January 29, 2011

 

Rising input costs to push up Thai feed meal prices

 

 

Thai feed meal prices are expected to climb 5-10% on the latter part of the year as prices of raw materials have shot up by 15-45%, according to the Thai Feed Meal Association.

 

The hike in the price of feed meal will lead to a rise in the price of livestock.

 

"Rising oil prices and the impact from climate change are major factors driving up feed meal and raw material prices," said Pornsilp Patcharintanakul, chairman of the Board of Trade's agriculture and food business committee and president of the association.

 

He said the association would ask the Internal Trade Department to increase the retail price of feed meal in the second half of the year as the oil price is projected to reach US$100 (THB3,000) a barrel.

 

The prices of major raw materials have surged consistently since last year as the climate-change factor has reduced production. For instance, the price of corn has gone up to THB9 (US$0.29) per kilogramme from THB7 (US$0.23) last year, the price of cassava is at THB3.50 (US$0.11) from an average of THB2.80-2.90 (US$0.090-$.093) a kilo, and the soy price is at THB15 (US$0.48) from THB12-13 (US$0.39-$0.42) a kilo last year.

 

However, to alleviate the cost of feed meal manufacturing while also freezing the retail price, Pornsilp said the government might consider waiving import tariffs on 21 raw materials.

 

The association has proposed to the Agriculture Ministry that it consider waiving tariffs for 21 goods, including soymeal, green pea, beef pulp pellet, palm meal and canola meal, among others, from an average tariff rate of 2-10%.

 

He pointed out that the government was expected to lose about THB1.5 billion (US$48.26 million) in revenue by waiving the import tariffs.

 

Pornsilp said that waiving off the import tariff would reduce the skyrocketing price of manufacturing. Moreover, the association urged the government to increase or eliminate import quotas for 23 products under its commitment to the World Trade Organisation.

 

The average tariff under the WTO's quota is 20%, and outside is at 70%.

 

The price of tapioca chip is expected to average THB8 (US$0.26) a kilo this year, which is used by the feed meal industry, up from last year's THB5 (US$0.16).

 

The plant disease will mean lower export of tapioca chips this year, from four million tonnes last year to three million tonnes. However, export incomes will be unchanged or will drop only slightly because of increased product value.

 

Agriculture Minister Theera Wongsamut said four factors would affect agricultural-sector growth this year: food security, climate change, free-trade agreements, and rising oil prices.

 

To promote farming growth, the ministry will tighten cooperation with private enterprises to eliminate trade obstacles and promote more research and development on particular plants.

 

The ministry will focus on increasing the yield per rai and encourage farmers to grow more varieties of plants that have stable demand, including soy and green bean.