adopt a speculative position, the department, after a further warning, reduced the delivery period allowed to wholesalers by importers to 15 days. The permissible importers/wholesalers credit period remained unaltered at 30 days. All prices quickly declined, and the subsequent steady rise in import prices was not reflected in an increase in wholesale or retail prices until shortly before the announcement of the Thai Govern- ment's temporary ban on exports at the beginning of November. There was consequently a diminution of selling margins, substantial in the case of whole rice, less marked for broken rice until despite the consider- able stocks available, the Thai Government's announcement had its inevitable inflationary effect on the market as a whole.
Between then and the end of the year, rice continued to come in steadily from China, to a diminishing extent from Thailand, and in a trickle from other sources. The ban on Thai exports, initially announced for two weeks, was extended to the middle of December when broken rice shipments were resumed on a small scale. The result was a gradual run-down of stocks in Hong Kong, if not alarming, at least sufficient to cause concern. The economic effect was a rise in both importers' selling price and a parallel increase in the cost of rice to the consumer in expectation of shortage, higher replacement costs, and diminished sup- plies in the future. There was also during December buying pressure from consumers stemming from nervousness about the effect of riots in Macau, etc.
Between 31st October 1966 and 13th January 1967, importers' selling prices at auction increased by approximately $15 a picul for Thai 100% whole white rice (third grade), by $20 a picul for Chinese rice (Wah Nam Jien), and by $6 a picul for Thai broken rice Al super grade. At no time was there any evidence of supplies where available being withheld at auction. The less steep increase in the price of broken rice reflected greater quantities of this quality held in stock and the fact that it was already relatively higher in price.
COMMERCE AND INDUSTRY Department,
25th January, 1967.
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COMMERCE AND INDUSTRY DEPARTMENT
RICE CONTROL SCHEME
QUOTA CONDITIONS
APPENDIX I
(made under the provisions of Section 5 of the Importation and Exportation (Reserved Commodities) Regulations, 1954)
Rice quotas are not transferable, nor will they necessarily be left in the hands of firms in which the control or ownership has changed materially since the quotas were originally allocated. Minor changes are permissible, but quota- holders should seek prior confirmation from the Director of Commerce and Industry that any proposed changes in ownership will not affect the quota con- cerned. Each quota-holder should send a list of shareholders as at 1st January, to this department not later than 15th January each year. Such information will be treated in confidence.
A reserve stock of 400 tons (per unit quota) of white rice must at all times be maintained by the quota-holder in good condition and in such godown or godowns as may be approved by the Director of Commerce and Industry.
Not less than 10% of each quota-holder's reserve stock must be stored in approved godowns in Kowloon.
Rice for sale on the local market may not, without the written permission of the Director of Commerce and Industry, be imported in arrear of the proportionate quota in each quota period, that is to say, for the first two months 4/13ths of the quarter's quota should be imported each month, and 5/13ths for the third month of the quarter; i.e. by the end of the third month the full quota must have been imported.
Quota-holders must offer supplies to the market regularly throughout each quota period.
Rice sold by quota-holders must be delivered to the wholesalers within 15 days, and paid for by them within one month, of actual sale.
Quota-holders must keep proper books of account in respect of all sums of money received and paid out and all sales and purchases of rice. These books are subject to inspection at any time by inspectors of the Commerce and Industry Department.
Quota-holders must observe the requirements of the Importation and Exportation (Reserved Commodities) Regulations, 1954.
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