'Shortages if no price hike'

Companies are cutting production or turning to exports to take advantage of a big price gap between domestic and export prices, they said.

Sethasan Sethakarun, president of the Soybean Oil and Rice Bran Processors Association, said many soy¬beanoil makers had cut production by 50 per cent due to losses from the gov¬ernment's pricecontrol policy.

"The wide price gap between domestic and export prices has also encouraged producers to export rather than supply the domestic market," he said, adding that domestic retail prices were Bt10Bt12 per a litre lower than in neighbouring countries.

To balance supply and demand for soybean oil, Sethasan called on the government to allow a price increase from Bt49.50 per litre bottle to Bt54 as soon as possible.

The association pointed out that cost of soybean had doubled from Bt11 a kilogram in July last year to Bt22 now.

Exports of vegetable oil account for 8 to 10 per cent of total production.

Average monthly domestic con¬sumption of vegetable oil is 90,000 tonnes. Of this, about 60,000 tonnes is palm oil, 20,00022,000 tonnes is soybean oil, and the remainder other vegetable oils such as from rice bran, sunflower seed and corn.

Overseas prices of soybean oil vary. For instance, the retail price is Bt60Bt64 a litre in China, Bt62.50Bt64 in Cambodia, Bt64.50 in Vietnam and Bt72 in Singapore.

The Department of Export Promotion has reported that Thai exports of soybean oil jumped 149.10 per cent to Bt425.7 million in the first six months of this year, up from only Bt170.9 million for the same period last year. About 30 per cent of exports go to the Philippines, followed by Singapore, Indonesia, Cambodia, and South Korea.

Sethasan said that if the govern¬ment continued to curb retail prices, producers would inevitably turn to exports while reducing domestic sup¬plies.

Some soybeanoil producers have quit the market over losses incurred from the government's pricecontrol policy.

Only two brands are trying to stay in the market. However, they have had to cut production and that will lead to shortages, Sethasan said.

Yangyong Phuangrach, directorgeneral of the Internal Trade Department, said the department would meet with producers early next week to find a way of allowing a price rise. However, he would not be specif¬ic as to when a price increase may come into effect over fears of hoarding.

The ministry will meet tomorrow to discuss the pricecontrol policy with representatives from the private sec¬tor, including consumergoods man¬ufacturers, the Thai Chamber of Commerce, and the Thai Federation of Industries, to hear their views on how to effectively oversee prices of consumer goods.

Meanwhile, palmoil producers said the delay in a Bt2.50perlitre price rise had only had a slight effect on their business.

Wanporn Marthkasem, president of the Palm Oil Refining Association, said the cost of oil palm had dropped from Bt7Bt8 to Bt6 a kilogram.

Palmoil producers can live with the current retail price of Bt47.50 a litre bottle for a while, despite higher production costs, he said.