Page 35 - FoodFocusThailand No.173 August 2020

SPECIAL FOCUS

• Exports of fresh, chilled and frozen Thai chicken in 1H20
have a tendency to grow but may decelerate from the first two
months, during which growth was 31.4% YoY or an export value of
approximately USD 41.0 million. That growth was partly stimulated
by preorders made by Chinese importers during the first quarter of
2020, which came in before the Chinese New Year festival and the
imposition of the lockdown measure. Moreover, orders for the second
quarter of 2020 since the reopening of Chinese ports have continued
to trickle in – until Thailand reaches its full production capacity – based
on the 16 factories that produce chicken export products to replenish
the declining Chinese inventories. The Chinese customs authority
has recently issued trade-related measures to support the imports
of agricultural and food products so as to make them more quickly
available for purchase . Chicken products are among the products
1
that have benefited from such actions, as they are categorized as รูปที่ 4 อัตราการขยายตัวของมูลค่าการส่งออกไก่สดแช่เย็นแช่แข็งของไทยไปจีน
essential food products in China. Figure 4 Expansion rate for value of exports of fresh, chilled and frozen Thai chicken
Meanwhile, the COVID-19 situation in Thailand has seen an to China
increase in the number of cases, which in turn prompted the ที่มา: MOC รวบรวมและประมาณการโดยศูนย์วิจัยกสิกรไทย
government to declare the Emergency Decree on Public Source: MOC compiled and projected by KResearch
Administration in Emergency Situation, B.E.2548 (2005) between
26 March and 30 April 2020, resulting in lockdowns of multiple products to China . Likewise, Russia – a newcomer that merits close
2
provinces, the closure of border checkpoints and tightened watch– has remarkably carved out a larger market share after the
interprovincial travel regulations. These COVID-19 control initiatives Chinese authority authorized no less than 23 factories to export its
may partially affect the production and delivery of goods to cater to chicken products to China in April 2019. This fact further emphasizes
the Chinese market since inspection processes and procedures will heightened competition for Thailand which has already faced off
potentially be stricter, not to mention the permission granted for against major competitors like Brazil, Argentina and Chile. Although
transport of goods which has a narrower time frame than normal Thailand may not feel much impact from rivalry of the US and Russia
circumstances. KResearch maintains a cautious stance towards the this year amid the COVID-19 pandemic, such rivals may present a
exports of fresh, chilled and frozen Thai chicken to China in the greater challenge following the resolution of the COVID-19 crisis.
second quarter and expects that shipments of this product category 2. The decelerating growth of the Chinese economy may
in 1H20 may grow by around 20-25% YoY. affect consumers’ purchasing power: The COVID-19 outbreak has
• Exports of fresh, chilled and frozen Thai chicken to China affected the livelihood of people, society and economic development
in 2H20 will continue to be supported by 12 chicken-producing of China. Economic activity has been crippled, which has in turn
and processing factories that are currently waiting to be granted affected supply chains across all industries worldwide. KResearch
certifications for export to China. If the COVID-19 outbreak does estimates that China’s economic growth in 2020 may slow to a range
not reemerge in China, these 12 chicken processing plants from of 1-3%, compared to 6.1% in 2019. Since fresh, chilled and frozen
Thailand will be approved to export to the mainland within the third chicken is considered essential consumer goods, demand is expected
quarter of 2020 at the latest, following factory inspections conducted to remain ample though in a reduced quantity during the period in which
in 2019. One of the reasons why we expect quick approval of these China is seeking to control the spread of the disease. Demand from
registrations can be traced back to consumers’ concerns on domestic important consumer groups such as restaurants, however, is expected
food products during periods of various outbreaks, whether it is to slow, as business has yet to return to normalcy. Moreover, consumers’
COVID-19 or H5N1, which necessitated the Chinese authority to purchasing power remains crippled by a stagnant economy this year
order the culling of 18,000 chickens, as well as the African Swine as they exercise more caution in their spending.
Fever or ASF situation which has not fully subsided in China. These In conclusion, even though demand for chicken in the Chinese
scenarios mean that China not only needs to increase its production market remains high, expansion in the Chinese market this year
capacity but also import more meat products of every kind to meet continues to pose a challenge. Under the assumptions that the logistic
demand. Imported fresh, chilled and frozen chicken is expected to system remains operational as usual, the Chinese authorities are able
be well-received by Chinese consumers in continuation from the to effectively prevent and control the spread of COVID-19, and Thailand’s
previous year. According to the United States Department of export-oriented production is resilient to the viral transmission even with
Agriculture (USDA), China’s chicken imports for 2020 are projected the government’s stricter measures, KResearch
to rise to 750,000 tons or an expansion of 20.0% YoY. preliminarily expects that Thailand’s exports of
Given the expected rise in production capacity from the 12 fresh, chilled and frozen chicken to China
aforementioned factories along with rising seasonal demand during could be valued at USD 266-277 million
year-end, exports of fresh, chilled and frozen chicken in 2H20 are in 2020, growing 20-25% YoY. While
expected to grow 20-25% YoY in continuation from 1H20. growth is expected to slow from the
Despite a bright outlook, KResearch views that this year’s exports previous year, partially the result of
of fresh, chilled and frozen Thai chicken may see the following a remarkably high base effect in
challenges: 2019, the rate of expansion is
1. Increased competition in the Chinese chicken market: As considered satisfactory. Chicken is
a greater number of new competitors are allowed to enter the market, therefore one of the products that
Thai exporters are at the risk of losing their market share. Competition shows promising outlook in the
is expected to become intense, especially from long-time rivals like Chinese market this year.
the United States which has returned to the Chinese market after
China reopened its market for the US chicken in November 2019
– with 172 US factories being authorized to export chicken-based
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