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12 Oct 2006


Spiraling Vegetable Prices: Impact of Flooding, Vegetarian Festival ( Business Brief No.1874)

The Ministry of Agriculture and Cooperatives released its latest report on initial damage from flooding as a result of persistent rainfalls under low-temperature pressures that stretched across the country, including depression storms and typhoon Xangsane during August 1 - October 10, 2006. Approximately 49 provinces and 3.61 million rai of farmlands have been inundated, and it is projected that more than 2.82 million rai of rice and crop fields would be damaged. However, one calamity to agriculture that cannot be overlooked is the damage to vegetable produce. The vegetable orchards that are forecast to have been ruined by flooding between August 1 – October 10, 2006 would be as high as 18,890 rai. The most heavily damaged areas are in northern Thailand, accounting for 51.6 percent of all the affected land. A study on retail prices of some important vegetables over the last 10 years shows the importance of this to the retail prices of some important vegetables, which would tend to rise around September-October every year because of the Vegetarian Festival, and in some years there was flooding, as well. The problem for 2006 is that the retail prices of important vegetables have been quite high in October, compared to the same periods of the previous ten years. The types of vegetables that tend to become more expensive include leafy vegetables particularly Chinese Kale, Pakchoi, water spinach and lettuce. At present, supplies of these vegetables are mostly purchased in fresh markets because they are popular with consumers. Also, temperate climate vegetables have exhibited higher prices because the flooding hit the major cultivation areas in Northern Thailand. Such vegetables are sold in supermarkets and at department stores, as they are popular among middle- and upper-income earners. Normally, the price of such vegetables is higher than other vegetables. When the key production sources face flooding, temperate climate vegetables become pricey and in short supply.
Higher priced vegetables affect the cost of living of the populace. As a direct impact, people would have to buy vegetables for consumption at higher prices. Moreover, instant foods will tend to be more expensive, as well. Some restaurants would end up raising the prices, but, some would prefer carry the rising cost burden, instead of passing it on to buyers, or decrease the size of servings, somewhat.

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