Food prices could rise 5% in 2012 from impact of fuel, rice scheme

Pornsilp Patcharintanakul, chairman of the Board of Trade’s Farm and Food Business Committee, said prices of commodities, including crops and livestock, will rise by at least 5 per cent next year for end-consumers, because of increased production costs.

Food prices are expected to continue to rise gradually in subsequent years as production costs are further pressured by uncertainty related to natural phenomena, he said.
The global oil price is expected to stay above US$100 (Bt3,131) per barrel next year. This will result in rising prices of fuel crops, mainly maize, oil palm, sugarcane and cassava.
The price of feed meal is also expected to increase next year as those crops are among its raw materials.

Pornsilp said consumers will have to shoulder the rising costs of food prices next year. However, manufacturers will not gradually increase retail price to ensure minimum impact on consumers amidst high competitiveness in the industry both in domestic and for export.Pornsilp said the government’s price subsidy to raise crop prices and farmers’ incomes would encourage food price hikes. For instance, rice price is expected to be driven up by Bt10 per kilogram as the pledging price is much higher than the market price.

Although private firms have signed contracts with some neighbouring countries to grow certain crops to reduce their raw-material costs, the government’s stringent controls on crop imports have obstructed the growth of the food industry, he said.
Food manufacturers still face high costs for imported raw materials as the government puts quotas on crop imports, he said.
In addition, the impact of climate change and natural disasters creates uncertainty, which is expected to impact the price of fuel next year.
Pornsilp said such disasters could also lead to new plant |diseases or outbreaks among livestock.