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Published on November 23, 2007

Thai President Foods, the manufacturer of Mama instant noodles, insists it is not committed to avoiding further price increases in the next five years after winning the Internal Trade Department's approval to jack up the price of a sachet of noodles by Bt1.

The Mama price will goe up by 20 per cent on January 1 to Bt6 per sachet in the first increase since the 1997 economic crisis.

The increase was approved yesterday following months of negotiation amid upward movements in oil prices. Oil retailers will today raise the prices of all fuel products by 40 satang per litre, pushing up all oil prices to record highs.

Pipat Paniangvait, director and president of Thai President Foods, told The Nation yesterday that the company agreed with the Internal Trade Department, which urged the company to delay increasing the Mama price until January 1. However, he said the company has not committed to freezing any future increase in the next five years.

"Raising the Mama price is not our policy. We would like to maintain our price as long as possible and we would not have raised the price if costs had not increased significantly," said Pipat.

The increase could lead other instant-noodle manufacturers to follow suit. Mama now has the largest market share, 52 per cent, and the rest is shared by Ajinomoto (Thailand) with its Yum Yum brand and Thai Preserved Food Factory with its Wai Wai brand. Ajinomoto's executives are meeting the department today.

Yangyong Phuangrach, director-general of the Internal Trade Department, said the department had finally agreed to the price increase, which was requested in the middle of this year. He said the department was concerned that further delay could lead the manufacturer into financial trouble, in light of the skyrocketing increase in production costs as wheat flour and palm oil prices have doubled since early this year.

"The government must approve the price hike as it has to take care of both the interests of the consumer and manufacturer," said Yangyong.

However, contradicting comments by company officials, Yangyong said Thai President Foods had agreed to maintain its new selling price for another five years. Before leaving for a provincial trip yesterday, Yangyong insisted that Mama's manufacturer was committed to the future price freeze.

Boonchai Chokwatana, president of Sahapathanapibul, said that Mama prices must be increased due to the hike in raw material costs, particularly palm oil and wheat.

"These are external factors. I myself am quite worried about the continuous increase in oil prices, which will become a major burden on business and product costs and will lead to market decline and a gloomy economy," he said. Goods manufacturers have asked for permission to raise prices. The Commerce Ministry has so far tried to delay the increases for fears that they would exacerbate the cost of living of consumers who are now threatened by high oil prices.

Crude oil prices yesterday were steady above US$97 (Bt3,286) a barrel in Asia after failing to break above $100 overnight as a US weekly inventory report showed crude oil inventories rose at a key oil terminal. Light, sweet crude for January delivery rose six cents to $97.35 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

Following the increase in domestic oil prices today, premium petrol costs Bt32.89 per litre and diesel at Bt29.34.

As petrol prices keep hitting new highs, domestic consumption of gasohol, whose pump prices are kept lower, has risen sharply to 5.4 million litres a day from four million a few months earlier. Of the total, 4.5 million litres are gasohol 95 and 900,000 litres are gasohol 91.

By year-end, gasohol consumption would reach the target of eight million litres a day, Kurujit said.

Panich Pongpirodom, director-general of the Alternative Energy Development and Efficiency Department, said that at this rate gasohol consumption should reach 27 million to 30 million litres a day by 2011.

Kwanchai Rungfapaisarn

 Petchanet Pratruangkrai

 The Nation