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 Thai
Production, Consumption and Marketing
Production
Total broiler meat production in 2003
is forecast to grow by 4-5 percent from 2002, mainly because
of surplus breeding stock and a continued improvement in overall
productivity in broiler farming. Despite depressed export
prices for broiler meat during most of 2002, most integrated
broiler producers will likely maintain or slightly increase
broiler production in 2003 following their expanded operations,
which took place in 2001 and 2002. In addition, a continued
upgrading to "high-yield-type" parent stocks and
the increased number of evaporative cooling system barns in
broiler farming should favor the overall productivity in 2003.
Despite increased competition among exporting countries, a
current global supply surplus and a likelihood of intense
non-tariff trade barriers by importing countries, Thailand
has great potential to expand its broiler production in the
next 3-5 years. This is mainly because Thailand has successfully
diversified broiler meat products, from depending only on
basic uncooked boneless parts into premium-quality cooked
products. This should help Thailand to overcome its disadvantage
of relatively higher feed costs compared with competitors
like the US and Brazil. Meanwhile, China, which could be a
threat to Thai exports due to its labor-cost advantage, may
continue to be troubled with the on-and-off import ban from
major importing countries such as Japan and the EU due to
sanitary problems.
The emergence of residue problems in broiler
meat exported to the EU in 2002 should also lead to new developments
in Thai broiler farming. The EU recently developed a lab test
to detect the trace amounts of prohibited residues in broiler
meat and frozen shrimp, and found nitrofuran residues for
the first time in broiler meat shipments from Thailand in
March 2002. Shortly after that, the EU announced it would
conduct 100 percent testing on all broiler meat containers
shipped from Thailand and warned that they would ban Thai
imports if the problem of nitrofurans in broiler meat were
not remedied. Although the Thai government and broiler processors
have cooperated closely to resolve this critical problem (as
mentioned below), most Thai integrated broiler producers are
increasingly concerned that importing countries (especially
the EU) would seek to utilize sanitary issues to impede Thai
exports in the near future. As a result, these producers have
begun to strictly control their operations at all steps, from
feed milling and breeding to processing. Some producers isolated
their production of poultry feed from that of other livestock
feeds. As for broiler farming, they also segregate production-for-export
farms from regular farms, and switched to source their live
broiler production only from their own farms and reliable
contracting farms. This trend in broiler farming will definitely
speed up the elimination of independent broiler producers
in the country.
In reaction to the EU's warning, the Thai
government set up guidelines to resolve the residue problem,
which include: a) controlling the import of drugs/chemicals
and their derivatives which contain prohibited substances;
b) regulating all drug use in the animal feed manufacturing
process; c) regulating all drug use on farms and d) monitoring
the level of drug residues in all meat products. The actions
conducted by the government in the past five months (April-August
2002) are as follows:
•
The government approved a budget of 200 million baht (US$
4.8 million) to be used for the surveillance of drug residues
in animal products.
• The EU detection technology
is so new that a specific laboratory has been established
in Thailand. The lab has the capacity to detect any contamination
by prohibited drugs/chemicals in animal feed, premix feed
and animal products.
• The government has
conducted trial tests on drugs/chemicals imported into Thailand,
and has not found any prohibited substances in these imports.
• The Department of Livestock
Development has regularly inspected many broiler farms that
process for export, and no prohibited residue violation has
been found.
As a result of depressed export prices (partly due to the
emergence of residue detection), integrated broiler producers
have scaled down their live broiler production. FAS/Bangkok,
accordingly, is revising the estimate of total broiler production
downward from an earlier estimate. However, the new estimate
still represents 7 percent growth over 2001. Chick production
in the first 8 months of 2002 (Jan-Aug) was around 18-20 million
birds/week, compared to an average of 18 million birds/week
in 2001.
Average live broiler production costs
in 2002 decreased 2001, following a lower replacement stock
cost. Chick prices between January and August 2002 fluctuated
between 3-12 baht/bird, compared to the more stable 10-12
baht/bird in 2001. Meanwhile, feed cost was relatively unchanged
in 2002 due to sufficient domestic corn production and continued
low prices for such protein-source ingredients as soybean
meal and fishmeal. The total cost of broiler production in
2002 is pegged at 24-25 baht/kg live weight (approx. 24-25
cents/pound live weight), as opposed to 27-28 baht/kg (27-28
cents/pound) in 2001. The cost in 2002 (24 baht/kg live weight)
is roughly derived from day-old chicks (3 baht), feed (17
baht), vaccination and drugs (0.8 baht), labor (2.5 baht)
and other costs (0.7 baht).
Consumption
Broiler meat consumption is forecast to
increase further in 2003, with the expectation of strengthening
the Thai economy and increasing popularity of chicken meat
among Thai people. The Thai economy should continue to grow
by 3-5 percent in 2003, compared to the estimated 4-4.25 percent
in 2002. The tourism industry should also expand, with more
than 11 million visitors, which should bolster meat consumption.
Quick service restaurants (such as KFC, McDonalds, Pizza Hut,
Sizzler, Chester Grill, etc) are also increasing their outlets,
mainly in large cities. In addition, chicken meat consumption
is also driven by the increased popularity of Thai northeastern-style
food, of which grilled chicken is a main dish, and its relatively
low prices compared to other meats. Total consumption in 2002
is estimated to have increased by 5 percent over the previous
year.
In response to unfavorable export prices,
live broiler prices declined sharply in 2002. The Ministry
of Commerce reported that wholesale prices for live broilers
in the first 8 months of 2002 (Jan-Aug) dropped 13 percent
to 26.48 baht/kg (29 cents/pound). Meanwhile, average prices
for chicken boneless breast meat at Bangkok in 2002 (Jan-Aug)
decreased by 5 percent to 69.11 baht/kg (75 cents/pound).
Marketing
There have been no significant changes
in the marketing of Thai broiler meat products since the last
annual/semi-annual reports. For years to come, Thai processors
are likely to further shift their production lines to higher
value-added products in order to overcome their disadvantage
in production costs (mainly feed costs, genetics and animal
health products) against competitors. Thai investors own nearly
all existing broiler integrators, except Sun Valley Company,
which is linked to US-based Cargill Corporation. There should
be no additional foreign investment in the broiler business
in the near future.
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