Article No.

2 : Subsidies for food operators using healthier ingredients

1.0 Summary
Summary
Health Promotion Board has recently introduced a healthy eating option for all eateries to
promote the use of healthy cooking oil with low saturated fats contents for cooking. Suppliers
that bringing healthy cooking oil with not more than 35% of saturated fats will entitled to a
subsidy of 50 cents per kilogramme under the first phase of Healthier Ingredient Subsidy
scheme. The subsidised amount that complied by HPB will be reviewed by both industry
members and experts for every 6 months. Over the next 3 years the subsidy will also be
introduced to other ingredients such as whole grain noodles, wholemeal bread and brown
rice. The subsidy quantum had not been fixed but the pricing will allows consumers to be
able to choose between healthier and regular ingredients that will increase the demand of
needs from consumers. Under this scheme wholesalers must submit an audit report every 6
months to proof that the full subsidy amount is captured into the invoices that helps to save
food costs for all consumers. The Health Promotion Board will issued all food outlets that
using healthy ingredients a Healthier Choice decal. Suppliers see the needs that more eateries
will switch to a healthier choice.
1.1 Introduction
In the following report, we will see how the theories are being implemented based on the
article. The theories that are found in this articles are the theory of demand and supply, effects
of increase in demand and decrease in supply.
1.2 Application of theory

Theory of Demand
Theory of Supply
Effects of increase in Demand
Effects of decrease in Supply

2.0 Definition of Microeconomics Theories

Demand
The Quantity demand of any goods and services is the amount the consumers plan to buy
during the given time period at a particular price ceteris paribus.
Law of demand
The law of demand states the quantity of goods and services demanded are negatively or
inversely related to the price.
P

Qd when P

Qd

Supply
The quantity supply for goods and services is the amount the producer plan to sell during the
given period of time at a particular price. Higher the price of the goods, the greater the
quantity supplied is.
Law of supply
Law of supply states that there is a positive and direct relationship between the price and the
quantity supplied ceteris paribus.
2.1 Effects of Increased in Demand
Figure 1
Price
S
P
P2

Qty

D
Q

Increase in demand shift will result in the rightward shift of the demand curve from D to D1.
= Price
= Quantity
In accordance to this article, As more consumers start to demand such ingredients, there will
be a natural and stronger tendency for the market to meet the needs and when that happens
and it is ingrained, the Government can gradually move away from giving subsidies, he said
As a result the quantity demand will increase because suppliers will want to earn more
money. Therefore price increase and quantity increase.

2.2 Effects of a Decrease in Supply

Figure 2
Price
S2
S
P2
P
D
Q2

Q
1

Qty

Decrease in supply will result in a leftward shift of the supply curve from S1 to S2.
= Price
= Quantity
In this article, As more consumers start to demand such ingredients, there will be a natural
and stronger tendency for the market to meet the needs and when that happens and it is
ingrained, the Government can gradually move away from giving subsidies, he said. In this
case they will need more supply because when people demand more, supply will go down
hence causing the price to increase.
Problems Identified
Problem arises when the suppliers act dishonestly in order to gain subsidy from government
of the 50 cents per kilogramme for using healthier ingredients. For example, suppliers may be
using deceitful methods to get the subsidy as much as possible. Furthermore, the HPB board
may not be able to review the audit report when suppliers refuses to do a proper
documentation or suppliers dont know how to do the report .Besides that, consumers may
not achieve the demand and the government may need to subsidies again.
Solution( Left hina part)

Conclusion
In a nutshell, government subsidies food operators using healthier ingredients is a good idea
as it helps to change the consumers lifestyle in a healthier positions. Despite the problem
arises, the advantages in keeping the country people healthy are beneficial after all. Overall,
the subsidy is encouraging the people moving into a better lifestyle. Therefore, the
wholesalers and also suppliers indirectly will have more businesses on the healthier
ingredients choice.

References
Subsidies for food operators using healthier ingredients. (2015, January 19). Retrieved
February 14, 2015, from http://www.todayonline.com/singapore/subsidies-food-operatorsusing-healthier-ingredients
TOPIC 2: THEORY OF DEMAND AND SUPPLY POWERPOINT SLIDES. Retrieved
February 17, 2015, from http://elearning.psb-academy.edu.sg/mod/folder/view.php?id=36028