have contributed in varying degree in the last two years to the increase in purchase and consumption of broken rice.
The other generalization that can be made is that the business acumen of importers has from time to time enabled registered importers to purchase rice at prices c.i.f. lower than the going price f.o.b. Bangkok, which in turn has, by and large, tended to keep the wholesale/retail price down in the domestic market. Apart from these two generalizations, the following conclusions are valid in respect of the years 1962-66 in the light of known domestic and external circumstances.
1962. A sudden rise in import prices in the early part of the year leading to a steep decline in June, when stocks of rice were exceptionally high, caused great confusion in the market. This brought to light that one of the 'conditions' imposed on importers-that credit to wholesalers should be restricted to one month-was being widely ignored, and because wholesalers had also been too free with credit to retailers. The market was eventually stabilized, and the year was probably marginally profitable for all sectors of the trade.
1963. Import prices were reasonably stable, but in February the selling price of whole rice declined very steeply, broken rice in lesser degree. Stocks at all times were high and per capita consumption con- tinued to decline. Most importers suffered losses, but profits among wholesalers and retailers were probably good.
1964. This was on the whole a year of stability in the rice market. The import price of whole rice was steady, broken rice prices fell slowly during the whole year; purchases of broken rice diminished consider- ably. Retail prices were stable and did not fall despite the decline in import prices. The Commerce and Industry Department had taken steps early in the year to allow stocks to run down. Those importers who had suffered in the previous year were able to recoup their losses, and the more expert probably did reasonably. Retailers probably had an unusually profitable year, but there were signs of instability and shortage of credit among some wholesalers at the end of 1964, coin- ciding with nervousness in the property market.
1965. Import prices followed a mixed trend; whole rice prices at first declined, but rose steeply as from the middle of the year; broken rice prices rose steadily throughout the year. Retail prices remained stable at a somewhat higher level than the year before, apart from a brisk and relatively short-lived increase in the period February to April 1965.
It was about this time that a much publicized dispute broke out between the three sections of the trade. The Commerce and Industry Department overtly intervened only when importers, wholesalers and retailers had failed to reach agreement in direct discussion, but was greatly concerned at the implications if the credit structure of the trade was damaged at a time when credit was tight all round, consequent on the failure of certain banks. After six weeks of almost daily contact with all the parties con- cerned, a settlement was reached in June 1965 under which certain restrictive selling arrangements likely to increase (or, even inflate) the retail price adopted some months earlier by rice wholesalers were sub- stantially withdrawn. The importers also agreed to sell rice direct to retailers under certain safeguards designed to protect the credit structure of the trade. The upshot was that some twenty retailers, including two retail associations, now deal direct with the importers; at present their purchases represent about 8% of total imports. A number of wholesalers ceased active business.
In September 1965, after import prices had started to rise more steeply, the Commerce and Industry Department again had to intervene when purchases were made by wholesalers well in excess of their normal requirements, and stocks sold but not cleared rose from a 3-year average of 6,000 tons at any one time to over 12,000 tons. In view of this in- cipient speculative position, the department issued a written warning to the Rice Merchants Association advising them that unless those of their members who had been speculating against a shortage of supplies immediately divested themselves of their excess holdings, the depart- ment proposed to instruct importers/stockholders to reduce the credit allowed to wholesalers to a maximum of 15 days. As a result, the exces- sive stocks were quickly disposed of, and the retail price stabilized.
Throughout the whole of 1965, the margin between the c.i.f. price of Thai rice and the importers' selling price in Hong Kong remained high, whereas stock levels were constantly below those of previous years. Despite high interest rates and, perhaps even because of confusion brought about by the internal squabbles referred to above, 1965 was a profitable year for importers.
1966. The Commerce and Industry Department again had to in- tervene in April 1966 when, in spite of its previous warning, rice sold but not cleared by wholesalers and retailers rose to over 14,000 tons (including amounts of broken rice much in excess of average require- ments). In view of this second attempt by wholesalers and retailers to
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