Theerasak Urunanont, deputy director for processing and integrated operations for Charoen Pokphand Foods, said the price war would involve major chicken exporters like Brazil, the US, Thailand and some countries in Europe.

 

Although a major poultry producer, China will be out of competition this year, he said, because of food safety problems following last year's melamine scandal. A number of countries, including Japan, suspended poultry imports from China last year after melamine was discovered in animal feeds and throughout the Chinese food chain.

 

In the face of a global recession, the buying power of importing countries like Japan and the EU has declined, causing shipments and prices to fall. During the first quarter of the year, Thailand's cooked chicken exports to Europe dropped by 12.9 percent, compared to the same period last year.

 

Shipments to Japan during the first three months of the year slid to 61.2 percent from 74.2 percent during the same period last year, Theerasak said. Annually, Japan accounts for about 50 percent of Thailand's annual broiler exports, while EU countries take in about 40 percent. The other 10 percent goes to other countries.

 

In a bid to outsell each other, the CP official said, exporting countries would try to cut their prices, further contributing to the current price slump. Betagro, another one of the country's agribusiness giants, had earlier reported that chicken prices abroad had fallen by 15-20 percent early in the year due to weak demand.

 

During the same period last year, Thai chicken was selling at about THB135 each internationally, its highest price so far. Locally, it was selling at THB36-37 a bird.

Domestic prices had since fallen to THB27-28 a bird, Theerasak said, adding that the early part of 2008 was the "golden year" for the Thai broiler industry.

 

To avert a further decline in prices, Thai broiler farmers are voluntarily cutting down production by 5 to 10 percent. The country's current production is about 19.5 million birds a week. The most ideal level, he said, would be 17.5 million birds a week, particularly after recent declines in overseas shipments.

 

For its part, CP is cutting down production by 5 percent from its current 5 million birds a week. It, however, expects its chicken income from both foreign and domestic sales to fall by 10 percent this year because of the price slump.

 
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