Sweet Corn: 2001 in review   Published on February 11, 2002

Overview

Production of canned sweet corn in Thailand had been increasing on an annual basis since 1999. This was largely due to a significant increase in the amount of suitable arable land, as well as excellent weather conditions throughout peak growing seasons. Attractive prices during previous years, as well as a rise in the number of factories producing sweet corn products, led many farmers to switch to growing sweet corn. Most of these farmers had previously been growing other vegetables. About half the sweet corn grown in Thailand is used in the production of sweet corn products, while the remainder is either used in frozen products or sold in fresh markets.

Weather woes

Heavy rains and flooding hit Thai sweet corn production last year, reducing both the quality and quantity of supplies. Crops were particularly hard hit in March, and sweet corn crops were hit harder than baby corn crops. Some plants were unable to produce cobs, while the kernels of cobs that did fully develop were frequently substandard and were rejected by processors. There were also reports that ears did not live up to export requirements. Ears must be packed with kernels in order to reach these standards.
In August, Petchabun province was hit by flash floods. Petchabun is Thailand's premier sweet-corn growing province, generating about 15 per cent of the country's total output. The damage to plants was limited, and did not have a significant impact on the overall crop in terms of volume. However, it did effect the quality of supplies. Some cobs were apparently not sufficiently packed with corn. There was also a report that Downy Mildew disease had been discovered in August, posing a major threat to sweet corn crops.

Market trends and developments

Thailand canned sweet corn exports have grown by about 15 - 20 per cent over recent years, mainly due to the high quality of its products and the country's competitiveness in the world market. Hong Kong, Germany, Japan and South Korea historically account for almost 80 per cent of Thailand's sweet corn exports.

Prices have been following a downward trend recently, and local exporters have been worried that the degree of rivalry between producer nations may lead to further price cuts and a deterioration in quality.

Meanwhile, in the U.S., the world's biggest exporter of sweet corn, production has been falling slightly, mainly due to lower prices. The downward trend began back in 1997. Despite the fact that Asia has been facing economic woes, it has accounted for the bulk (66 per cent) of U.S. sweet corn exports over the past couple of years. Japan, Taiwan, South Korea, the Philippines and Singapore are particularly important export markets within Asia. Exports to Hong Kong, the Netherlands and Norway have remained strong, while exports to other key markets have not performed so well recently.

Thailand probably benefited from concerns over genetically modified (GM) corn last year after Japan found that the GM content in some U.S corn imports exceeded that outlined in the government's regulations. Japan and some nations in the Middle East imposed restrictions on U.S. corn imports at this time, and then France and Germany also became wary. Since the U.S. is the world's biggest producer of sweet corn, importers looked to alternative supply sources, including Thailand. Buyers in Europe said that the U.S. had lost its quality advantage, while some said that U.S. corn had simply become too expensive. As price is one of the most important marketing tools in the retail food sector, this was a significant factor.

The price of sweet corn in the Thai market was extremely competitive in 2001. Suppliers, acting as brokers with local factories, and farmers established contract-farming arrangements. Farmers were expected to adhere to the agreement, but problems occurred when farmers became tempted to sell their crops to brokers with whom they did not have contracts. This created tension in the market, and lead to lower pricing levels. While the price hovered around three baht per kilogram, farmers were generally less likely to "give in to temptation". The brokers had already made commitments with factories, and wanted to honor these agreements, so the situation was far from ideal. These brokers will have to keep their eyes on the farmers during the growing cycle. Keeping prices at reasonable levels ensures that farmers remain loyal in the longer term.

Outlook

The outlook for sweet corn farmers seems fairly upbeat at the present time. Prices are unlikely to drop as brokers are said to be scouring the country in search of supplies. Supply levels are also decreasing, so farmers can realistically expect prices to improve.

Thai sweet corn exports 2001 ( Jan-Nov )