1 year on, govt needs to change tack in tackling prices and crops

The government has spent Bt1.32 billion under a project to rein in goods prices, in particular the rising cost of foods. However, the Commerce Ministry’s latest report on the Consumer Price Index shows that prices in the food and beverage sector climbed during the first six months of the year by 4.72 per cent, far higher than the average inflation rate of 2.56 per cent over the period.

The ministry recently also failed to implement a planned price recommendation for fast-food dishes at food courts, on the grounds that goods prices had dropped since it formulated the plan. However, despite this explanation, the failure to press ahead with the recommendation was due to weak cooperation from modern traders, which have recently increased rental fees for food retailers. The ministry had intended capping the prices of fast-food dishes at Bt30-Bt35 per menu, and thought it had convinced modern traders that they should reduce their rental charges. However, a survey by The Nation found that the country’s leading department store has marked up its rental fees by Bt3,000-Bt5,000 per booth, depending on the amount of space taken up.

A food retailer at Central Chaeng Wattana said she had no option other than to increase her prices by Bt10 per menu from July 1 after the fee hike. She said she had to pass the burden on to consumers, as she could not shoulder the higher cost arising from the landlord’s decision.

The government should control food and goods prices in the right way rather than forcing small food vendors to curb their prices, she added.

The average price per dish for cooked food at fast-food courts in many modern-trade outlets is now above Bt40.

Modern traders such as hypermarkets have also not yet agreed with the government about lowering their share of food traders’ income at food courts. Currently, modern traders receive 27-35 per cent of the income generated by each food vendor operating on their premises.

Moreover, the government has been unable to resolve the problem of rising consumer-goods prices, mainly for processed foods. 

The current price reduction for some foods such as eggs, fresh fruits and vegetables is a result of the harvest season and lower fuel prices. However, the prices of many products have increased sharply. 

For example, the retail price of canned tuna has risen from Bt34-Bt37 early this year to Bt39-Bt41 at present, while packed rice has increased by Bt10-Bt20 per 5-kilogram pack and the price of a kilo of ham has shot up from Bt420 to Bt500.

Furthermore, the Commerce Ministry’s initiative to open a “Thook Jai Shop” network for selling cheap goods to consumers also has not yet shown itself to be effective in curbing the cost of living.

The ministry targeted 10,000 stores by June, but fewer than 8,000 have to date opened their doors around the country. 

A shopper at one convenience store said that only a few products at the local Thook Jai Shop were priced lower than the market, with most of the remainder costing the same as in other convenience stores.

Meanwhile, the government still leaves farmers generally unhappy about its price-pledging scheme, on which it has spent more than Bt350 billion during the past year in an attempt to prop up the prices of rice, cassava, garlic, red onion, rubber and pineapple.

The latest reports show that prices of farm commodities remain low, having fallen gradually in the first half of the year, especially for rubber. Although the government has allocated Bt10 billion to shore up the price of rubber to Bt120 per kilo since last month, the price is still low at Bt89.

The price of paddy white rice is now quoted at Bt8,500-Bt11,500 per tonne, compared with the pledging price of Bt15,000, while fresh cassava is trading at Bt1.70 per kilo, after the pledging price was set at Bt1.95.

Besides subsidising a host of crops, the government has not introduced any measures to develop the farming, marketing and trading processes, resulting in sluggish agricultural trade in both the export and domestic markets.

While subsidies have not yet proved efficient in boosting crop prices, the government is leaving consumers to shoulder a higher cost of living. One year’s experience should be sufficient to persuade Prime Minister Yingluck Shinawatra and her ministers that they should review some of the traditional policies they have pursued, and on which huge sums have been spent without any real positive effect.

As taxpayers, consumers and farmers have the right to expect more effective and sustainable measures to help them cope with higher living and crop-production costs. 

The government should adopt a more creative approach to spending taxpayers’ money, rather than wasting it on trying to boost its short-term popularity.