SUNDAY, February 25, 2024

Fuel tariff adjustment should reduce food production costs, TCC says

Fuel tariff adjustment should reduce food production costs, TCC says

The rise in electricity bills since the start of this year has increased the overall cost of food manufacturing by 2.5% to 5%, Wisit Limleucha, vice president of the Thai Chamber of Commerce said on Monday.

He said last year’s electricity costs were responsible for 5-10% of manufacturing costs of the food industry, but this year the number has jumped to 7.5-15%, prompting some operators to find ways to reduce their power bills, including installing solar rooftops and turning off unnecessary appliances.

Wisit also pointed out that the average electricity cost in 2021 was 3.6 baht per unit, and this increased to 4.69 baht per unit in 2022. In the first four months of this year, power bills further jumped to 5.33 baht per unit.

The TCC vice president however believed that the situation would improve after the Energy Regulatory Commission (ERC) agreed last month to reduce the electricity cost to 4.7 baht per unit as part of the May adjustment of the fuel tariff (Ft).

ERC reviews the Ft every 4 months, in January, May, and September.

Wisit added that food exporters have not increased their prices so far this year despite increasing costs, as exporters had already hiked their prices last year to cover increased freight fees.

The hike resulted in Thai foods being more expensive than those of its competitors, and any further price increase would drive customers to find cheaper alternatives, especially from China, he added.

Fuel tariff adjustment should reduce food production costs, TCC says

Meanwhile, Chakra Yodmani, the Department of Internal Trade’s (DIT) deputy director-general, said on Monday that the department has not approved any price increases for controlled products this year despite rising electricity costs.

“Product manufacturers have many different costs other than electricity, such as fuel, natural gas, transport, raw materials, labour, services, and administration. They need to manage these costs efficiently to keep the price competitive and not add to consumers’ burden,” he said.

He added that the number of manufacturers applying for price hike consideration in the first four months of the year has been lower than for the same period last year.

The DIT also believed that the reduction in power bills to 4.7 baht per unit from May onward will reduce the impact of electricity costs on manufacturers, and thus result in fewer of them asking permission to increase prices.

“The DIT is monitoring the market and economic situation closely to ensure that product prices reflect the true manufacturing cost and to prevent any unfair price hikes,” he said.