Effects of September 11 Terrorist Attacks on the Thai Food Industry -Retail sales and Halal   Published on November 5, 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.

Retail sales

Following the terrorist attacks against the U.S., an underlying fear has mounted in people around the world, particularly Americans and British nationals. There seems to be a growing fear of the outside world, which has lead us to believe that people will be traveling less, eating out less and generally spending less. However, it has been forecast that Americans will prefer to eat their meals at home, which will include food products from Thailand.

Thai food is well known among U.S. consumers for its spicy and tasty flavors. Therefore, during this critical time when consumers are opting to not dine out, Thai instant food specialties such as <I>Tom Yam Koong</I> (spicy shrimp soup) and curries should be produced in convenient forms for those consumers who adore Thai food. These instant food products mostly come in the form of frozen dishes that can be cooked by microwave. According to the Thai Farmers Research Center (TFRC), the terrorist attacks on the U.S. have had a severe impact on Thai exports of fishery products, of which the U.S. is the top consumer. One beneficiary of the terror attacks has been canned tuna and tuna products, which can be stocked for easy consumption during times of conflict.

In the midst of the current situation, Thai exporters should turn their attention to instant products, such as frozen, microwavable Thai food products, the center reported. The fact that the U.S.' production of canned and instant foods is declining in spite of strong domestic demand may support the theory that instant Thai food products have the potential to grow strongly in the U.S. market.

Tokai Bank said that before the September attacks, consumer spending was on track for a 3-per cent rise last quarter. However, following the terrorist attacks, the U.S. Commerce Department reported that retail sales dropped 2.4 per cent in September to the lowest level since December 2000. However, it should be noted that the categories that recorded a rise in sales last month were mostly related to necessities, such as personal care, food and gasoline.

Moreover, the University of Michigan reported that its consumer sentiment index unexpectedly rose to 83.4 in the preliminary October reading from 81.8 in September. While part of the increase was likely due to a patriotic "rallying around the flag" effect following the attacks, it is also is likely due to a rebound in attitudes towards spending after a big drop last month.

Considering the economic recession in the U.S., which Thai exporters generally regard as a major obstruction for Thai food exports, especially for luxury items like instant Thai dishes, Thai exporters may find some comfort in the stimulus packages provided from over $ 55 billion in emergency funds from the federal government since September 11, and the prospect of a large fiscal stimulus package, currently being negotiated in Washington, should provide a floor for the economy. This would be the largest economic stimulus package enacted by the federal government since the Great Depression. Thus, Thai instant food products should be well affordable for American consumers for the time being. On the part of Thai exporters themselves, one thing that must be maintained is product quality. Last year, fishery products were the most detained food export item to the U.S., which is very strict when it comes to hygiene and consumer safety standards.

Therefore, amid a wartime atmosphere, when people are hoarding foodstuffs, and thanks to the sustained U.S. economy, Thai food products, particularly instant ones, and possibly even luxury items, exporters should still enjoy strong demand in the U.S. market.

Halal

Halal, a term used to define those foods and other items that are permissible and lawful for Muslims to consume, has become a subject of interest in the wake of the terrorist attacks. One direct impact from the September 11 incident would be that some Thai food exporters are reluctant to supply Halal foods, as they are afraid of being labeled as supporters of terrorism. If mistaken as supporters of terrorism, exporters may find themselves subject to trade barriers imposed by importing countries. As a result, it is likely that Thai food exporters are 'playing it safe' by showing no preference for supplying Halal food for the time being.

The Muslim community makes up a quarter of the world's population, or roughly 1.5 billion people in 160 countries. Muslims consume as much as $ 80 billion of food annually.

An attempt to standardize Halal certification by organizing the first international Halal food symposium by the Export Development Center (EDC) of the Council of Saudi Chambers of Commerce (COSCC) last month in Riyadh, Saudi Arabia proved to be fairly unsuccessful. The conference aimed to discuss various international initiatives regarding the certification of Halal foods, and harmonize certification programs in different countries to create globally acceptable rules and regulations for issuing Halal food certifications, which would eventually lead to the creation of a Halal food label and a single internationally recognized Halal logo. CODEX, the United Nation's food standards control unit, will supervise this single Halal certification.

Unfortunately, from a projected number of 600-1,000 participants from more than 40 countries, only about 150 participants showed up. Representatives from 400 international food companies canceled their trip to Saudi Arabia following the terrorist attacks. If terrorists had not attacked the U.S., the conference would have been carried out effectively with a larger number of attendees and an absolute resolution on global Halal certification would have been reached.

In other words, the attacks have slowed down international standardization of Halal certification. The task remains unfinished so to get certification for the production of Halal foods is still not much of a big deal for food producers. For now they don't need to face the high costs of achieving a single Halal certification. Procedures for getting Halal certification will become more stringent and uniform only when all Halal certification systems worldwide are harmonized. This is 'Hercules' Labor', undeniably.

On the other hand, in the absence of a single omnipotent Halal certification, Thai Halal food exports are still considered by importing countries to be inferior due to lack of adequately trained personnel to examine the production process. To address the credibility issue, many Thai manufacturers are willing to bear higher costs by acquiring the Halal symbol from Malaysia. Internationally recognized Halal certification, no matter how hard it is to achieve, should be able to guarantee and boost Halal food exports from Thailand. Major markets include Algeria, Egypt, Iran, Jordan, Kuwait, Saudi Arabia, Syria and Turkey.

Due to the 'war against terrorism', it is almost impossible for Muslim countries to assemble and create a single Halal certification. Some of these nations may be considered to be Muslim 'extremists', while others are trying to remain neutral, maintaining different degrees of respect for the U.S.

The consequence of this situation is that tougher, single Halal certification is still far from being realized.
The 'war against terrorism' is the main issue at present, and the formation of a unified coalition of Muslim states is unlikely to emerge for some time on the issue of Halal certification.

However, as demonstrated this week when the Central Islamic Committee of Thailand withdrew Halal certification for four U.S. products, there is always the potential that the issue of Halal foods could become more political.