January 13, 2011
Thailand''s agricultural sector plan needs to expand
Thailand''s Pracha Wiwat plan needs to go beyond the livestock industry as all farmers take on high production costs, according to an economist.
The Pracha Wiwat plan to bring down raw material costs for the animal feed industry will help about 300,000 livestock farmers, but other crop farmers will ask why they are not getting help as well, said Aat Pisanwanich of the University of the Thai Chamber of Commerce.
"Reducing production costs for farmers is not a new issue. It has been talked about for a long time. Every farmer needs equal assistance. If the government can help across the board, it will bring overall benefits," he said.
Dr Aat is sceptical about the focus on animal feed since the industry is essentially an oligopoly of three to four large producers. Instead, he said the government should effectively enforce the Trade Competition Law and find ways to help small producers compete.
"Necessary measures should include ensuring no price collusion by large manufacturers. All farmers face the same problem of high production costs. It''s not only layer, broiler and pig farmers. The assistance should cover crop farmers as well," he said.
Animal feed costs depended not only on raw materials but also on transport, he added.
Pornsil Patcharintanakul, president of the Thai Feed Mill Association said feed manufacturers wanted the government to eliminate the 2% import tax for soymeal to reduce costs. Currently, feed makers wanting to import soy must buy all domestic soy production, estimated at about 250,000 tonnes a year, at prices set by the government.
They also need to buy all domestic soymeal from soyoil producers at the world price plus a 2% tariff. This measure has been in place for 10 years to protect soy oil producers.
Thailand imports about 1.2 million tonnes a year of soy and 1.8 million tonnes of soymeal.
Feed manufacturers need to get import licences from the Commerce Ministry every year, and delays in issuing licences also add to costs, said Mr Pornsil.
He said conditions had changed in the past decade and Thailand can no longer produce enough soy, so the government should review import tariffs for soymeal as well as the 15% tariff on fishmeal.
Another major raw material is corn, of which local output of four million tonnes a year is sufficient for local use. Thailand produces 13 million tonnes of feed.
There are around 50 feed mills in Thailand. Big manufacturers include CP Group, Betagro, Saha Farm, Thai Feed Mill Company and Lee Feed Mill Plc.