Rabobank: Thailand bites into Brazilian chicken exports as EU lifts import ban
(Thomson Reuters ONE) -
Utrecht, May 14 2012 - Thailand looks set to return to a leading position in the
global poultry market after the EU announced that it will end restrictions on
imports of raw poultry meat from Thailand on 1 July 2012. The end of the ban
could cut prices for consumers at a time when they have been hard hit by
inflation in other foodstuffs. These are some of the main conclusions coming out
of a new report from Rabobank titled, " The Return of Thai Raw Chicken - Global
players need to change strategy."
The restrictions on one of the world's major poultry exporters followed an
outbreak of bird flu in the country in 2003. Japan also stopped importing Thai
raw poultry and is widely expected to lift its own restrictions. Brazil is set
to be particularly hard hit as it is currently the major supplier to both Japan
and Europe.
The 2003 ban saw the poultry sector in Thailand lose 350,000 tonnes of export
volume out of a total of 500,000 tonnes and suffer from years of overcapacity.
However, in recent years the industry has shifted its strategic focus to cooked
processed poultry meat, for which exports were allowed. This strategy was so
successful that the industry once again reached full capacity in 2010/2011,
resulting in a first wave of investments.
The re-opening of the EU and Japanese markets could see Thailand's raw chicken
production grow by 20 per cent by 2015. The EU and Japan have long favoured
Thai products for their high quality and low prices and as a result, "Thailand's
return to the market will lead to a new wave of investment in the Thai poultry
industry as it might offer new growth opportunities," says Nan-Dirk Mulder of
Rabobank Food and Agribusiness Research & Advisory.
In the EU, an expected influx of 92,000 tonnes of chicken on to the market is
expected to significantly increase price competition between suppliers of raw
chicken from Thailand and Brazil, and to a lesser extent Argentina, with
consequently lower prices.
The EU market for fresh meat - and the local players involved in it - will be
relatively unaffected because labeling standards make importing fresh meat
economically unviable.
In Japan, the return of Thailand to the market will give traders more options to
source products, again to the detriment of Brazil. Japanese imports of Thai raw
chicken are set to reach up to 150,000 tonnes within a few years, with imports
from Brazil falling from 350,000 tonnes to 250,000 tonnes and lower prices all
round, Rabobank believes.
For Brazilian producers the stakes are high. EU and Japan represents both12 per
cent of Brazil's total exports based on volume, although the both region's
importance in value terms is significantly higher.
Meanwhile, despite the boost from the lifting of the EU ban, Thailand needs to
focus on reducing risks in the industry. The bird flu outbreak starkly
illustrated the risks of being
mostly focused on raw meat and the increased proportion of cooked meat products
will help in the event that bird flu returns to Thailand, a country where the
disease is endemic.
Currently, its export profile is 95 per cent cooked meat to 5 per cent raw meat
which will move to 70 per cent cooked to 30 per cent raw if it can regain its
position in Japan and the EU. But a recurrence of bird flu and subsequent import
bans from the EU and Japan could mean the industry will have 20 per cent
overcapacity at a stroke. "A well-balanced approach to dealing with the
constantly present possibility of an avian influenza outbreak is the base for a
strong international position," says Mulder. "An ongoing emphasis on biosecurity
will be key."
To lower its risk, Rabobank believes the Thai poultry industry could:
1. Further strengthen and prioritise the country's position as the world's
leading cooked meat exporter - pushing growth in raw meat volumes without
also investing in primary processing capacity could increase costs for
Thailand's processed chicken plants if prices rise.
2. Keep emphasising the strength of the compartmentalisation model in global
and bilateral trade negotiations - this makes sense from a veterinary
perspective but it has been difficult to implement globally.
3. Diversify the country's export portfolio, which is currently overwhelmingly
focused on the EU and Japan - 90 per cent of Thailand's exports go to these
two markets. It needs to establish itself in other markets, particularly in
Asia and the Middle East.
4. Internationalise the industry's business model by investing in production
and distribution facilities in leading markets such as China and the EU,
something that companies such as CP Foods and Bangkok Ranch have already
done.
For more information please contact:
Rabobank Food & Agribusiness Research and Advisory
+31 30 71 23822 Nan-Dirk Mulder nan-dirk.mulder(at)rabobank.com
For other information
Franscé Verdeuzeldonk, +31 40 21 70374, F.E.J.M.Verdeuzeldonk(at)rn.rabobank.nl
NB:
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Rabobank Report:
http://hugin.info/133178/R/1609751/511411.pdf
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Source: Rabobank via Thomson Reuters ONE
[HUG#1609751]
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Datum: 14.05.2012 - 09:00 Uhr
Sprache: Deutsch
News-ID 145819
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"Rabobank: Thailand bites into Brazilian chicken exports as EU lifts import ban"
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