December 22, 2005

Thailand seeks chicken deal with Russia

Thailand's government has sought a deal with Russia involving 250,000 tonnes of raw chicken in exchange for Russian fighter jets. The move was meant to help revive raw chicken sales for Thai agribusiness companies, in the wake of last year's bird flu outbreaks that hurt exports.

Sommart Prapertchob, head of the food processing club of the Federation of Thai Industries, said the build up in frozen chicken inventories has been significant and exports were important.

Prime Minister Thaksin Shinawatra has tried to conclude chicken deals with Russia and Sweden for over a year in exchange for fighter jets, but has been unsuccessful. However, talks with Russia on a possible barter deal have been revived when Thaksin met Russian President Vladimir Putin during the recent East Asia Summit in Malaysia.

The government is seeking to export 50,000 tonnes of raw chicken to Russia in the first year of the deal, and then 100,000 tonnes of chicken in each of the following two years, the Thai Broiler Processing Exporters Association (TBA) said.

A TBA official who declined to be identified, said the association would try to seek government support in raw meat exports as some poultry companies were unable to make the change to cooked chicken. "But even if the government says we need to supply cooked meat, that is no problem."

The government also preferred raw chicken in its deal with Russia, as cooked chicken was more costly and had to be produced according to individual buyer requirements.

Russia had earlier banned Thai poultry due to the bird flu outbreaks, but it remains unclear whether the country has lifted its import ban on raw chicken from Thailand. A trade official at the Russian embassy said he was unaware of Thailand's proposed deal or whether the ban has been lifted.

Major Thai food exporters, such as Charoen Pokphand Foods, have turned to exporting cooked chicken products instead of raw chicken. A raw chicken deal with Russia would likely benefit small and medium-sized food companies that might still carry frozen chicken stocks, an industry analyst said.