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 Government
support and policy
Despite trade barriers (in both tariff
and non-tariff issues) by importing countries, Thai broiler
meat exports should have high potential to grow steadily in
the next 3-5 years, reflecting its competitiveness in producing
cooked broiler meat products, its ability to tackle sanitary
problems and anticipated growing demand in the major importing
countries. As mentioned in previous annual reports, Thai processors
have successfully reduced their production costs (through
improved farm management and breeding genetics) and developed
their value added products (through continued investment).
According to trade sources, consumers in the EU and Japan
consider Thailand the supplier of the finest cooked products.
In addition, a recent problem with nitrofuran residues has
caused all broiler processors and the Thai government to introduce
a stringent program for monitoring food safety. This should
benefit Thailand by improving its food safety status. On the
demand side, trade sources strongly believe that a downward
trend in domestic production of broilers in both EU countries
and Japan should favor Thailand's market opportunities in
these countries.
However, there are concerns of possible
increased trade barriers, mainly in the EU, which may hamper
Thai exports. For instance, the EU recently reclassified prepared
chicken products in its harmonized custom codes. Thus far,
Thailand exports uncooked chicken meat products under the
'salted item' category (by mixing some salt in their chicken
products) to enjoy the lower tariff of 15.4 percent, instead
of paying about US$ 1,000/ton for the unsalted chicken meat
tariff. However, under the new definition, salted chicken
must contain not less than 2.0 percent salt and be thoroughly
marinated. According to trade sources, these conditions would
make the product impractical for regular uses, and would definitely
make it difficult for Thai packers to export uncooked chicken
meat under the 'salted item' category. A Thai delegation was
scheduled to discuss this issue (and the nitrofuran problem)
with EU authorities in September 2002.
Total broiler meat exports are forecast
to increase 5 percent in 2003 to 440,000 tons, of which about
300,000 tons would belong to uncooked products, while the
balance would go into cooked products. Unlike the booming
exports in 2001, exports of broiler meat in 2002 were hindered
by the incidence of drug residues in broiler meat shipped
to the EU in March, fierce competition from other supplying
countries, and the stronger Thai currency against the US dollar.
In the first few months after the emergence of the residue
problem, an additional requirement for 100 percent testing
on all broiler meat containers exported to the EU and a lack
of proper residue-detecting equipment and expertise in conducting
the new test caused delays in many shipments. Meanwhile, several
buyers in the EU were hesitant to place purchase orders or
switched to Brazilian broiler meat. A global supply surplus
also generated fierce competition in Thailand's major markets
in 2002. According to trade sources, Brazil posed some threat
to Thailand in both the EU and Japanese markets, following
their continued weak currency against the US dollar and increased
supply availabilities. Additionally, the average exchange
rate of the Thai baht against the US dollar in the first 8
months (Jan-Aug) firmed by 4 percent over the same period
of 2001. Trade sources believe that a sharp reduction in exports
in the second half of 2002 (Jul-Dec) should lead total broiler
meat exports in 2002 to drop to 420,000 tons, compared to
438,000 tons. Of total exports, exports of both uncooked products
and cooked products are likely to fall to 300,000 tons and
120,000 tons, respectively.
Not only would export volume drop in 2002,
but also export prices. The C&F prices for skinless boneless
breast meat (SBB) shipped to the EU market in January-August
were fairly stable at US$ 1,800-1,900/ton, as opposed to about
$2,700-2,800/ton in the same period of 2001. Meanwhile, prices
for boneless leg meat (BL) mostly shipped to Japan declined
enormously in 2002, from an average of $2,400-2,500/ton in
early 2002 to $1,300-1,400/ton currently. The average BL export
prices in 2001 were about $1,800/ton.
Japan and EU countries should remain the
major markets for Thai broiler meat for years to come. In
the first six months of 2002 (Jan-Jun), Japan accounted for
57 percent of total broiler meat exports (against 42 percent
in 2001). Meanwhile, the EU accounted for 27 percent (down
from 37 percent in 2001). Demand patterns in Japan and the
EU have not changed from previous reports. Japan usually buys
uncooked meat in the form of boneless leg meat (BL), boneless
breast meat (BB), and special cut meat in sticks (Yakitori).
It also buys made-to-order meat, which is processed or prepared
by heat (such as grilling, steaming, boiling, and etc.) Some
of these products are breaded or seasoned (with salt, Japanese
sauce, etc.). The EU normally buys uncooked skinless boneless
breast (SBB) meat, and semi-cooked and cooked meat in made-to-order
style.
Policy
There have been no price intervention
schemes or export subsidies for the broiler meat trade in
recent history. Although the Thai government is seeking to
improve market access for broiler meat exports in several
countries, including the US, Canada and Australia, it has
not been successful so far.
It is ironic that Thailand has become
one of the world's largest suppliers of chicken meat and is
seeking greater market access in potential buying countries,
while simultaneously remaining opposed to the idea of opening
up its market for imports of broiler meat. While groups of
broiler producers and broiler meat processors are supporting
the idea of domestic protection, they recently submitted a
request to the Cabinet for retaliating against the EU on the
recent residue issue. According to their letter, they believe
that the EU is using the sanitary issue as a trade barrier
to Thai broiler meat exports. In retaliation, the Thai poultry
producers are asking the government to reconsider a plan to
buy commercial aircraft from an EU country.
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