. Though the price of eggs had increase but people still buy eggs because they need them for
furter production just like the backery need eggs to make bread.
Explanation of the issue:
The supply for mainland eggs decreased (S0S1) as mainland eggs accounting for 60% of the Hong
Kong market are being checked for melamine. The supply from the mainland has dropped by between
70% and 80%. The price of mainland eggs is therefore increased from HK$230 to $260 (P0P1). The
quantity transacted of mainland eggs is then decreased (Q0Q1).
The mainland eggs are economic goods because the quantities of the mainland eggs are not enough to
satisfy people’s want. More is preferred to less. There is a positive cost of production.
The mainland eggs can be both consumer goods and capital goods. When someone eats the egg to
satisfy his wants, the eggs are consumer goods. However, when the eggs are used as a model for
sketching, the mainland eggs are capital goods.
Mainland eggs are in inelastic demand as people have a habit to eat eggs for breakfast every day.