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Published on October 27, 2007

Yangyong Phuangrach, director-general of the Commerce Ministry's Internal Trade Depart-ment, said manufacturers were facing higher production costs, mainly from uncontrolled imported raw materials and freight charges. As a result, manufacturing costs are forecast to increase through early next year.

Despite yesterday's agreement, the ministry will allow the retail price of palm oil to increase, as the industry is facing steeply higher costs of raw material. Fresh palm has increased from Bt2 a kilogram to Bt5, driving the cost of crude palm oil up Bt10 a kilogram from the current price of Bt29. The current ceiling retail price of palm oil is Bt38 a kilogram.

After a three-hour meeting with representatives from the private sector, Yangyong said the ministry wanted to ensure consumers were protected amid the rising cost of living.

"The ministry does not like to block retail prices, but sometimes it has to when consumers have low purchasing power," he said.

However, the ministry will consider letting food and other consumer-product manufacturers increase their retail prices next year. The plan is to ensure a balanced demand and supply of goods in the market and help manufacturers survive. But manufacturers should gradually increase their prices rather than do so in one big jump, Yangyong said.

Other products that face increasing production costs of raw materials are soybeans, powdered milk and wheat flour - which is a major ingredient in instant noodles - and bread.

Pun Paniangvait, a senior executive at Thai President Foods, manufacturer of Mama instant noodles, said his company would attempt to freeze its retail prices until the end of the year despite facing higher production costs, particularly for wheat flour, the price of which has doubled over the past year.

"Although the board had agreed to increase retail prices Bt1 a pack for all kinds of products on December 1, we'll try to freeze the retail price until the end of the year," he said.

Thai President Foods said it stood to make no profit this month for the first time and expects a loss next month because of production costs. Thus, the firm wants to increase retail prices in December.

Pun said the company would submit a letter to the Internal Trade Department next week seeking approval for the price increase.

Meanwhile, the department yesterday approved a request by the Swine Raisers' Association to increase the pig price at the farm door Bt3 a kilogram nationwide, from Bt41 to Bt44.

 Yangyong said approval was granted because of farmers' higher production costs. However, the department has asked the association to try to control the retail price.

 The department accepted that the number of small pig farmers had been reduced 30 per cent to 110,000 countrywide. If that number continues to decline, it will affect pork supply in the market, he said.

Petchanet Pratruangkrai

 The Nation