EU lifting of Thai raw chicken ban to affect world trade

By Melodie Michel

- Last updated on GMT

Related tags International trade Eu Poultry

EU lifting of Thai raw chicken ban to affect world trade
Brazil and Argentina will face increased competition on the international poultry market now that the EU has announced it would lift its bird flu-related ban on raw chicken from Thailand on 1 July 2012, a report has said.

The lifting of the ban will open the doors for 92,000 tonnes (t) of raw chicken to be shipped from Thailand to the EU, putting a lot of pressure on Brazilian and Argentine exporters to maintain their market share, the study by Dutch-based Rabobank explained.

The bank expects Japan to follow the EU’s lead and lift its own ban on Thai chicken, which could represent an additional export outlet of 150,000t for the Thai industry and threaten Brazil’s position as top exporter to Japan.

“The EU’s decision to allow exports from Thailand may have an even bigger impact if, as expected, Japan follows the EU’s lead and re-opens its market for raw chicken from Thailand in the near future. Currently, Brazil is almost Japan’s only raw chicken supplier, similar to its position with the EU. If Japan opens it market for imports of raw chicken from Thailand, Brazil could see a decline in Japanese import volumes and prices, as market share is not protected by quotas,”​ Rabobank said.

The report added that lifting the ban would prompt investment in the Thai industry, which enjoys a good price/quality reputation, helping the country strengthen its position on the market. Meanwhile, Brazil could increase investment in the local European distribution sector in order to better control its presence in the supply chain. However, Rabobank pointed out that Thai processors were also likely to follow this route, possibly forcing Brazil to expand the globalisation of its exports and increase its share in the Middle East and the rest of Asia.

The bank recommended that EU processors strengthen their position in the fresh chicken sector, a segment where they are not exposed to South American and Thai competition.

Following the bird flu outbreak that caused the export ban in 2003, the Thai industry shifted its focus from raw to cooked processed products, managing to reach full capacity utilisation in primary processing and farming despite the restrictions. With the lifting of the ban, Thailand is likely to change its export profile from 95% cooked products and 5% raw meat to a 70-30% ratio, but Rabobank warned that this change could put the industry at risk again in case of another bird flu outbreak.

To protect the industry, Rabobank suggested Thailand further strengthen its position as the world’s leading cooked poultry meat exporter, keep emphasising compartmentalisation between the two segments in trade negotiations, and internationalise its export model to lower its dependence on the EU and Japan.

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