MLBA12: December / January 2010

 

 

 

 

With the global recession brewing, 2009 started ugly for Thailand's poultry sec­tor. A month before, chicken prices had plummeted. The farm price of live broiler, the main indicator of the industry's health, had sunk to THB33-34/kg from THB37-38/kg in Novem­ber 2008.

 

Ignited by the sub-prime mortgage crisis in the US, the world economy was tottering. At home, political cri­sis made it worse. Anti-government protesters had taken over Bangkok's international airports, leaving tens of thousands of foreign tourists unable to fly into the country during the peak tourist season.

 

Tourism is a pillar of the Thai economy, with 12-13 million foreign tourists visiting the kingdom each year. In the absence of tourists, ho­tels and restaurants cut down their chicken purchases, causing the price to spiral.

 

This was a big setback. Due to oversupply, chicken prices had been low for the most part of 2008, while production costs had gone up to about THB35-36/kg.

 

And while chicken prices were dismal, feed ingredient prices were restive. Prices of corn and soymeal, which account for about 85-90 per­cent of a broiler's feed ration, had been escalating – after sharp declines just months before. Commercial feed prices are under government control but prices of feed ingredients are not. And big poultry raisers, which formu­late their own feeds, are sensitive to any fluctuation in feed grain prices.

 

The export front was in simi­lar strait. After enjoying a 9-percent growth in the first half of 2008, broil­er export was seen declining by 5 per­cent in the second half of the year. Key chicken importers like Europe and Ja­pan were in economic slowdown that was expected to drag on through most part of 2009.