Food firms' costs 'up 20%'
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The recent minimum-wage hike has increased production costs in the food industry by up to 20 per cent, according to a National Food Institute study released yesterday.
Production costs will go up by 5-20 per cent throughout the food supply chain, but aquacultural product manufacturing will be hit the hardest, with costs inflated by 20 per cent.
The next hardest-hit are the cracker-making business, up 6-10 per cent, and the livestock (meat) and fruit-and-vegetable businesses, up 5-10 per cent each.
Labour-intensive industries such as processed chicken, fishery and fruit/vegetable, which employ a combined 120,000 people, are directly affected.
In Bangkok, small and medium-sized food-related enterprises, which employ 70,000, face both a cost increase of 6.4 per cent and a shortage of 50,000 workers. This will cause higher turnover, particularly among alien workers.
Petch Chinabutr, director of the institute, said the food industry was the most vulnerable.
SMEs, accounting for 97 per cent of the food industry, have no access to financial sources and manufacturing technology. Because of these problems, they are thinking about using machines as a replacement.
Of the 9,227 food plants in the country, small producers account for 91 per cent and medium producers for 6 per cent.
“It’s unavoidable if producers cannot absorb the rising cost. They have to push the cost on to end-users by increasing product prices,” he said.
Workers may decide to move to provinces that pay the new wage. Producers may reduce their costs by cutting back on work hours but boosting productivity.
The minimum-wage hike will also discourage Thai investors from expanding upcountry, Petch said. Instead, they may look at other countries where labour is cheaper.
The government should consider tax cuts on imported equipment for affected industries to reduce their cost, the institute has said.
According to Asia News Network, Vietnam, a major food exporter, will add 220,000 dong (Bt328) to its monthly minimum wage on May 1. The wage is currently 830,000 dong.
