October 16, 2013

Vertically integrated poultry companies, which represent about 70% of Thailand's poultry industry, are dominating the country's small-scale poultry farmers, according to a new report from Ipsos Business Consulting.

Thailand's poultry industry is set to enjoy sustained growth which will place it at the heart of the government's aim of making Thailand the "kitchen of the world", according to Ipsos.

In 2012, Thailand's poultry production exceeded 1.3 million tonnes, which was last achieved in 2003, prior to the outbreak of Highly Pathogenic Avian Influenza (HPAI) that devastated the industry.

However, the Ipsos report suggests that small-scale farmers, who account for 90% of farms in Thailand, are not well placed to take advantage of this growth opportunity. To secure future growth, the industry needs to invest in technology and equipment such as climate control housing and biosecurity production techniques, all of which requires significant capital investment. With current government policy focused on large players within the market, it is likely that there will be little opportunities for small farmers in Thailand.

According to Ipsos, in 2004, an estimated loss of US$3.1 billion were incurred by Thailand when 63 million birds were culled to control the HPAI outbreak. Prior to the outbreak, Thailand accounted for 8.3% of world poultry exports and was the top exporter to the EU and Japan.

The country's poultry industry grew 5% (compound Annual Growth Rate) between 2004 and 2012 and this is likely to continue until 2015. Output in 2012 was 1.4 million tonnes, exceeding the 2003 peak.

The Thai industry is moving towards industrialised farms and a vertically integrated farm structure. The average farm size is 37,147 birds, a 66% increase from 2008, and vertically integrated commercial farms now account for 70% of poultry production. Domestic consumption accounts for more than 65% of national poultry production, according to Ipsos.

The report adds that after nine years, the EU officially lifted its ban on raw Thai poultry in 2012. The top five companies in the sector are CPF, CP, Betagro, Cargill, GFPT and Laemhthong, which account for almost 75% of poultry meat exports.