February 6, 2004

 

 

Thai Fishmeal, Corn, Soybean Meal Producers Facing A Hard Time

 

Animal feed producers in Thailand are calling for price intervention to cope with the current bird flu crises. Producers are badly hit by falling prices with many about to be driven out of business within a month.

To date, the deadly virus has led to a mass cull of more than 26 million poultry in the country, resulting a drastic decline in the sales of animal feed.

 

Producers of the key ingredients of animal feed - fishmeal, maize and soybean meal - say they have been hard hit by the bird flu crisis and might be forced out of business within a month if no action is taken. The market value of the three products combined exceeds tens of billions of baht a year.

For fishmeal, Thawee Piyapatana, president of the Thai Fishmeal Producers' Association, has already proposed unofficially the intervention of the price to the Commerce Ministry.

He said the price of fishmeal with 60% protein fell from 20 baht a kilogramme early last week to 16 baht a kilogramme last Friday. If it keeps falling, the producers will have to offer a lower buying price to fishermen, at three baht a kilogramme instead of four baht currently, or stop buying the raw material altogether until the situation improves.

"This is the worst situation I've ever seen - the fishmeal price plunged one baht in one day," said Mr Thawee, 58.

The association has also urged the government to guarantee the price at 17 or 18 baht a kilogramme for all fishmeal output of around 50,000 tonnes a month, valued at around 12 billion baht annually.

Fixing the fishmeal price will be easier than intervening in raw material prices because the number of finished product producers is limited at 113 nationwide, while there are tens of thousands of coastal fishermen, according to Mr Thawee.

Earlier, the association had sought to export the product to offset declining local demand. Unfortunately, their major markets -- China and Taiwan -- were also affected by the avian virus.

He said animal feed ingredient suppliers would be dealt yet another blow if the US government decided to impose an anti-dumping duty on Thai shrimp, causing raisers to cut their output.

In terms of maize, there were reports this week that Thai maize exporters would sell 20,000 tonnes of the grain to Malaysia and maize suppliers were eyeing sales to the Philippines. The recent export price was offered at US$132-137 a tonne free-on-board (FOB) compared to $140 quoted last month.

As for soybean meal, Kaveevudh Nuangchumnong, president of the Feedstuff Users Promotion Association, which represents importers, believes the government will succeed in containing the bird flu outbreak within three months.

But what worries him is the psychological effect, as public reluctance to eat chicken could prolong the problem.

He said that if most people continued to shun chicken meat, the chicken industry, as well as related industries such as animal feed and food processing, would face an unprecedented blow.

Like producers of other animal feed raw materials, importers of soybean meal have seen their sales halved since the outbreak was suspected early last month, he said.

They have since cut back on their imports, which under normal circumstances amount to 1.7 million tonnes annually. The majority of the products are from Brazil, Argentina and India while local consumption stands at around 3.8 million to four million tonnes annually. Also, the country imports about 1.5 million tonnes of soybeans annually, mainly from the US and Argentina.

Mr Kaveevudh said soybean meal importers had helped farmers by extending the credit terms from one to three months normally.

"If the farmers are doing fine, we'll be fine too," he said.

But a ministry source said it was unlikely that the government would intervene the prices of these products. For example, the Commerce Ministry is likely to shelve its plan to shore up maize prices as it views that the grain is already in the hands of the traders, not the planters.

Maize prices have been falling since the bird flu outbreak due to subdued demand. The average price this month was 4.16 baht a kilogramme, from 4.40 baht in December.

Commerce Minister Watana Muangsook said earlier he might introduce a maize pledging programme to stabilise prices.

But the source said almost 90% of maize production from the 2003-04 crop had already entered the market from July to November and the remainder would be harvested in April and May.

The output of maize from this crop was expected at 4.16 million tonnes, down from 4.23 tonnes from the previous crop, on par with local consumption of 4.2 million tonnes.