2013-12-11 13:56:13 - 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 food-producing 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 buy-back 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
* 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 into the bloc, giving 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.
* 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: 22.8mn in 2014 (growth to average 1.0% annually to between 2013 and 2017).
* Real GDP growth in 2014: 4.5% year-on-year (up from 4.0% in 2013, forecast to average 4.3% between 2013 and 2017).
* Consumer price inflation in 2014: 2.6% average (down from 2.9% in 2013; forecast to average 2.6% between 2013 and 2017).
* Central Bank policy rate in 2014: 2.50% end of period (same than in 2013; forecast to average 2.65% between 2013 and 2017).
Full Report Details at
- www.fastmr.com/prod/723624_thailand_agribusiness_report_q1_2014. ..
Key Revisions To Forecasts
* We have revised our pork and beef production and consumption forecasts owing to a change in data source. We now follow Food and Agriculture Organization (FAO)/OECD estimates. For pork, we now expect production to grow by 5.7% out to 2016/17, reaching 988,100 tonnes (compared with a previous forecast of 845,000 tonnes). Beef output will expand to 415,900 tonnes in 2016/17, up 8.8% on 2011/12 (and compared with a previous forecast of 225,000 tonnes).
The Thai poultry sector was under pressure in 2012 - a result of large oversupply and high feed costs. Companies started aggressive capacity expansion plans after the EU lifted an eight-year ban on uncooked poultry imports from Thailand in April 2012, and the sector can now process 3.85mn birds/day, up from 3.10mn birds/day in 2011. The outlook is starting to improve, with production costs easing and export growth prospects strengthening. This is likely to help domestic producers such as Charoen Pokphand Foods recover from its lacklustre performance in the second half of 2012.
Confusion has surrounded Thailand's controversial Paddy Pledging Program, 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 2013 that 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 level of subsidies, we believe the government has demonstrated its intention 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 market.
We believe ethanol production growth will not significantly affect Thailand's sugar output in the future. Indeed, ethanol fuel production is relatively low and is forecast to show only mild growth over the coming years, according to the OECD and FAO. In any case, the use of sugar cane as a feedstock for ethanol production remains low. Thailand is expected to use only 550,000 tonnes of sugar cane for ethanol in 2013, or 0.6% of total cane supply. Only one out of the 48 ethanol plants operating in Thailand produces sugar cane-based ethanol, producing about 30mn to 40mn litres of ethanol per year, or around 4% of total production. The majority of plants are cassava-based plants. 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 (cassava produces 6,000kg of ethanol/ha, compared with 4,900kg/ha for sugar cane) 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 EU. 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) is a sign that raw production in Thailand is likely to pick up strongly in the coming years.
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