December 26, 2005

 

Thai chicken exports to benefit from Russian fighter jets barter trade

 

 

Leading Thai chicken producers and exporters have thrown their full support behind a government proposal to exchange chicken for Russian Su-30 fighter jets.

 

''This barter trade is a good concept to push our farm exports,'' said Adirek Sripratak, the president and CEO of Charoen Pokphand Foods Plc (CPF).

 

''It is not necessary to trade the jets only with chicken. Other farm products; rice, rubber and shrimp should be considered.''

 

According to Prime Minister Thaksin Shinawatra, the government is still shopping around different countries for new fighter jets. Although it is considering trading farm products, chicken is preferred for the Russian Su-30 jets.

 

The cost to buy the 12-strong fleet of jets is reported to be about 35 billion baht, approximately the same value of Thai chicken exports in one year.

 

But critics doubt that a deal would benefit all chicken companies, not just the big firms that can provide large supplies.

 

Mr Adirek dismissed a report that the CP Group, the country's largest agribusiness conglomerate, would benefit directly. Any shipments would be managed by the Thai Broiler Processing Exporters Association.

 

''There's no need to just take CPF chicken. The government might pick meat from other companies to trade,'' he said.

 

Russia annually imports about two million tonnes of chicken meat. Some 80% comes from the United States but none from Thailand. Russia also imports 500,000 tonnes of pork.

 

Mr Adirek said the deal would help Thailand penetrate the Russian market.

 

He also said that Russia has not imported Thai chicken because the country has not sent a team to inspect Thai poultry production plants yet.

 

Anan Sirimongkolkasem, the president of the Thai Broiler Processing Exporters Association, noted that Russia has a complicated import system, in which quotas are set each year based on the past records of importers. More importantly, importers can buy meat only from plants certified by Russian hygiene experts.

 

Thailand asked Russia to open the market for Thai chicken two years ago, according to Mr Anan, and invited the country to examine Thai chicken plants, but the visit was cancelled due to bird flu.

 

However, with high production standards and an improvement in bird flu prevention and control, Thailand could export to Russia, he said.

 

Although selling prices were a key in barter trade negotiations, Mr Anan said, they should not be fixed but should vary with market rates.

 

The association estimated that Thailand's chicken exports next year would rise to 350,000 tonnes of meat for 40 billion baht, compared with the estimated 270,000 tonnes for 32-33 billion baht this year.

 

Meanwhile, CPF dismissed reports that the company's planned poultry investment in Russia would benefit from the barter trade.

 

CPF is conducting a feasibility study to invest in the Russian chicken industry. A team has been studying investment regulations and market potential in the overall business climate.

 

CPF is also considering taking over a poultry plant in Russia, in a similar move to its investment in a Turkish chicken business.

 

''Russia now welcomes more investment from overseas, and we can invest in something 100% there,'' Mr Adirek said.

 

Apart from investing in Russia, CPF plans to inject six to seven billion baht in various businesses such as shrimp and fish, next year.

 

Its sales are projected at 130 billion baht for 2006, compared with 110 billion this year. Next year, the company plans to ship 110,000 tonnes of chicken and 60,000 tonnes of shrimp, rising from 90,000 and 42,000 tonnes respectively this year.