In Thailand, which is characterized as the second largest economy in Southeast Asia, milling sector consists of mainly rice mills due to intense rice production. However; wheat milling has shown some development in the recent years. Today, it is estimated that there are 8-10 flour mills that have a voice in the production with modern and developed structure.
Being world’s top rice exporter but losing its position to India for the last 2 season, Thailand is considered as an important market in terms of wheat flour and milling products. Especially the changing consumption habits and rapidly increasing tourist numbers in the country cause important increases in imports of luxury food products. Although this movement is not much widespread, it directs consumers to other products rather than rice which is the traditional food product. Wheat and wheat flour are among these products.
Wheat flour need that can meet the domestic demand in Thailand is directly met with flour import. Turkey is the second largest flour exporter to Thailand after Vietnam by meeting 19% of total 114,3 million-dollar flour import of Thailand in 2012. However; development of milling in the country and new investments in this direction point that direct wheat import will increase in the future.
ECONOMY IN THAILAND
Traditionally based on agricultural export but transforming into an industrial sector-oriented structure recently, Thailand economy became one of the outstanding economies of Southeast Asia during 25-year period until 1998. In 1970s, active foreign investment incentive created an industrial sector based on import substitution. In 1980s, export-oriented manufacturing sector, in which there were products based on labor-intensive products like textiles and clothing, started to develop. In 1009s, the largest growth was realized in technological products such as computer accessories and motor vehicle parts. An average of 4.3 percent growth rate was realized in Thailand’s economy between the years 2005 and 2008. Global economic crisis in 2009 caused the country economy to decrease with 2,3 % rate. However; in 2010, the country recovered itself after the recession occurred the previous year and reached 7,8 % growth rate that was the highest growth rate of the last 15 years.
In 2011; growth speed of the economy decreased due to the flood disaster in Thailand and the damaged supply chain because of the earthquake and tsunami in Japan. Especially the flood disaster at the second quarter of 2011 gave great damage to Thailand economy. Contraction of the economy 8,9 % on year basis at the fourth quarter of 2011 decreased growth to 0,1 % in that year. Despite the fact that flood waters ebbed, production remained below the normal level at the first quarter of 2012. Due to the repair works after the flood, Thailand’s 2012 economic growth gained speed unlike other South East Asian countries. All components of domestic demand (private consumption, public expenditure and gross fixed investment) contributed to the economic growth that increased in 2012 again and reached 6,5 %. Although the growth that increased in 2012 and reached 6,5 % gained speed compared to the growth that was low due to the flood disaster in the previous year, it is estimated not to continue with the sane speed in 2013 and will remain at 4,4 %.
In the long-term future predictions; it is forecast that Thailand economy will increase 4,7 % in 2014 and reach 5,2 % growth rate between 2015 and 2017 with the acceleration of world economy growth. This rate is close to the growth rates of Thailand before 2008.
THAILAND AGRICULTURE SECTOR
Forming the backbone of Thailand’s economy once upon a time, agriculture sector loses its importance in the whole economy. Agriculture sector today only constitutes 12 % of Thailand economy. However; despite this low rate, almost half of the country’s workforce (41,9 % according to 2012 data) is employed by this sector.
Nearly 27,5 % of the country's total surface area consists of agricultural fields. 25 % of total surface area consists of forest lands and remaining 34 % consists of unclassified lands. Central Plains region is the region where there are the richest sources for Thailand’s agricultural production. Corn, cassava, cotton and pineapple are grown in high plateaus and rubber is produced in the south of the country. Arable lands have doubled and reached 20 million hectares in the last 30 years. Paddy rice cultivation is made on nearly half of these arable lands. Until today; agricultural production in the country was increased generally by expanding cultivated areas rather than yield improvements about irrigation and fertilizer usage . But it is expected that urbanization and soil salinity would decrease the arable lands gradually in time.
Thailand agricultural sector is generally characterized as infertile in terms of productivity. Productivity in agricultural sector is 12 % of industrial sector. The projects for providing market information to farmers with the aim of developing production and export in the country and in order to achieve that connecting the villages to each other were designed. More technology usage is encouraged for increasing food process quality and high productivity. Besides; Thailand government makes attempts of negotiating with major agricultural export products producer in order to increase the agricultural product prices and controls.
Production of rice that is the most dominant agricultural product in the country is realized with irrigation in Central Plains and with rain water in other regions. Government in Thailand aims to reach more control levels in rice prices. As the five rice producer countries in Asia; China, India, Thailand and Vietnam met in Bangkok in 2002 on how to establish a system for information exchange in rice trade. These five countries agreed on the issue that the service which is the focal point of information processing and distribution is done by Thailand. This information can be used for determination of the prices from the perspective of ensuring stability in the market and protection of the farmers’ earnings.
GRAIN PRODUCTION AND CONSUMPTION
As we mentioned above, rice is the most dominant agricultural product in Thailand. Having a voice also in the world for rice production; Thailand is the world’s sixth largest rice producer after China, India, Indonesia, Bangladesh and Vietnam. According to the data of U.S. Department of Agriculture Foreign Agricultural Service (USDA FAS); realizing 20 million-ton rice production averagely in the recent years, Thailand has increased its production 3 million tons in the last 10 years. According to USDA data; Thailand rice production, which was 17,1 million tons in 2002, reached 19,8 million tons in 2008 and 20,2 million tons in 2012. The prediction for 2013 is 21,1 million tons.
Food and Agriculture Organization of the United Nations (FAO) explains its predictions for Thailand’s rice production on paddy rice basis. According to that; the paddy rice amount of the country realized in 2002 was 27,9 million tons. This amount reached 31,6 million tons in 2008, 37,8 million tons in 2012. When it is forecast that about 35 % of a residue is formed during the process of paddy rice into rice; it can be considered that rice production was realized as 18,1 million tons in 2002 and 20,5 million tons in 2008 and 24,5 million tons in 2012. From these figures; except 2012, data of FAO and USDA are almost similar.
Thailand uses almost half of its rice production for its domestic consumption. According to USDA data; Thailand rice consumption which was 9,4 million tons in 2002, reached 9,5 million tons in 2008 and 10,6 million tons in 2012. It is estimated that the consumption has reached 10,7 million tons by only increasing 100 thousand tons in 2013.
Wheat is a grain product that is not produced in Thailand, but its consumption has increased a little in the recent years. When USDA data are reviewed; it is seen that wheat consumption, which was 810 thousand tons in 2002, reached 1 million tons in 2008 and 2,2 million tons in 2011. However; the consumption recorded a slight decline in in 2012 and decreased to 1,9 million tons. It is estimated that Thailand wheat consumption is around 1,9 million tons in 2013.
Another grain product that is cultivated in Thailand is corn. According to USDA data; realizing averagely 4 million tons corn every year, Thailand experienced a decline in corn production in 2006-07 season but has reached 4 million ton-levels again in the recent years. It is estimated that the highest production amount for corn in the last 10 years will be realized in 2013 as 4,8 million tons. All corn production is used in the domestic consumption.
MILLING AND GRAIN PROCESSING SECTOR
Thailand milling sector consists of mainly rice mills due to the intense rice production. However; wheat milling has shown some development in the recent years. It is estimated that today there are 8-10 flour mills that have a voice in the production with a modern and developed structure.
Wheat flour demand in Thailand is met usually with direct flour import but the new investment on this direction point that wheat import will increase and flour import will decrease in the future. Milling investments continue to develop intensely in the country. According to the data explained by Central Anatolia Exporters Union (OAİB); Thailand ranks 8th
in world milling machines import in 2010.
Besides, it is expected that wheat flour will become widespread in Thailand just like in many other Asian countries. Thailand’s having an importance place in Turkey’s milling products and wheat flour export points country’s development on this direction.
FOREIGN TRADE IN THAILAND
Thailand is characterized as Southeast Asia’s second largest economy. In Thailand, where the economy mainly depends on export, 80 % of country export consists of industrial products and most of these products are imported ones. As petroleum production is insufficient for consumption in the country, petroleum depends on imports.
Thailand’s export, which was 68,1 billion dollars in 2002, reached 229 billion dollar level in 2012. However; some declines were also experienced in that period. For example; realized as 175,9 billion $ in 2008, country’s export decreased to 152,5 billion $ level in 2009 due to the global economic crisis. In 2010, it was realized as 62 % of country gross domestic product by increasing 29 %. In 2011, country had a deficit in foreign trade depending on factors like flood disaster in the country and that the supply chain was damaged due to the earthquake and tsunami in Japan and its interruption the production in Thailand. In 2012, export increased only 0,3 % due to the effects of previous year and foreign trade deficit reached 21,2 billion dollars. Approximately 80 % of Thailand’s good export consists of industrial products. Products with high added value like machines, their parts and components, motor vehicles, rubber and rubber products have an important place in Thailand’s export.
In terms of import; realizing 64,6 billion-dollar import in 2002, Thailand realized 250,6 billion-dollar import in 2012. Thailand’s import increased 9,7 % in 2012 compared to 2011. Raw materials and intermediate goods such as electrical machinery and equipment, crude oil, information processing tool parts, raw and semi-processed form of gold, spare parts for motor vehicles are Thailand’s major import items.
Japan is traditionally Thailand’s most important partner in foreign trade. Foreign trade volume between two countries reached 73,6 billion dollar level by increasing 10 % in 2012 compared to previous year. China is another important country for Thailand’s foreign trade. Trade volume between two countries reached 64 billion dollars in 2012. While China is number one country in Thailand’s export, Japan is the most important country in Thailand’s import.
The composition of foreign trade between Thailand and developing Asian Pacific countries consists of raw material and intermediate good that can reflect the integrated production structure that is increasing gradually.
Thailand has a very balanced export market compared to other countries. The shares of China, Japan, USA, Hong Kong, Malaysia with which Thailand makes export are 12 %, 10 %, 10 %, 6 % and 5 % respectively.
Until 2009, Thailand’s largest market for export was USA; but USA gave its place to China after 2009. As of 2012, Japan and USA follow China. The share of the export that was made with these three countries in total export was nearly 32 %.
Export of Thailand to China that is the largest export market mainly consists of raw material and intermediate goods. In the export to Japan and USA, consumer goods constitute a great part.
Japan is the most important country in Thailand’s import. Country’s many manufacturing activities, particularly the ones in the automotive and electronics sectors depend on the imports of parts and components from Japan. The shares of Japan ,China, UAE, Malaysia and USA in country’s import are 20 %, 15 %, 6 %, 5 % and 5 % respectively.
THE PLACE OF GRAIN IN FOREIGN TRADE
Rice is the largest export item of the country among grain products. Realizing averagely 20 million tons rice annually Thailand uses nearly half of this production for its domestic consumption and the rest is exported. As one of the world’s 2 largest rice exporter, country ranked first in world rice export for years. However; it lost this position to India in 2011/12 season. The reason of it is that India provided a serious increase in rice export rather than that Thailand decreased its rice export.
According to USDA data; Thailand’s rice export, which was 7,5 million tons in 2002, reached 10 million tons in 2007 but remained at 8-9 million tons level for the next 2 years. Reaching 10,6 million export level again in 2010, Thailand remained at 7 million tons level for the next 2 years. The estimations say that rice export of Thailand in 2013 will be realized as 8 million tons level. FAO’s data for Thailand’s rice export show a few ton-differences from USDA data. The largest difference between USDA and FAO data is the data of 2011. While USDA announced Thailand’s 2011 rice export as 6,9 million tons, FAO announced it as 10,6 million tons.
Wheat is the mostly imported product of Thailand among grain products. According to USDA data; including flour ,Thailand’s wheat import reached 1,9 million tons in 2010 while it was 895 thousand tons in 2002. Reaching the highest wheat import of the last 10 years in 2012 with 2,6 million-ton import, Thailand decreased the import amount to 1,8 million tons in the next year. It is estimated that the country will make 2,1 million tons wheat import in 2013. FAO data show that country’s wheat import exceeded 1 million tons only in 2006-2009-2010 and 2011.
THAILAND FOOD AND WHEAT FLOUR IMPORT
As world’s 12th
net food exporter, Thailand imported nearly 11 billion-dollar agricultural and food products in 2011. It is stated that there are important increases in especially expensive and luxury food products’ import recently. On the basis of this change, changing consumption habits of Thai consumers and rapidly increasing numbers of tourists have an important place. Hotels in catering sector just like in retails sector, major resorts, restaurants and cafes are considered as the potential buyers of imported food products. It is estimated that there will be increase in demands of these places for the imported food products.
Food and agricultural products export of Turkey to Thailand reached to 228 million dollars from 144 million dollars by increasing 10 % between 2007 and 2011. Together with the increase in per capita income in the recent years; rather than rice, which is the traditional food product, consumers have started to direct to another products that is not too widely. Wheat that is not possible to be cultivated due to the country climate and wheat flour are among these products. Thus the country meets its wheat and wheat flour need via import. Turkey is the second largest flour exporter to Thailand after Vietnam by meeting 19% of total 114,3 million-dollar flour import of Thailand in 2012.
PASTA AND BISCUIT MARKE IN THAILAND
Pasta and biscuit are among other food products that are imported to the country or to be imported. Modern life style and ease of preparation keep pasta demand alive in Thailand. Some consumers buy pasta in order just to eat something different. Together with Asian meals are consumed normally; Western-style foods are preferred in some meals. Pasta is one of them. The only important pasta type in the country is dried pasta.
Pasta category in Thailand is less dynamic field compared to other products in packaged food sector. Brand comes to the forefront as an important criterion in consumer preferences. Consumers are tried to be reached via websites, product package and sample products. 5% growth was realized in pasta sales in 2012. Price increase also continued. It is forecast that the increase in Italian restaurants that have become widespread in Thailand recently will cause an increase in the demand of pasta.
Instability in grain products is effective on the retail price of pasta. Pasta prices increased especially due to the increase in wheat and wheat flour costs and import prices and this situation directed consumers to cheap and medium-quality products. When the annual pasta import figures of Thailand are reviewed; it is seen that Italy is the top supplier country in terms of product variety, packaging and distribution. Turkey took place near the bottom in country’s 19 million-dollar pasta import in 2012 with 194 thousand-dollar export.
The size of the biscuit market in the country in 2012 was realized nearly as 9,1 billion Baht. The largest growth in biscuit group was realized by chocolate covered biscuits with 8% rate. Due to the increase in premium biscuit sales, volumetric growth remained below the increase in value.
Biscuit producers were adversely affected from the melamine-contaminated products and the economic recession between 2008-2010. Economic recovery in 2011, the increase in consumer income and confidence, new products and aggressive marketing strategies help the sector recover. Sandwich biscuits, spiced biscuits and crackers also contributed to this growth a lot. Chocolate covered biscuits and filled biscuits showed a dynamic growth. In 2012, new companies made efforts for the market share of international companies that make aggressive marketing by putting new varieties to the market.
Due to their low prices and having less calorie, biscuits sold in little packages are demanded more. As the retail sales prices of these products are low, kids can buy them on their own and they are preferred by low-income people. There was an increase of 2% in the prices in 2012.
It is expected that biscuit market in 2012-2017 period will have 6 % growth speed and this growth will be from developing new products and active marketing activities of the producers. It is expected that chocolate covered biscuits and sandwich biscuits will have the fastest growth rate among all categories. It is forecast that the demand for premium and imported biscuits will be spread among especially urban consumers and young Thais. However; price will protect its importance in preference for Thai biscuit consumers. The fact that products with low fat, sugar and salt have not become popular in Thailand in spite of healthy living and good nutrition trend arises from that palatal delight comes first. Consumers with healthy nutrition concern prefer to consume fewer amounts in little packages.
Thailand’s 2012 biscuit import reached 144,8 million dollars by increasing 25,6 % and Indonesia, Malaysia, and China are the top 3 supplier countries. Turkey’s export to the country decreased to 84 thousand dollars in 2012.
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