The rising cost of raw materials used to feed animals,
constituting 70% of animal farming costs, is expected to rise another 20% in
It has been reported that an increase in animal feed prices of 20% will
result in food prices - both for the domestic market and export - increasing by
5-10%, says CP Intertrade CEO Pornslip Patcharintanakul.
Because of the uncertain animal feed costs, CP, one of the largest chicken
and shrimp exporters in Thailand, will raise export prices for its chicken
products and not take orders for more than three months in advance.
Control costs, new technology
â€œFortunately, the higher costs are being experienced equally everywhere in
the world and, to maintain their share of international markets, animal farmers
and exporters must control other costs by introducing new technology,â€ says
Patcharintanakul, adding that the situation will intensify if Thailand does not
have a clear policy of controlling agricultural output for food and
Patcharintanakul says a recommendation would be if Thai companies were able
to contract crop production to farmers in neighbouring countries. Thailand
currently imports about 100,000 tonnes per year from Laos, Cambodia and Burma,
though the import volume of soybeans remains small.
This farming contract, however, does not go without risks, he says: â€œWhen
oil prices climb further, what if the neighbouring countries introduced a
requirement that crop output must be converted into ethanol before being
exported to Thailand, so as to reap additional benefits? That would mean even
fewer raw materials for animal feed!â€
Ultimately, the higher food costs will make 2008 a tough year for
Thailand's food exports, says Patcharintanakul, adding that there is the danger
of a â€œdrop in consumptionâ€.