5% decline seen in 2009 food exports

Thailand's food exports are expected to contract 5 per cent in 2009 on slowing demand while manufacturers have already cut production capacity due to fewer orders.

"The world economic downturn is having a direct impact on the Thai food industry, as many items rely on the world market, particularly the US, Europe and Japan. Meanwhile, exports to secondary markets like Singapore, Hong Kong, Taiwan and South Korea are also tending to drop," said National Food Institute (NFI) director Yuthasak Supasorn.

Yuthasak projected next year's food exports at Bt750 billion to Bt760 billion, down from the projected Bt800 billion this year. The 2008 level rose 30 per cent from last year, due mainly to the sharp rise in rice prices.

However, excluding rice, other food exports are expected to register a 7.6 per cent annualised growth next year. Those with good prospects are processed chicken, canned tuna, canned and processed fish, canned vegetable and fruits, spices and seasoning sauces.

Rice exports will see a drop in both value and volume, while tapioca and palm oil would see a rise in volume but a decline in value.

Food exports in the fourth quarter are projected at about Bt200 billion, up 17 per cent from the same period last year. In the previous period, the growth rate was 47.2 per cent.

Paiboon Polsuwan, president of Food Industry Club, said export value in 2009 should not drop by more than 5 per cent, as manufacturers have adjusted  to the changing market.

Orders have been slowing.but he expected them to return about 20 days into the new year. Manufacturing plants have cut production to maintain liquidity. So far, there were no signs of layoff in an industry of  one million workers.

"Manufacturers have insisted that they would not lay off workers, despite the fewer orders. The environment should be clearer in the first quarter, when it should be known if the US economy would recover and if Japan would place more orders for Thai products," he said.