The price of packed rice looks likely to rise this year to cover expected increases in the cost of production and distribution.

"If modern traders increase their entrance fees and rebates too high from the current 5-10 per cent a year to 10-15 per cent, packers may need to hike the retail price of rice," Somkiat Makcayathorn, president of the Thai Rice Packers Association, said yesterday.

The price of fertiliser is also expected to go up by Bt100-Bt1,200 a tonne this week because of the rising cost of imported chemicals.

Somkiat said the entrance fees and rebates charged by modern traders - supermarkets and hypermarkets - were considered one of rice packers' production costs. If the surcharge is too high, traders must share the burden with consumers.

Also, the expected higher prices of rice in the domestic market due to increased production costs and the out-of-harvest season in the third quarter will lead to higher rice prices in the market in the second half.

Because of higher competition, rice packers have not adjusted their price for more than a year. More consumers have turned to purchasing rice from modern traders. The domestic market for packed rice is expected to grow to Bt20 billion a year from Bt16 billion-Bt18 billion presently.

To ensure fair practice for traders, consumers and modern retailers, the association has called for the Internal Trade Department to draw up regulations for modern traders on charging entrance fees from suppliers.

The expansion of modern retail giants has increased their bargaining power against suppliers, so the government should closely monitor their practices, it says.

A fertiliser-industry source said the Internal Trade Department would complete its recommendations for price increases this week after finding higher import costs.

Initially, traders had asked for price hikes according to the fertiliser formula and stock of traders. For instance, the price of 46-0-0 formula is expected to be increased from Bt14,100 to Bt14,200 a tonne, while the price for the 16-16-8 formula is expected to be adjusted from Bt14,300 to Bt15,500 a tonne.

To cushion farmers from the surge in fertiliser prices, the Commerce Ministry and the Agriculture Ministry will next week finalise their plan to subsidy fertiliser for rice farmers.

The government will also cooperate with fertiliser traders to sell 100,000 tonnes of fertiliser directly to rice farmers at Bt11,000 a tonne

Source: The Nation