Higher Production Costs in Thailand Threaten Local Consumers to Carry the Burden

Thailand's higher production costs are threatening consumers to carry the burden and be forced to buy goods at higher prices.
Consumers will soon be burdened with higher commodity prices because of higher production costs.

There’s no questioning that the Russian-Ukraine conflict generated higher production costs among businesses. These expenses will soon threaten local consumers to carry the burden.

Higher Production Costs CauseThailand’s Soaring Inflation Rate

Last month, Thailand’s inflation rate swelled to 5.28%. This is stronger than anticipated and the highest level from way back in September 2008.

Farm-front eggs are available for up to 3 baht, which is 20 satang an egg, according to the Department of Internal Trade (DIT). It will allow hen raisers to keep up with their egg-laying production. This way, they won’t excessively burden consumers.

Prices of animal feed rose because of oil price hikes due to the war in Ukraine. Likewise, hotter weather conditions affect hens’ laying capability to produce more quality eggs. Most eggs are smaller in size, which reduces the income of chicken layer farmers. They are pressuring the Ministry of Commerce to increase its price cap on eggs to consider the higher production costs.

Department of Internal Trade director-general Wattanasak Sur-iam completely discussed with many different entities and agencies. These include the Office of Agricultural Economics, Layer Farmer Association, Department of Livestock Development, and the Association of Hen Egg Farmers and Exporters.¬†They talked about the matter of the egg’s higher production cost.

Sur-iam verified that the cost of producing eggs soared. The production cost is currently 2 baht, 94 satangs for each egg, as specified by the Department of Livestock Development. He added that about 700,000-800,000 tons of corn would arrive in 2 to 3 months.

Key agencies will likewise ease import standards for animal feed raw materials. Both actions are expected to help mitigate the animal feed higher production costs issues.

Weakening Baht Exceeds Thai Rice Exports

Meanwhile, the country’s rice exports are foreseen to surpass 8 million tonnes this year. Consequently, the weakening baht drives excessive exports, including the increasing demand in the worldwide market.

Chookiat Ophaswongse said that Thai rice shipments extended to 1.5 million tonnes in the first two consecutive months. There’s a huge gap compared to last year in the exact period with 900,000 tonnes only.

“If Thailand can ship an average of 700,000 tonnes a month, the total export volume will likely be at least 8 million tonnes this year, well over the 7 million tonnes the association forecast. Export values are estimated at 130 billion baht, up from 110 billion last year. Any time Thai rice is priced equally with grains from Vietnam, importers in Asian countries such as the Philippines, Malaysia and China buy Thai rice. More importantly, the export market in the Middle East, such as Iraq, Iran and Saudi Arabia, is back this year,” said Chookiat Ophaswongse, Thai Rice Exporters Association president.

Competitive Thai Rice Prices

Chookiat added that Thai rice exports are now compelling due to the weakening baht because of war in Ukraine. Thai prices are now close to Vietnamese rice grains. The free-on-board price of 5% Thai rice is currently priced at $420, equal to the Vietnamese rice. The valuation is $20 higher than the $400 a tonne recorded at the start of March.

Moreover, Chookiat noted that consumers are stocking up more Thai rice in the markets. The Russia-Ukraine conflict created a domino effect for Thai rice prices. It slightly increased due to the elevated prices of corn and wheat.

The estimated upturn is average because there are adequately high stocks in India. Vietnam and Thailand expect to have rice production gain this year. For last year and this year’s harvest season, the association anticipates Thai rice output to boost by 30 to 32 million tonnes.

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