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Published on March 14, 2008

The Soybean and Rice Bran Processors' Association will ask the Commerce Ministry for a third round of retail price increases if the Cabinet approves cutting the import tariff of soybean meal to zero.

The association will send a letter today to three concerned ministers - Commerce, Finance and Agriculture and Cooperatives - to object to the final decision to allow an import tariff cut for soybean meal.

The association pointed out that the measure would cause a domino effect in the soybean oil industry. The lower tariff will bring cheaper import prices since the local soybean meal price directly relies on imports. If approved, the measure would reduce soybean oil manufacturers' income from selling soybean meal by 60 satang per kilogram.  So far, the selling price of soybean oil is quoted at Bt49.50 a litre, but if the tariff is cut the price would increase to Bt52.  

Association president Sethasan Sethakarun yesterday said the plan to cut the import tariff of soybean meal would make a large impact on the domestic soybean industry.

"The government should decrease other production costs rather than cut the import tariff of soybean meal as it is a minimum cost of animal feed," he said.

The government is considering to cut the import tariff of soybean, aiming not only to reduce the production cost of pigs but also to bring down the retail pork price. 

Sethasan suggested that the government focus on reducing other costs of pig production. For instance, pig breeding costs account for 35 per cent of total production while the feed meal costs are only 1-2 per cent.

Lowering the import tariff will benefit only a few large-scale feed producers, but the costs of farmers would not be reduced.  If the import tariff is cut by 4 per cent, it will affect the local soybean price by 60 satang per kilogram. As a result, the local soybean meal price will drop from the existing Bt15 per kilogram to Bt14.40.

In addition, it will only slightly benefit pig production as the tariff reduction will reduce feed costs by only 7 satang per kilogram, while chicken farmers will enjoy a 13 satang drop and shrimp farmers 20 satang .

With the lowering of local soybean meal prices, soybean oil manufacturers would face a loss of Bt3.02 per litre of oil production or Bt2.75 per kilo. To offset losses, they would increase retail prices. Deputy Finance Minister Pradit Pataraprasit yesterday said the Finance Ministry agreed with the idea of cutting the import tariff for animal feed from 4 per cent to zero. 

However, he said the government must ensure that the benefits of the tax cut fell on end-users or consumers rather than companies that imported animal feed.

The Nation