May 18, 2012          

Thailand's Q2, Q3 food exports seen to decline

Due to the slowing global economy and higher production costs, Thai food exports in the second and third quarters of 2012 are projected to decline, according to the National Food Institute (NFI).

In April-June, the production is likely to slow in tandem with exports. Food exports in particular are forecast to drop 2.3% valued at nearly THB250 billion (US$7.96 billion), said NFI Director Petch Chinnabutr.

Exports of rice, frozen shrimp, processed tuna and processed fruit and vegetable are projected to decrease. Food exports are likely to continue slowing into the third quarter, but will rebound in the fourth quarter.

Overall in 2012, food exports are projected to drop in quantity but prices will tend to rise, so that Thai food export value is likely to surpass THB1 trillion (US$31.8 billion), an increase of 5.1%.

Risk factors that should be monitored are global energy costs, effects from the minimum wage rise and higher prices of raw materials for agricultural production. Regarding the increase of the daily minimum wage in April, most entrepreneurs experienced higher production costs but 75.9% of those still capped the prices while 20.3% will increase prices, and another 38% may raise their prices in the next three months.

The Thai food production industry in the first quarter of this year dropped 1.6%, resulting from global economic slowdown, particularly in major Thai food importing countries such as the US and the EU.

Fish, vegetables and fruit-processing industries produced less and the dairy industry shrank 43.3% as it has not yet recovered from last year's severe flood impacts.

Food exports in the first quarter of this year rose 5.3%, worth THB234 billion (US$7.4 billion). Exports of sugar, chicken, poultry meat, tapioca powder and seasoning rose.

Export values were up due to rises in goods prices. However, exports of rice, shrimp, tuna, vegetable, processed fruit fell.