March 30, 2006

 

South-east Asia a top trade region for seafood, food and agribusiness

 

An eFeedLink Exclusive

 

 

The South-east Asian region accounts for among the world's heaviest trade flows in food and agribusiness (F&A), to a tune of US$94.7 billion in 2004.

 

This is more than half the entire Asian continent's total F&A trade at US$170.7 billion that year, revealed the Dutch-based Rabobank during an in-house seminar on South-east Asia's F&A trade, hosted for the media.

 

Although the United States leads at US$101 billion in total F&A trade in 2004, South-east Asia netted a sizeable trade surplus at US$30.3 billion, well above America's US$11 billion. In contrast, F&A trade for the entire Asian continent registered a deficit of US$1.7 billion.

 

Several key trends have emerged in South-east Asia's F&A sector. One of these is the issue of food safety, which has become a critical determinant of market access. For instance, standards like HACCP and Good Manufacturing Practice (GMP) are now synonymous with the exportability of poultry products from Thailand, a country noted for having successfully wooed back key export markets after the 2004 bird flu outbreak, through strict adherence to food safety regulations.

 

Currency revaluations, vertical integration across the value chain, and intense competition leading to the consolidation of fragmented production are also noteworthy developments, says Sami Khan, head of Rabobank's Strategic Advisory and Research for South-east Asia, who presented the seminar. 

 

On mergers and acquisitions, South-east Asia's agribusinesses are on the lookout for opportunities in the region, Khan adds, pointing to San Miguel's high profile US$2.2 million bid for Australia's National Foods last year.

 

Seafood is the region's top F&A export commodity, led by producers Thailand, Vietnam and Indonesia. Average annual growth rates for seafood exports from 2000 to 2004 were as high as 21 percent in Vietnam. The US and Japan emerged the region's top seafood buyers, with bilateral trade flows between the US, Japan and Thailand, Vietnam totalling over US$3 billion in 2004.

 

In Thailand, meat and seafood processing contributed 11.7 percent to total F&A trade in 2004, at a net export value of about US$2.6 billion. "Much of the seafood caught in the waters of Japan is sent to Thailand for processing, before being shipped back to Japan or exported elsewhere," says Khan.

 

Emerging as an increasingly competitive value-add centre too is Vietnam, where seafood is the country's top agricultural trade product at 32.2 percent of total F&A trade or a net export value of US$2.35 billion. Singapore, the only country in South-east Asia which is a net seafood importer, also boasts a thriving value-add processing base.

 

The curb in poultry exports from traditional producers following bird flu has led to trade flows moving in the opposite direction as well as new emerging players. Imports of poultry to Vietnam, once an exporter, are growing, while the Philippines, the only producer in the region unaffected by the H5N1 bird flu, saw its export potential rise significantly in 2004.

 

In the region, Thailand is the only country with a sizeable poultry and animal feed export industry. For feed grains and oilseeds, key import sources to South-east Asia are India, Argentina, the US and Brazil.

 

In 2004, the top trade flows in animal feed came from net exports from India to Indonesia, followed by that from Thailand to Japan. Combined value for both of these bilateral trades amounted to well over US$250 million.

 

On the potential for F&A trade expansion, Khan singled out Indonesia's resource rich base as offering great scope for F&A growth; already, Indonesia is South-east Asia's second largest F&A exporter. Vietnam, which has been strengthening its competitiveness in F&A, is fast developing its supply chains and systems for agri-commodities, with an estimated 8.5-percent growth in the F&A sector for 2005.

 

In terms of potential export markets, the Middle East has been cited as an up-and-coming F&A trading partner for the region, particularly in halal meats and processed foods.

 

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