Farm Exports Set to Boom This Year Despite Strong Baht

By Phusadee Arunmas, Bangkok Post, Thailand

Jan. 3–The export outlook for Thailand’s key farm products remains strong this year, with the possibility of at least 400 billion baht in revenue for the country despite the appreciating baht and projected economic slowdowns in key buying countries.

Of the total export value, 100 billion baht could come from exports of 8.5 million tonnes of rice, thanks to higher world demand and falling supplies in other rice-exporting countries.

Chookiat Ophaswongse, president of the Rice Exporters Association, said the country’s rice exports in 2007 would benefit from several conditions including a weaker performance of archrival Vietnam.

Rice production in Vietnam, the world’s second largest rice-exporter behind Thailand, is expected to decrease as a result of a plague that has destroyed many fields. As a result, the country was estimated to ship 4.5 million tonnes of rice in 2006, slightly below 4.7 million tonnes in 2005.

On the demand side, the Philippines and Indonesia will likely import up to two million tonnes of rice to compensate for local shortfalls following severe drought.

According to Mr Chookiat, Thailand’s output from the latest crop is estimated at 29 million tonnes of paddy or 18-19 million tonnes of milled rice. Together with more than four million tonnes in the government’s stock, it is possible Thailand could export up to 10 million tonnes in 2007.

The only factor that can dim the prospect is the baht. “If it’s too strong, prospective buyers could turn to less expensive grains,” he said.

Also showing good prospects is rubber, for which strong demand will likely keep prices high early this year, although the outlook for the rest of the year remains uncertain.

Luckchai Kittipol, president of the Thai Rubber Association, said rubber prices would rise by 5 percent year-on-year in the first quarter of 2007. Based on advance sales for first-quarter delivery, ribbed smoked sheet No. 3 (RSS3) rubber is being quoted at US$1,900 per tonne, compared with $1,600 last year.

But the total export value of the commodity this year might fall short of $5 billion this year thanks to reduced speculation and easing oil prices.

“Rubber prices for the rest of this year are uncertain. There remain certain factors that could affect supply such as El Nino and the US economy,” Mr Luckchai said.

However, he expects rubber exports this year to rise slightly from the estimated 2.6 million tonnes shipped last year.

For tapioca products, traders foresee improvements in both export volume and prices.

Sukij Wanglee, president of the Thai Tapioca Trade Association, is confident that the country could earn 23 billion baht this year from exports of five million tonnes of tapioca chips and pellets, up from four million last year, and 2.4 million tonnes of starch, up from two million in 2006.

“Drought in Europe will force users there to use chips and pellets as raw materials to mix as animal feed,” he said.

He added that the future of tapioca looked bright, as several ethanol plants that use it as raw material are scheduled to be completed over the next two years.

Higher demand could definitely raise the prices of cassava from 1.30 baht to 1.40 baht per kilogramme.

Likewise, chicken and shrimp look set to show strong export performances.

Shrimp exports last year were estimated at 340,000 tonnes or 80 billion baht. The export value is expected to increase by 20 percent this year, backed by higher yields of white shrimp, said Somsak Paneetatyasai, president of the Thai Shrimp Association.

Nopporn Vayuchote, executive vice-president of Betagro, a leading chicken exporter, said that although the chicken export outlook remained positive, exporters would feel the pinch from higher production costs, mainly more expensive animal feed, maize and other grains.

He said the prices of maize rose more than 30 percent over the past year to seven baht per kilogramme as a result of drought. Maize accounts for half of all ingredients in animal feed.

“Although export prices will remain stable in 2007 at around $3,000 per tonne, the industry is not attractive and I foresee few investments next year,” said Dr Nopporn.

Earnings from chicken exports in 2007 are forecast to increase slightly to 93 billion baht from 310,000 tonnes of shipments, compared to 87 billion baht and 290,000 tonnes in 2006.

Dr Nopporn said he was less worried about bird flu, which still haunts the industry, as nearly all of Thai chicken exports were heat-treated products.

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