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Giant retailers unfairly raise rice fees (Nation)

Giant retailers unfairly raise fees-Rice packers yesterday insisted some of the giant modern retailers increased the fee demanded from them every year, adding to their cost burden.

Somroek Tangpiroonthum, president of the Thai Rice Packers Association, said large retailers had increased the “back-margin” fee (also known as the “entrance” or “supplement” fee) from 1-2 per cent of the selling price to 5-10 per cent in recent years. Some modern retailers have also marked up the retail price by 6-10 per cent, he said, resulting in consumers paying over the odds. He called for the government to negotiate with large retailers to maintain the back-margin fee, as the sale of packed rice offered a low margin. If such charges were increased further, then suppliers would have to pass the burden on to consumers because of higher operating costs. The Internal Trade Department will soon set up a meeting between the giant retailers and the rice packers in a bid to solve the problem. Somroek also called on the government to release its rice stockpiles – particularly jasmine rice – via auction, in order to increase the supply for domestic traders. This would make up for a shortfall of rice in private warehouses.

Department director-general Yangyong Phuangrach said rice packers had agreed to freeze their retail prices for another two months, in order to ease the burden on consumers. The government will release about 70,000 tonnes of jasmine rice via auction on August 10, in order to increase supply for domestic consumption, he added. Meanwhile, Tesco Lotus senior vice president Darmp Sukontasap said each year, his company sold about 17 million packs of rice, the equivalent of 85,000 tonnes. This is only 0.5 per cent of the overall rice consumption in the country in one year. With all the modern retailers combined, the volume is unlikely to exceed 2 per cent of national consumption, he said. Therefore, it is unlikely the business these retailers conduct with members of the rice packers’ association can have a major impact on the market price of rice, he argued. Furthermore, he added, the rice that the packers sell to modern retailers is only 30 per cent of what they produce, with the rest sold on the open market. “It is unlikely the price of the 30 per cent sold to us would have a major impact on the 70 per cent sold on the open market,” he said. “The margin per unit for rice packers is now 8-10 per cent, which is much more than the margin of modern retailers. Therefore, we see no reason for an increase in the price of rice sold to consumers. This year, there’s enough rice for both domestic consumption and export, and the market price is 15-per-cent lower than last year,” Darmp said.

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