Middle East War Pushes Oil Prices, Strains Thai Food Industry
Middle East conflict is driving up oil and fertilizer costs, squeezing Thailand's food industry as manufacturers struggle to pass price increases to consumers. Bread, snacks, instant noodles, and soybean oil face the steepest pressure, with
Krungthai COMPASS warns that Middle East conflict is creating cost-push pressures through rising fertilizer and oil prices, unavoidably affecting Thailand's food industry production costs.
Four food products face the highest impact: bread and baked goods, snacks, instant noodles, and soybean oil. These rely heavily on imported raw materials and carry combined energy and transportation costs representing 77.2–82.7% of total production costs.
However, manufacturers can only pass 0.08–0.32% of a 1% cost increase to consumers, with snacks able to pass through the least at just 0.08%.
Food producers should urgently reduce cost vulnerability through three approaches: (1) Supply Chain Relocation—diversifying raw material sources and increasing domestic ingredient use; (2) AI Adoption—boosting efficiency, reducing waste, and extending product shelf life; and (3) Green & Energy Transition—investing in energy-efficient production technologies and alternative energy like biogas to build long-term sustainability.
