2013-08-24 09:11:35 - New Food research report from Business Monitor International is now available from Fast Market Research
Thailand will maintain its status as a key Asian agricultural provider in the coming years, as the sector benefits from strong export opportunities and government support as well as an efficient foodproducing industry. The sugar and livestock sectors are especially promising; however, the government's interference in the market, especially in the rice sector, will hinder the competitiveness of Thailand's production relative to its Asian rivals. Although rice farmers will directly gain from the rice guarantee buyback programme, we are uncertain about the long-term effectiveness of these policies in enhancing Thailand's food-producing efficiency and in boosting the country's export competitiveness. Thailand will remain a key rice exporter but may lose out to secondary exporters owing to growing instability in its trade
Full Report Details at
- www.fastmr.com/prod/670596_thailand_agribusiness_report_q4_2013. ..
* Poultry production growth to 2016/17: 19.4% to 1.85mn tonnes. This growth will largely be due to increased private investment in the sector. The lift of an eight-year EU ban on uncooked imports in April 2012 will allow imports of Thai-produced poultry and other food products and give the industry more impetus to expand production.
* Sugar consumption growth to 2017: 26.8% to 3.2mn tonnes. Thailand's sugar consumption is growing fast, boosted by consumption patterns and the rising demand for carbonated soft drinks and confectionery sales.
* Rice production growth to 2016/17: 8.4% to 22.2mn tonnes. This in line with the government's forecast for rice production to reach 21mn tonnes by 2014/15. Expansion will come almost entirely from improved yields, as the area of land under rice cultivation will remain stable.
* BMI universe agribusiness market value: 22.5mn in 2013 (growth to average 1.2% annually between 2013 and 2017017).
* Real GDP growth in 2013: 4.0% chg y-o-y (down from 6.4% in 2012, forecast to average 4.2% between 2013 and 2017).
* Consumer price index in 2013: 2.9% average (down from 3.0% in 2012; forecast to average 2.6% between 2013 and 2017).
* Central bank policy rate in 2013: 2.50% eop (down from 2.75% in 2012; forecast to average 2.65% between 2013 and 2017).
Key Revisions To Forecasts
* Sugar 2012/13 production forecast revised up, to 9.9mn tonnes (compared with a previous forecast of 9.4mn tonnes). Despite an increase in sugar cane area harvested to 1.3mn hectares, up 4.7% y-o-y, driven by the ongoing growth of the numbers of mills in Thailand, sugar output declined on the back of lower yields.
Confusion has surrounded the controversial Paddy Pledging Programme, which has kept Thai rice at uncompetitive prices and has led to a sharp drop in exports since its implementation in October 2011. After announcing in mid-June that the subsidies would be scaled down by 20% from THB15,000/tonne of paddy to THB12,000/tonne, the government promptly reversed course on July 2 after farmers threatened to hold protests. Despite the recent disarray surrounding the subsidies, we believe the government has proven its intentions to eventually scrap the programme. We continue to see this policy as unsustainable and believe the country will be forced to reduce the subsidies or to release part of its hefty stocks on the international markets.
We believe that ethanol production growth will not significantly affect Thailand's sugar output in the future. Ethanol fuel production is relatively low and is forecast to show only mild growth over the coming years, according to the OECD and Food and Agriculture Organization. In any case, the use of sugar cane as a feedstock for ethanol production remains low. Ongoing debate on the revenue sharing system for sugar cane profits between farmers and mills has led to only limited sugar cane-to-ethanol production. This, coupled with the fact that cassava is usually the most cost-efficient biofuel feedstock and available in Thailand, is likely to limit demand for sugar cane-based ethanol in the coming years.
The Thai government announced in March 2013 that negotiations are to begin on a Free Trade Agreement (FTA) with the European Union that is supposed to be concluded in less than two years. An FTA would be a boon for raw poultry meat and broiler exports, which remain low compared with cooked poultry exports. This, coupled with the end of the ban on raw exports from the EU (which is expected to be followed soon by Japan and South Korea) are signs that raw production in Thailand is likely to pick up strongly in the coming years.
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