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Published on November 29, 2007

The strengthening baht and reduced consumption in target markets will cripple exports of food products in the remainder of the year, according to exporters and the Export Promotion Department yesterday.

However, the department predicts the industry will have a brighter future next year thanks to aggressive export promotion. Initially, the food-export sector is forecast to grow by 10 per cent next year. The department will announce its official export target in each sector by the middle of next month.

Food exports grew by 12.8 per cent to US$8.84 billion (Bt283 billion) in the first 10 months this year and are expected to increase 7.1 per cent to $10.3 billion for the entire year.

Poj Aramwattananont, president of the Thai Frozen Foods Association, said exports of food products would decrease in the remaining weeks due mainly to a firmer baht and reduced consumption in importing countries.

"Thai food exporters are facing not only tough competition but also lower purchasing power in the United States and Japan. Exporters are under pressure to lift their prices in line with export rivals. Also, major costs of production are increasing because of a shortage of raw materials, most of which are local content," said Poj.

He added that although exporters were trying to seek potential new markets to compensate for losses in major markets, it would be difficult to increase export growth immediately.

Shrimp exports dropped by 2 per cent to $1.78 billion in the first 10 months. It is expected they will continue to fall by another 3.19 per cent in the remaining period. Overall, exports of shrimp are forecast to decrease by 2.2 per cent to $2.18 billion this year.

Shrimp exports to the US alone dropped 12.8 per cent in the first 10 months because of slowing consumption as a result of economic trouble in that country. Also, shrimp exports to the US faced anti-dumping duties and continuous bonds. The US currently takes 52 per cent of shrimp exports.

Canned and processed-food exports will drop by 33.94 per cent in the remaining months, from an increase of 16.9 per cent to $1.8 billion in the first 10 months. This is due to a shortage of tuna.

Poj said tuna was now very expensive because of climate-change problems. Tuna exporters also faced lower profits because exporters cannot increase prices above those quoted by foreign rivals.

Exports of processed chicken will decrease by 4.9 per cent before the end of the year, from an increase of 20.4 per cent to $753.9 million in the first 10 months. The figure should grow by 10 per cent to $1.03 billion this year.

Rachane Potjanasuntorn, director-general of the department, said that despite stringent import measures following concern over a bird-flu outbreak, the government would attempt to promote processed chicken to potential new markets, particularly Muslim countries.

Thai processed chicken is well accepted for its high safety standards, and many chicken plants are certified to produce halal foods to serve Islamic countries, he said.

Exports of dried fruits are also expected to drop by 14.5 per cent before the end of the year from an increase of 14.9 per cent to $505 million in the first 10 months.

Exports of dried fruits are projected to grow by 10 per cent to $558 million this year.

Rachane said Thailand must accelerate the adoption of high technology to increase production across longer seasons because foreign consumers have an increasing demand for tropical fruits.

He pointed out that Vietnam, an export competitor, is developing technology to produce longan in longer seasons to compete with Thai longan.

 Petchanet Pratruangkrai

 The Nation