Exports of processed food face tough year
Thailand's processed-food exporters are likely to have a difficult year due to the stronger baht and tougher global competition, Vilai Kiatsrichart president of the Thai Food Processors' Association has forecast.
The sector has targeted exports to grow by 12 per cent this year to Bt150 billion. Last year, the export value of processed foods increased by only 7.8 per cent to Bt119.8 billion against a target of 12 per cent largely as a result of the baht appreciation. Negative factors including the stronger currency, increased competition in overseas markets and more non-tariff barriers erected by major importing countries will continue to make it more difficult for exporters. "Exports dropped in the first two months of the year because the European Union slapped an anti-dumping duty on sweet corn. The price gap between Thai products and those from other countries has also created tougher competition for local exporters," Vilai said. Some importers have started to purchase processed foods from Vietnam, Indonesia and other competing countries because of price differences. Thai exporters are trying to redress the price difference by cutting manufacturing costs to retain their customer base, Vilai said. She urged the government to maintain baht stability so exporters can recover their competitiveness. Only food ingredients and ready-to-eat meals will have a good year, thanks to rising international demand for Thai food, she said. According to the association, sales of food ingredients and ready-to-eat meals jumped 17.8 per cent to Bt8.87 billion last year, compared to Bt7.5 billion in 2005. In addition, River Kwai International, the country's leading sweet corn and vegetable exporter, expects flat growth this year as a result of the rising baht. Royal Kwai's chief executive officer, Roj Burusratanabhand, said the firm expects sales this year of Bt1.6 billion. "The strong baht is bound to hurt exporters, in particular those in the agribusiness sector. The problem is that as the currency strengthens, Thai exports are less competitive overseas and the value of companies' repatriated profits declines," he said. To maintain sales volume and compensate for losses on the exchange rate, Roj said his company would concentrate more on value-added products for sweet corn and fresh vegetables in markets that have customers with high purchasing power. These include Japan, the United Kingdom and Australia. The firm is also starting to export fresh fruits and organic foods to markets where demand for these products is rising, he said.
Petchanet Pratruangkrai The Nation
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