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International Egg and Poultry Review: Thailand

by 5m Editor
22 December 2010, at 8:09a.m.

THAILAND - This is a weekly report by the USDA's Agricultural Marketing Service (AMS), looking at international developments concerning the poultry industry. This week's review looks at the broiler chicken industry in Thailand, which is set to grow.

Thailand's broiler meat production in 2010 is estimated at 1.28 million metric tons (MMT), up seven per cent from the previous year, and is expected to grow to 1.38MMT in 2011, an increase of eight per cent. This compares to a three per cent increase from 2008 to 2009. The combination of slow growth and strong demand resulted in favorable returns, which led to rapid expansion. Production capacity in poultry farms grew by 15 to 20 per cent in 2010 and early 2011, but trade sources do not believe production will increase that much because most producers have large integrated facilities and are able to reduce production once a market glut looms, and thus avoid falling prices.

In addition to expanded capacity, the new facilities have evaporative cooling systems and use improved genetics in broiler breeding stocks, which results in increasing yields. Biosecurity is strictly enforced and improved farming systems have increased production and reduced disease exposure and mortality rates. All integrated producers are strictly implementing biosecurity measures from the farm level to the processing level. This has been a factor for not having any HPAI incidents since the last affected flocks were depopulated on 12 November 2008.

In 2008-2009, chick prices averaged 12-13 baht (THB) per bird but rose to a record high THB20-21 in May 2010 with a production cost of THB8-9 per bird. Trade sources estimate that total chick production capacity increased from 18 million birds per week in early 2010 to a current capacity of 20 to 21 million birds and will increase to 22 million birds in early 2011 and 23 million birds by mid-2011. Since most breeding farms are integrated farms, they will likely respond to changes in market dynamics in a reasonable time period to avoid falling prices.

In 2010, average live broiler production costs are estimated to increase almost 10 per cent to THB35-36 per kg (51-52 US cent/lb) from THB32-33 baht per kg (47-48 cents/lb) in 2009, due to higher prices of chicks and feed. Prices for corn, which accounts for 60 per cent of the broiler feed ration, is expected to increase by 16 to 17 per cent in 2010 from 2009. Fishmeal, which accounts for five per cent, has risen by three per cent. Prices for soybean meal, accounting for 25 per cent of the feed ration, have decreased 12 to 13 per cent from 2009 which is enough to offset the increase in corn and fishmeal prices. Trade sources forecast that in 2011 live broiler productions costs will increase two to five per cent in anticipation of stronger prices for bulk feed ingredients, which would offset any savings from a possible reduction in chick prices.

Despite sharply higher domestic prices, domestic consumption is estimated to grow five per cent in 2010 due to chicken's price competitiveness compared to other meats and a favorable economic growth (GDP is estimated to grow 6.5 to 7.5 per cent). For the first seven months of 2010, average domestic prices for live broilers increased by 24 per cent over the same period in 2009, to THB42.37 per kg (about 62 cents/lb.), mainly due to increased production costs and strong export demand for chicken. Average retail prices for chicken boneless breast meat in Bangkok rose 27 per cent to THB87.54 per kg ($1.27/lb) the from 2009 level.

Domestic consumption is expected to grow by five per cent in 2011 as broiler meat prices are expected to soften due to an oversupply in broiler production. An increase in consumption should be partly attributed to efforts in promoting new ready-to-eat chicken menus by quick service restaurants (QSR) and food processors. The ready-to-eat market should grow 10 to 15 per cent annually in the next five years.

Total exports for 2010 are expected to reach 410,000 metric tons (MT), up eight per cent from 2009. In 2011, an expected oversupply in the domestic market could lead to cheaper product which is more competitive with Brazil and China. Carry-over stocks are estimated at 32,000MT in 2010, increasing to 72,000MT at the end of 2011. Thailand's broiler meat exports should grow by seven per cent in 2011, with most of the growth in Asian markets, including Japan, ASEAN countries, Hong Kong and South Korea. Exports to Japan are anticipated to increase almost 10 per cent. The lower prices should help Thailand expand into other markets. Currently, the EU and Japan account for 85 to 90 per cent of market share. The bulk of chicken products for export consist of made to order products that are processed or prepared by heat (such as grilling, steaming, boiling, etc.) and are usually puffed or seasoned (with salt, Japanese sauce, etc.).

Several importing countries are likely to lift a ban on Thai uncooked frozen chicken meat in the near future as Thailand meets its OIE HPAI free requirements. Currently, countries which have lifted the HPAI ban on Thai uncooked frozen chicken meat include Hong Kong, South Africa, Bahrain and Russia. The Thai government authorities reported that a Russian inspection team has approved several processing plants in Thailand for export eligibility to Russia. No exports have occurred so far mainly because Thai exporters consider prices offered by Russian importers too low and are wary of the financial terms on the possible trades.

Under the EU quota administration Thailand receives 92,610MT out of a total quota of 264,245MT for uncooked salted poultry meat (EU HS code 02109939) but has been unable to fill the quota due to the EU ban on uncooked poultry meat. Quota for cooked chicken meat (EU HS code 16023219) for Thailand is 160,033MT, out of a total quota of 250,953MT, and in-quota imports from Thailand will be subject to an eight per cent tariff. The out-of-quota rate for cooked chicken meat is €1,024 per ton. Thailand's cooked chicken meat (EU HS code 16023219) reached the quota ceiling of 160,033MT in 2008.

Thailand's request to the EU to increase the prevailing quota of 160,000MT for cooked chicken meat products and to lift a ban on uncooked chicken meat is still pending. In addition, the EU raised import tariffs on eight poultry meat products in 2009, including uncooked chicken meat products containing more than 57 per cent chicken meat, cooked chicken meat products containing 25 to 57 per cent chicken meat, and cooked chicken meat products containing less than 25 per cent chicken meat. These chicken meat products are currently not under the EU tariff-rate-quota. The import tariff applied for products containing 57 per cent chicken meat and below is 10.9 per cent. Thailand has thus far enjoyed this tariff to export products containing 57 per cent and below content out of the quota system. The export under this category should reach 20,000 to 25,000MT in 2010, as compared to 17,657MT in 2009.
Source: USDA GAIN Report

Further Reading

- You can view the full report by clicking here.