Food exporters staring at flat growth next year

The export volume is expected to drop by 2.5 per cent from 32.55 trillion tonnes this year to 31.74 trillion tonnes in 2012. The value of food exports is expected to grow slightly as food producers have focused more on processed food and value-added products.
Food export this year is projected to grow by 20 per cent, to Bt963 billion, below the earlier estimate of more than 20-30 per cent, due to the flooding.
Food-export volume this year is expected to reach 32.55 trillion tonnes, an increase of 14.7 per cent. In the first 10 months of this year, export value was up by 22.3 per cent to Bt812.55 billion, while volume rose 19 per cent to 28.53 trillion tonnes.
“The food industry has lost about Bt50 billion due to this year’s severe inundation,” said National Food Institute (NFI) president Petch Chinabutr. “More than 1,300 food factories nationwide and 38 large and medium-sized plants in seven industrial estates, and many food packaging firms were affected by the floods. As a result, exports will be lower this year and next year.”
He said that although some crops have not been severely affected by floods, rice has been the hardest hit among crops. Of the total 12 million rai of damaged plantation areas, about 9.9 million rai grow rice. A total of 130,262 farmers were hit by the flooding this year.
But the floods are not the only cause for lower food-export growth. There is also risk from the global economy, in particular the euro-zone crisis, Petch said. The European Union is one the major global food importers and the fourth-largest food-export market for Thailand. More than 40 per cent of total food trade is in the euro currency. Hence, food trading has been hit by currency fluctuation.
Pornsilp Patcharintakul, chairman of the Board of Trade’s Farm and Food Business Committee, said the value of farm crops is expected to increase by 5 per cent next year due to the impact of climate change and higher costs of production and labour.
To promote growth of the food industry, Pornsilp urged the government to revise rules and regulations to facilitate exports. He pointed out that many laws and regulations of some government agencies such as customs rules and the Food and Drug Administration regulations have become out of date. The government should update those laws to increase Thai competitiveness.
Visit Limpana, chairman of the Food Processing Industry Club of the Federation of Thai Industries, said food producers would like to see a clearer plan from the government to prevent flooding next year.

MAHACHAI
Since Mahachai, a centre of food and processing, which is located on the eastern part of Bangkok faced difficulty during the floods, the government needs to ensure that flooding will be under control and will not impact the food industry in the future, he said.
Visit pointed out that if Mahachai were to be hit again next year, not only would exports be in limbo, but there could be a serious threat to domestic food supply also.
Higher minimum wages, lower supply of raw materials and an expected increase in commodity prices will also increase production costs, he said.
Next year, most major food products will enjoy higher exports both in terms of value and volume. However, rice exports will face contraction next year due to tough competition.
Thai Rice Exporters Association vice president Chokechai Sethiwan said rice exports are expected to drop by 2 million tonnes next year from this year’s 10.5 million tonnes because of India resuming its exports.
After India lifted its export ban in October, Thai rice exports have dropped continuously to only 400,000-500,000 tonnes a month from the previous 1 million tonnes a month. Some rice importers, mainly Bangladesh, have turned to buy rice from India instead of Thai rice as Indian rice is much cheaper than Thai rice by about US$100 (Bt3,100) per tonne. Moreover, Vietnam’s strategy to compete with India by lowering its rice price will also cause difficulties for Thai rice exports next year, Chokechai said.
Panisuan Jamnarnvej, president of the Thai Frozen Foods Association, said shrimp-export volume and value will grow continuously by 2.2 per cent and 2.4 per cent respectively next year. He said shrimp value is expected to increase due to lower output. However, buyers can accept the higher price if the baht stays stable.
Chicken exports next year are expected to grow by 8.9 per cent in terms of volume to 556,000 tonnes.