NTUC makes so much money, why their things cannot be cheaper?

By July 18, 2018Current

TL;DR – It’s called FairPrice by the way.

Once upon a time, in a faraway town, lived a young man named Ah Huat.

Ah Huat was a very kind man who believed in doing good and doing right.

Really meh? Got people like that one meh? Don’t wayang lah – That’s exactly what his peers thought.

So, many peers shunned him because he was too good a person to be true – you know, how the goody two-shoes in class usually gets ostracized by their classmates? You get my drift. His peers were suspicious of Ah Huat’s intentions, but they failed to realize that not everyone was egoistic, selfish, and full of themselves just because they themselves were like that.

Ah Huat was a very down-to-earth person and he ran a humble little grocery store that sold daily necessities like rice, flour, egg and oil. You know, stuff that every household needed. Every night when he tallied his sales, he would put aside a portion and put them into an empty Milo tin. At the end of every month, he would take out all the notes and coins from the Milo tin and donate them to the orphanage where he grew up.

Life was simple, until the town got hit by what could be its worst drought in the nearby villages with lots of paddy fields, which resulted in a shortage of rice.

Merchants began exploiting people living in the town. Since there was low supply, prices of rice began spiraling out of control as unscrupulous traders began their profiteering schemes. As a result, only those who were more affluent were able to afford rice, while the poor were left in a lurch, unable to afford expensive rice.

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Ah Huat, being the good-hearted person that he was, was determined to keep rice prices at his grocery store as low and affordable as possible. Thankfully too, he was tipped off about the rice shortage and had ordered more than usual. As Ah Huat was able to hold rice prices at more or less the same level as before, it didn’t take long for everyone in town to hear of the good news. This deterred profiteering and black markets when everyone started patronizing Ah Huat’s grocery store instead.

People in Ah Huat’s town – both rich and poor – were able to afford rice as a result.

Since then, it further reinforced Ah Huat’s determination to be the grocery store in town that moderated prices of essential goods and hence, helped moderate the cost of living for the people in his town.

As his customer base grew, Ah Huat began travelling out of town to source for more goods to meet the demands of people in his town.

While he was travelling, Ah Huat needed someone to tend to his store. So, Ah Huat recruited a few employees – his elderly but still healthy and fit neighbors who were having problem finding work. He hired them not just because they needed the income to survive, but also because they were able to do the job effectively.

As much as Ah Huat would like to keep every single product in his grocery store the cheapest in town, he realized he could not do so.

He really needed his grocery store to generate income and make money. Not just for his own livelihood, but also to continue his monthly donation to the orphanage. He also needed to pay fair wages for his workers, and also to have enough capital to purchase enough stocks so as to ensure that his grocery store was always well-stocked. After the last experience, he also made sure he kept three months’ worth of rice at any one time. All of these cost money, and to make things more challenging for him, he had no funding from anyone whatsoever.

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Ah Huat then figured that whilst it was not possible to be the cheapest for everything in town, he could price his products as fairly as possible. On top of that, since he remembered how it felt like to be poor and hungry, he selected a basket of essential goods and priced them at really low prices so that the poorer families could afford them. Through the years, Ah Huat’s actions gave people assurance that they could always turn to his grocery store for their basic needs. This was also how he managed to keep his grocery store running for over 40 years.

By now, you might have guessed that Ah Huat’s story is actually a simplified version of the business model of FairPrice, one of NTUC’s social enterprises.



FairPrice is not a charity, neither is it a food bank – it is a social enterprise. Like any other commercial enterprise, it operates on market principles and has to compete for spaces and contracts, as well as to generate its own profit.

While FairPrice does not enjoy privileges from the Government, it has to fulfill its social mission, which is to moderate Singaporeans’ cost of living by keeping daily essentials affordable. For instance, FairPrice’s Everyday Low Prices programme maintains a basket of 500 essential items that are competitively priced. At least 90 per cent of these 500 items are among the lowest priced in the market.



And over the years, FairPrice has risen to the occasion many times, holding prices of vegetables during SARS in 2003, prices of eggs during the Avian flu in 2004, and prices of rice during the Gulf War.

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Not many people are aware that FairPrice also has its own charity arm, FairPrice Foundation. The foundation has been donating money to help Singaporeans in need. For instance, it makes yearly donations to the NTUC-U Care Fund to support low-income families. Since 2009, the foundation has donated $24.3 million.

As part of the Labour Movement, FairPrice also practices fair employment practices to reduce bias and increase diversity. There are significantly more older employees working in FairPrice outlets than other supermarket chains, if you’ve ever noticed.



Social enterprises need to do well before they can do good.

So I guess this answers the question why “NTUC earn so much money, their things cannot sell cheaper one meh?”

It’s called FairPrice by the way.

 

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JW

Author JW

I am nice, most of the time!

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