Effects of September 11 Terrorist Attacks on the Thai Food Industry -Trade patterns and Products   Published on October 24, 2001

The September 11 attacks on the United States shook the world. Six weeks after the initial attacks people around the world are looking for ways to restore shattered consumer confidence in a weakening economy. Thailand, an export-oriented country, depends on international demand for its products. In a time of unusual circumstances, the Thai food industry will have to adjust its trade patterns, products, markets, logistics, tourism and travel so they can remain competitive in a changing world market.

The September 11, 2001 attacks on the U.S. have had major effects on market economies around the world. As the aftershocks of the attack are felt in the U.S., they are undoubtedly felt in other countries worldwide.

Economic, political and social conditions in the U.S., the world's only superpower, unequivocally affect Thailand's economy. Thailand's total export value in 2000 stood at 2.777 trillion. Of this figure, Thailand exported 592 billion baht, or 21.3 per cent of these exports ended up in the U.S.

During the first 7 months of this year (January-July) the value of agricultural exports to the U.S. amounted to 68.47 billion baht (US$ 1.5 billion), up from 68.35 billion baht when compared with the same period last year. According to the Thai Customs Department, Thailand has five primary agricultural exports.

In the midst of the 'war against terrorism', food processors and exporters need to use their intuition in looking to the future. Preparing for the worst may be the safest path to take. Therefore, processors need to be prepared to sell or market goods based upon how perishable they are, as well as their potential shelf life. Importers ideally want to buy food that has a guaranteed long shelf life.

Paiboon Ponsuwanna, president of the Thai Frozen Foods Association, said shipments of Thai shrimp to the U.S. were being delayed longer at ports due to tighter security checks, but the impact on the shrimp trade so far has been minimal. However, he said, "good refrigeration on board can extend the shelf life of a product for up to 24 months, so the delay is no problem if the exporter is well prepared".

It is expected that canned foods will increase in both value and volume due to the changing demands of U.S. consumers. Specifically, it is expected that sales to the U.S. armed forces will increase, since Thai canned foods have a long shelf life and are easy to consume. The following table shows statistics for Thai food exports to the U.S. during the period January-August 2000/01.

Although consumption of canned foods and staples are expected to increase, consumption of luxury foods is expected to decline in the midst of the weakening economy. As the U.S. heads into recession, we expect that U.S. consumers will dine out less and avoid eating expensive, exotic and luxury items. Consumers will increasingly opt to eat their meals at home.

How will prices be affected? It is hard to speculate how much the 'war against terrorism' will affect the price of Thai export products because since the terrorist attacks in the U.S. last month, the value of the U.S. dollar has continued to weaken. Consequently, the Thai baht has strengthened against the greenback. This could be detrimental for the domestic market, especially for fishery products, which use crude oil in the production process. The price of crude oil shot up immediately after the September 11 attacks, but has been rather volatile since. It is currently lower than it was before the September 11 attacks.