Ceilings ‘warping market mechanisms’
Authorities are being urged to stop asking for cooperation from businesses to cap product prices, as such practices distort market forces.
“In the long term, it is imperative to stop capping product prices,” said Pornsil Patcharintanakul, deputy vice-chairman of the Thai Chamber of Commerce (TCC).
“State subsidies should be given to consumer products that are essential to the daily life such as milled rice, soap, toothpaste and vegetable cooking oil.”
Authorities have often asked for cooperation from manufacturers to maintain their product prices to help alleviate consumers’ hardship as the cost of living rises.
In the latest development last week, the makers of 205 consumer products agreed to cap their retail prices over the next six months to help ease the high cost of living.
The agreement came after the Commerce Ministry met with representatives of the Federation of Thai Industries, the TCC and 70 product manufacturers.
The products that manufacturers pledged to cap include cooked food, packed rice, powdered milk and detergents.
However, commerce permanent secretary Srirat Rastapana said authorities were ready to approve price rises if the costs of making those products were found later to be increasing.
The National Council for Peace and Order (NCPO) recently tasked the Commerce Ministry with speeding up tackling the cost of living and integrating the cooperation of all relevant agencies to find measures to address the issue.
In a related development, Mr Pornsil said certain farm products, particularly paddy, still needed to be subsidised to help farmers stay afloat.
“We fully support the idea of offering subsidies for farmers’ production costs plus their profit margin of 40%,” he said.
“Zoning measures and productivity enhancement should move ahead, while rice farmers who agree to grow other crops or shift their careers should be given compensation or financial support.”
Measures to help rice farmers deal with low paddy prices and spiralling production costs remain far from settled, as rice-related parties are still divided.
The Commerce Ministry on Tuesday held a joint meeting with representatives from the Thai Rice Mills Association, Thai Rice Exporters Association, Public Warehouse Organization, Internal Trade Department and Agricultural Futures Exchange of Thailand.
The move came a day after Gen Chatchai Sarikalya, the NCPO’s deputy head of economic affairs, rejected proposals and ordered the ministry to look for fresh methods.
At the meeting, the millers proposed the junta raise rice stocks held by exporters and that millers put a halt to plummeting paddy prices, but exporters said the move would increase their costs and reduce competitiveness.
Earlier, Nipon Poapongsakorn, a distinguished fellow at the Thailand Development Research Institute, suggested the government stop selling rice stocks so that NCPO could assess the exact amount of pledged rice, the amount exported, the amount withdrawn from state warehouses, the amount of good quality and rotten rice, the amount that has disappeared and total expenses incurred.
He also urged the junta to embark on a nationwide rice stock inspection, with independent organisations and surveyors allowed to participate.
Charoen Laothammatas, president of the exporters association, said state rice sales should be flexible and dynamic, adding that rice sales should immediately be stepped up once they fetch the right price.
First published: ฺBangkok Post, June 13, 2014