Thailand’s breeding industry is affected by the rise in corn prices

Comprehensive Thai media reported on November 5 that the price of feed corn in Thailand continued to rise, affecting the whole production chain including aquaculture and feed processing industry. The feed processing industry calls on the government to adjust the farmers’ income guarantee policy.

The Thai feed manufacturers association pointed out that the report on the comparison between Thai corn prices and global market prices found that in 2020, the price of corn purchased by Thai feed factories was 8.97 baht per kilogram, which was more than twice higher than the Chicago market price of 4.54 baht per kilogram.

According to the news of feed processing enterprises, feed prices have continued to rise since the third quarter of 2020, especially the prices of feed corn and soybean meal, which have increased by 30% due to the increase of the world’s largest market demand, affecting breeding farmers.

Corn produced in the United States and Brazil is used to produce ethanol. Due to the high freight, the price of popular seeds and soybean meal has increased from 12 baht per kilogram to 18-19 baht per kilogram. In addition, the price of supplements, vitamins and minerals has also increased by more than 20-30%.

In September 2021, the price of feed corn increased from 8-9.5 baht per kilogram to 11.50 baht per kilogram, making the overall cost of feed production rise at the same high speed, thus affecting the breeding industry and feed processing industry. The latest price from October 25 to 29, 2021 shows that the average price of corn is 10.85 baht per kilogram, and the average price of imported soybean meal is 19.80 baht per kilogram.

The increase of feed raw materials led to a 30% increase in the cost of aquaculture, which had an impact on farmers. Corn for feed is the main raw material. Farmers and feed processing plants hope to buy it at a price lower than 8 baht per kilogram, but there has never been such a price. Affected by this, the price of corn continues to rise, and only decreases slightly after starting to buy rice bran instead.

Thailand needs 8 million tons of corn for feed every year, but its domestic output is only 5 million tons. It must import wheat with a ratio of 3:1 between domestic purchase and import in accordance with government regulations to prevent the sharp decline of domestic corn prices. Such a proportion still cannot replace the insufficient part (at present, this proportion is only equivalent to importing 1.6 million tons of corn) to solve the shortage of corn.

At the same time, the government’s measures to guarantee farmers’ income stipulate that the purchase price is 8.50 baht per kilogram, and require private enterprises to purchase at a minimum price of 8 baht per kilogram (humidity 14%), without a maximum price limit. At present, the price of corn is 30% higher than the price stipulated by the government, making animal husbandry bear all the costs.

The Thai government restricts the price of meat and does not allow the price to adjust with the market mechanism. For example, it stipulates that the price of pigs sold in farms is 80 baht per kilogram, compared with the average cost of 78-80 baht per kilogram, while the price of pigs in neighbouring countries is higher than 100 baht per kilogram. Pig farmers also face higher costs brought by the plague prevention system, which increases the burden of farmers, affects Thailand’s competitiveness and hinders the long-term development of Thailand’s food production chain.

Source: Economic and trade window of the Consulate General in Kong Jing

Post time: Nov-12-2021