VZCZCXRO8900
PP RUEHCN RUEHGH RUEHVC
DE RUEHHK #1777 2611005
ZNR UUUUU ZZH
P 181005Z SEP 09
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 8572
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY

UNCLAS HONG KONG 001777 
 
SIPDIS 
 
DEPT EAP/EP RYAN MACFARLANE 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ECON ETRD KGHG
SUBJECT: HONG KONG:APEC FOOD SECURITY INITIATIVES 
 
REF: A. SEC STATE 96050 
     ¶B. HONG KONG 782 
     ¶C. HONG KONG 1999 
 
¶1. SUMMARY: The biggest food security challenge that Hong 
Kong faces is its dependence on food imports.  Hong Kong 
imports nearly 95% its food requirements, which leaves it 
exposed to export bans, inflation, food safety threats, and 
the possibility of global shortages.  It addresses these 
weaknesses with a sound public health service, strong food 
safety measures, food supplier diversification, and a welfare 
net for low income people and elderly. END SUMMARY 
 
Hong Kong,s Challenge 
------------------------------ 
¶2. The biggest challenge that Hong Kong faces related to its 
food security is its dependence on food imports.  Hong Kong 
imports nearly 95% its food requirements.  Local production 
contributes only 3% of fresh vegetables, 46% of live poultry, 
and 18% of live pigs consumed.  Currently, mainland China 
accounts for approximately 24% of imports and the U.S. is the 
second largest food supplier with 14%.  Due to its central 
location, free tax port status, and role as a regional 
purchasing and distribution center, 30% of all Hong Kong 
imports are re-exported to other destinations. 
 
¶3. Given its reliance on food imports, a food supply 
disruption at its sources could put Hong Kong at risk.  Hong 
Kong,s relative wealth helps shield it from supply issues 
that only affect a particular source, such as mainland China. 
 It can either absorb the increased cost or switch or 
increase imports from other sources.  However, in the rare 
event that there were to be a global systemic food supply 
disruption, Hong Kong,s food supply could conceivably be at 
significant risk. 
 
Hong Kong Food Price Inflation 
------------------------------ 
¶4. In 2008, as world agricultural commodity prices and food 
price inflation rose rapidly due to a range of global 
factors, Hong Kong also experienced a sharp rise in food 
prices, which registered double digit increases of 10-11% 
during February to August 2008.  But since August 2008, food 
prices have gradually stabilized.  In June 2009, food prices 
rose only 0.5% from last year,s level.  Given Hong Kong's 
dependence on imports, domestic food price inflation pressure 
will normally follow world food prices. 
 
¶5. Unlike mainland China which in 2008 imposed a 20% export 
tax to discourage exports of domestic production, the Hong 
Kong Special Administrative Region Government (HKSARG) has 
taken a hands-off stance towards rising food prices, advising 
consumers to consider cheaper alternatives, but refusing to 
intervene in the food market.  The HKSARG did however 
increase the "fruit mone" allowance given to the elderly. 
While consumer are oncerned about rising food costs, and 
incluing a brief run on rice in March 2008, no 
demonsrations or disturbances related to food prices in 
either Hong Kong or Macau have occurred. 
 
Hng Kong,s Concern for Food Safety 
------------------------------ 
¶6. Hong Kon consumers, concern about the safety of food 
imprts from mainland China, especially after the Melaine 
contamination incidents boosted demand for organic, high 
quality, all natural foods, and gourmet foods.  Tightening of 
food supplies from mainland China for products such as pork, 
eggs, and milk have lead to increased importation from other 
sources, including from the U.S.  The HKSARG introduced a 
bill requesting  importers and distributors to voluntarily 
register with the government in order to facilitate food 
traceability/recall in case of food safety incidents. 
 
Hong Kong's Safety Net 
------------------------------ 
¶7. The relative affluence of Hong Kong residents has allowed 
most consumers to absorb increases in food prices.  The 
typical Hong Kong household spends US$2,500/month to meet its 
basic living needs, of which 27% is spent on food and 
beverages.  Low income groups, the 10% of Hong Kong 
households making less than US$513/month (4000 HKD/month), 
face the biggest challenge.  Hong Kong's Comprehensive Social 
Security Assistance scheme provides a safety net for the low 
income, designed to bring their incomes up to prescribed 
levels to meet basic needs.  In addition, all elderly also 
receive an additional social security allowance (aka. "fruit 
money"). 
 
MARUT