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Thailand: Kitchen of the World

Thailand has become one of the world's largest and most advanced producers and exporters of processed food products. Its rich agricultural roots and resources, combined with its investments in international quality standards, technology, and research and development (R&D) for food safety, have helped make Thailand the sole net food exporter in Asia and one of the top five net food exporters in the world.

In 2008, Thailand was ranked as the worlds number #1 major food exporter of canned & processed tuna, canned & processed pineapple, rice, processed chicken and shrimp. That same year, its export-oriented food industry brought in $24.2 billion dollars a significant increase of 35.2% from 2007 and comprised up to 13.3% of Thailands total exports revenue.

Industry Overview: When Fresh Produce meets Technology During the 1980s and 1990s, technologies were imported and allowed for a surge in the export of frozen and chilled commodities. As exporting processed foods grew more profitable, producers strove to develop their technical knowledge and the quality of their products.

The industry has improved hygienic conditions of the production process, developed value-added products, reduced production costs and adheres to environmental and safety regulations. Expertise in product development, food processing and agriculture is growing and contributing to Thailands position as one of the most dynamic food centers in the world.

Thailands natural resources are central to its comparative advantage in the food processing industry, with more than 80% of the raw materials used being locally sourced at low prices. The country will maintain its position as a world leader in the food processing industry by drawing on this natural wealth and leveraging new technologies and improved standards in efficiency, production, safety and hygiene. The Thai food processing industry is currently comprised of approximately 10,000 foodprocessing companies. Some of the major Thai and multinational industry leaders include: Nestle, Saha Pathana Inter Holding Ltd, Patum Rice Mill & Granary, Royal Friesland Foods NV,

Unilever Group, Thai Union, Dole Thailand, Charoen Pokphand Group, Betagro, Saha Farms, Thai Beverage PLC, Kelloggs, Kraft, PepsiCo, Del Monte, Procter & Gamble, Ajinomoto and Ef-fem food. Exports of these companies processed foods are one of the key drivers of Thailands food industry as a whole.

Thailand's Major Food Export Markets 2008


The Middle East 7% The US 14% China 4% Others 25%

Japan 14% ASEAN 16%

The EU 20%

Source: National Food Institute.

Having the most developed food processing industry in Southeast Asia, Thailand has led international exports in several processed products. And there were several notable export achievements in 2008: Thailand was the worlds number #1 exporter of processed chicken, and of shrimp and tuna products, as well as the number #3 exporter of processed sweet corn, with other major export products including canned pineapple and sweet corn. . Thailand remains the number #1 exporter of rice in the world. Currently, companies are allocating more resources to R&D in the areas of disease-resistant rice cultivars and yield improvements. Products are also being diversified to include new products such as organic rice, vitamin-fortified rice and frozen rice dishes. Chemical-free rice in particular is increasingly popular as consumers become more health-conscious.

Thai food processors are increasingly developing frozen food products to keep up with the changing consumer preferences, and as Thai ready-to-eat (RTE) food gains popularity overseas. According to the Thai Food Processors Association, Thailands major processed food export value, which grew significantly at 30% in 2008, will continue to grow.

Thailands Major Processed Food Export Volume and Value 2005-2008


Quantity: Tons, Value: Millions US$
Products Canned Fish , Seafood and Tuna Processed Fruit and Vegetable Products Food Ingredients and Ready-to-Eat
GRAND TOTAL

2005
Quantity Value

2006
Quantity Value

2007
Quantity Value

2008
Quantity Value

661,874 1,176,159 248,184 2,086,217

1,535 909 327 2,772

697,477 1,445,077 259,114 2,401,668

1,700 1,069 365 3,134

644,215 1,260,765 307,492 2,212,472

1,785 1,138 483 3,405

697,730 1,303,579 330,235 2,331,544

2,456 1,356 629 4,440

Source: Thai Food Processors' Association

Thailand's Major Processed Food Export 2004-2008


2.45 2.40 2.35 2.30 2.25 2.20 2.15 2.10 2.05 2.00 1.95 1.90 2005 2006 2007 2008 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 -

Million Ton

Billion US$

Quantity Value

Source: Thai Food Processors' Association

Trends The Office of Industrial Economics (OIE) has predicted trends for Thailands food processing sector in 2009: livestock production will expand 26.5%, while its export value will grow 7.6%, the volume of fishery exports is projected to increase 5.8%, and the volume of vegetable and fruit products exported is expected to increase 11.3%.

Food safety and food standards Food manufacturers in Thailand are aware of the critical importance of food safety and quality and Thailand is home to a number of authorized food safety certifying agencies. Thai standards are drawn from and adhere to international standards such as Codex, OIE Standards and the

International Plant Protection Convention. Quality assurance systems such as GMP, Total Quality Management (TQM), HACCP and the International Organization for Standardization (ISO) are mandatory for certain products, including canned foods. All of the standards Thailand uses to regulate its food industry have been accepted by the members of the Asia-Pacific Economic Cooperation (APEC), and the Ministry of Agriculture and Cooperatives is accelerating its standards and certification project to ensure that Thailands food industry meets other international standards.

Food Machinery and Equipment Thai processors have demonstrated a willingness to upgrade equipment to keep pace with growing demand and maintain the countrys competitiveness in the food processing and packaging sector. In particular, the introduction of the GMP standard for food safety equipment brought a notable increase in the volume of GMP-level equipment purchased by Thailand-based firms. The Thai market for food processing and packaging equipment has grown an average of 20% annually since 1999.

Packaged food In addition, demand abroad is growing too. Food processors located in Thailand have access to the ASEAN market of over half a billion consumers, and according to the terms of the ASEAN Free Trade Agreement (AFTA) relevant tariff and non-tariff barriers among members will be eliminated or drastically reduced by 2010, further enhancing market access. Furthermore, the Suvarnabhumi International Airport provides an effective and sufficient airfreight transport for perishable products.

Snacks and Health Food Specific products notable for their current increased demand within Thailand include fruit snacks, chips, extruded snacks, tortilla/corn chips, popcorn and nuts. Fish snacks remained the most popular among the rising healthy food snacks. Increased education regarding nutrition has heightened consumer health-consciousness and demand for healthy products. The health food market in Thailand particularly nuts, fruit snacks, products without MSG or preservatives, lowfat/calorie and sugar free foods, organic foods, vegetarian foods, functional food products such

as products fortified with vitamins, fiber, iron, calcium or other healthy substances, and foods with all-natural ingredients is expected to expand rapidly given the increasing popularity of healthy food.

The Food Processing Industry Club 232 members in 12 sub-sectors: beverages; spice and seasoning; tea, coffee and cocoa; sugar and deserts; milk and diary products; oil and edible fats; meat and poultry; flour and flour products; fishery product; fresh and processed vegetables and fruit; feed; and other specialty foods.

Board of Investment (BOI) Incentives Thailands Board of Investment (BOI) considers the entire value chain of agriculture and agricultural products ranging from cultivation, production and services to the manufacture of farm machinery and food processing machinery as priority activities, which enjoy many compelling tax and non-tax incentives: Tax incentives include: corporate income tax holidays of up to 8 years; reduction of or exemption from import duties on machinery and raw materials; and other zone-dependent incentives such as 50% reduction of corporate income tax for another 5 years, double deduction of public utility and transportation costs from taxable income for up to 10 years, and additional 25% deduction of infrastructure investment costs. Non-tax incentives include: land ownership rights for foreign investors; permission to bring in foreign experts and technicians; and work permit and visa facilitation for expatriate employees.

For further information The Thailand Board of Investment (BOI): http://www.boi.go.th Thai National Food Institute: www.nfi.or.th The Food and Drug Administration: http://www.fda.moph.go.th/eng/index.stm Thai Food Processors' Association: www.thaifood.org The Food Industry Club: http://ftiweb.off.fti.or.th/industrialgroup/food/index.asp

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