Ever since the geo-political tensions between Russia and Ukraine began in February 2022, their exports and trade relations with other countries have remained in a chaotic state. Whether due to sanctions, supply chain issues or production trends, both Russia and Ukraine have not been able to export their key commodities like wheat, barley and fertilizer. Their backfoot in agriculture trade has resulted in a supply deficit and has consequently caused prices to rise in the global market. Wheat, a staple in many countries, is still one of the most affected commodities, with Russia and Ukraine accounting for 24% and 9% of global trade, respectively. The war has severely impacted countries like Thailand, which depend on wheat-producing giants like the U.S., Russia, and Ukraine to meet their domestic demands as global wheat prices reach new peaks.
Thailand’s Wheat Imports January - May, 2018 - 2022
HS Code: 1001 Wheat and Meslin.
Thailand imported significantly less wheat between January - May 2022, about 41% less than the same period in 2021 due to rising prices and limited volume of wheat available in the global market. Wheat is particularly important in Thailand as it is one of the basic ingredients for making the much loved instant noodles. In Thailand, one of the most cost-effective ways to satiate one’s hunger is to eat instant noodles, which is a product with prices that are controlled by the state. This means that instant noodles are one of 52 products and services on the state price control list, which requires manufacturers of listed products to report their operations and seek approval to adjust any wholesale or retail prices. However, since April 2022, there has been news that the price of noodles will be increasing to meet the rising costs of production. Not only are wheat prices increasing, but the price of palm oil, logistics and raw materials are also increasing the production costs in the country.
Rising production costs mean people who like to eat instant noodles will have to spend more money to consume their favourite cost-effective foods. While leading Thai noodle brands are working to ensure that rising prices are not passed down to the consumer, the situation has been difficult to sustain. The Office of Industrial Economics (OIE) estimates show that instant noodle production in Thailand in the first nine months of marketing year July 2021–June 2022 was 8% more than in the same period last year, in line with an increase in instant noodle export demand. However, the outlook for noodle production remains bleak, as producers/wholesalers can only bear the rising costs for so long, before they pass on the prices to consumers.