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Food price spike projected

Food prices are expected to rise on growing demand from catastrophe-hit Japan and more frequent natural disasters cutting the supply of ingredients.

Petch Chinabutr, president of the National Food Institute (NFI), said 30% of Japan’s agricultural area was damaged by last month’s devastating earthquake, tsunami and nuclear accident. The country must therefore increase food imports.

Products such as chicken, canned fish, frozen shrimp, frozen fish and fruit will see higher orders, he said.

However, challenges will include lower purchasing power of Japanese consumers on concerns over future natural disasters and a decrease in imports from Thai restaurants in Japan due to fewer tourists, said Mr Petch.

He said more important will be stiffer competition from other food exporting countries such as Vietnam, the Philippines, Malaysia, Indonesia and China.

Japan is Thailand’s largest food export market at 14-15% of annual food shipments. For each of the previous three years, Thailand exported an average of 113 billion baht worth of food products to Japan.

Up to 60% of Japan’s food is imported, and the recent nuclear accident has prompted countries to restrict imports of Japanese farm products and foods due to radiation fears.

Amorn Ngammongkolrat, an executive vice-president of the NFI, said the recent disaster had resulted in Japan’s inability to use affected areas for agricultural purposes for some time to come.

“Therefore, Japan will probably want to secure its food supply by hiking its investment in Asian production bases such as Vietnam, Indonesia and Thailand,” he said.

Japan is expected to increase its investments abroad in rice, fish, palm oil, sugar and livestock.

However, Tatsuo Sato, vice-president of the Japan Nuclear Energy Safety Organisation, disagreed, saying only Fukushima and Ibaraki prefectures had been found to be contaminated with radiation.

Meanwhile, Dr Amorn said Australia, which accounts for 3% of Thailand’s food exports, had good potential to import more due to the recent cyclones and floods that have damaged that country’s sugar production.

The NFI predicts Thai food exports of 855 billion baht this year, up by 6.4% from last year, driven by the strengthening global economy and heightened food demand due to natural disasters worldwide.

The forecast is based on 4.2% growth in the world economy, an exchange rate of 30 baht to the US dollar and a 10% increase in food prices from last year, said Dr Amorn.

Source: Bangkok Post

ThaiVest Editorial Team