January 29, 2010

AFTA to boost Thai livestock exports

Thailand's livestock exports are expected to increase 5-10% this year, as the expanded Asean Free Trade Area (AFTA) agreement will allow unlimited import quotas and zero import tariffs on feed meal.

 The abolition of limits on imports of soy and corn, the main ingredients in animal feed, enables producers to manage costs and improve their competitiveness, said Pornsil Patcharintanakul, president of the Thai Feed Mill Association.

Exports of livestock products will reach THB150 billion (US$4.5 billion) this year, an increase of 5% to 10% on the previous year, he said.

Corn will average between THB8 (US$0.24) and THB8.5 (US$0.256) per kilogramme for the entire year.

No supply shortage is expected as manufacturers can freely import corn from neighbouring countries, said the association president.

Increased soy supply from Brazil this year will bring down soy prices, said vice-president Nopporn Vayuchote.

Soy output from Brazil, one of the world's largest soy producers, is forecast to rise to 120 million tonnes this year, up from 100 million tonnes last year. The increase is expected to bring down market prices to about THB13 (US$0.39) to THB15 (US$0.45) per kg, from an average of THB16 (US$0.48) to THB18 (US$0.54) in 2009.

The association estimates that the growing local livestock industry will consume about five million tonnes of corn and 3.1 million tonnes of soymeal this year, up from 4.7 million tonnes of corn and 2.9 million tonnes soymeal last year.

There is also strong demand for corn from the alternative fuel industry, but livestock producers may shift to either tapioca pellets or broken rice as alternative sources of carbohydrate.

The Thai Tapioca Trade Association forecasts demand for 29 million tonnes of cassava in 2010. The association expects 11 million tonnes to be made into chips and pellets for export and domestic use, largely in the livestock industry.

But Seri Denworalak, president of the Thai Tapioca Trade Association, was concerned that production could plunge to 22 million tonnes, down from a previous harvest of 30 million tonnes, due to mealybug infestation.

He expects the government to unload tapioca from the state stockpile of more than five million tonnes to minimise the impact from lower supply.