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International Egg and Poultry Review

by 5m Editor
9 August 2006, at 12:00am

By the USDA's Agricultural Marketing Service - This is a weekly report looking at international developments concerning the poultry industry, this week looking at the bird flu situation in Thailand.

Thailand

H5N1 was confirmed on July 26, 2006 in a fighting cock carcass from the northern province of Bang Mun Nak for the first time 8 months. The outbreak started on July 16 and include 31 cases and deaths with 264 animals destroyed. The virus has also been found in the northeast in Nakohn Panom province, bordering Laos. Approximately 310,000 hens on 78 farms have been culled and is the first case this year in commercial birds. The outbreak was blamed on egg merchants swapping contaminated flats instead of just the eggs. Outbreaks are also suspected in the southern part of the country. Currently growers are compensated 75% of the value of the poultry.

Trade with Laos is suspected by some a source of some the outbreaks because an outbreak was also reported in that country. Thailand had recently imposed a ban on poultry imports to prevent a new outbreak of bird flu in the country. The ban was put in place after some neighboring countries sent fowl samples for laboratory tests in Thailand and a few tested positive for the virus. Thailand has also vowed to jail farmers for failing to report poultry deaths.

The H5N1 virus arrived in Thailand in late 2003 and in 2004 Thailand culled approximately 29 million fowl, affecting an industry that accounts for .5% of gross domestic product. Thailand raised 260 million chickens in 2005. Since early 2004 when most countries banned imports of fresh poultry from Thailand, processors have been concentrating on cooked meat exports. Thailand is currently the world’s fourth largest poultry exporter. Before bans were paced on Thailand’s raw chicken exports in 2004 due to bird-flu fears, it was considered the number 1 exporter in the world. The European Community (EC) has announced that its ban on fresh poultry imports from Thailand would remain in effect until the end of 2007.

The shift to processed chicken has helped Thailand regain its exports after a 40% fall in 2004. In 2005, 270,000 tones of poultry were exported and in 2006 it is expected at least 300,000 tons with forecasts noted as high as 350,000 tons will be exported. The volumes are still below the 543,000 tons of total poultry meat exported in 2003. Japan (54%) and the EC (41%) are Thailand’s major export markets by volume. Thailand is also expected to speed negotiations for exporting poultry products to other markets with high purchasing power. Some of these countries include the United States, United Arab Emirates, New Zealand and Australia.

Domestic broiler production in 2006 was estimated in the first of the year to grow 18% due to anticipated growth in domestic broiler meat consumption and exports. Domestic consumption was expected to grow 7% in response to rebounding confidence in the safety of cooked chicken meat among consumers and relatively competitive chicken meat prices against other meats. However, midway through the year domestic chicken prices still remained low with some companies blaming them for drops in profits. In order to prevent bird-flu from affecting exports, companies are placing requirements on where they buy poultry from and educating their workers on safety precautions.

Even though Thailand’s currently exports mostly cooked poultry now, their exports could face price pressures from several fronts. The first front could be from Brazil due competition from them in both the EC and Japan markets. The second front from the EC. Even though the EC lost a battle at the World Trade Organization to restrict the import of cheap frozen, salted chicken from Thailand and Brazil through punitive tariffs, the EC is proposing a new tariff system on cooked chicken imports. Under the EC proposal, processed chicken imports in excess of quotas would be taxed as high as 53%, compared with rates between 8.5-15.4% currently. Meanwhile, some are projecting an 8- 9% fall in European poultry consumption this year due bird-flu concerns.

A third front facing Thailand are anticipated slowing Asia and Thailand economies. Thailand’s economic growth has slowed in the second quarter as due to high oil prices and 6 months without an elected government. Oil prices have increased 23% in the past year and Thailand imports almost all its crude oil. Surging fuel costs and higher global interest rates have started to stump demand for exports across Asia. First quarter economic growth in South Korea was the weakest in a year with consumer confidence falling to a 10 month low in July. Some are expecting the Philippines, which imports 95% of its oil, to cut next years growth forecast. Thailand’s central bank is forecasting oil to average 71$ a barely during the second half of 2006 before decreasing $67 in 2007.
Source: USDA/FAS and various news articles.

To view the full report, including tables please click here (PDF Format)

ThePoultrySite News Desk

5m Editor