Promising market in Thailand
Over the last four decades, Thailand's poultry sector has transformed itself from a small farming community into a leading poultry exporter, according to The Netherlands Embassy in Bangkok's report. Its poultry industry is the largest in the region. One of the main factors for its success is the fact that poultry is the cheapest source of animal protein with a relatively short lifetime, thereby minimizing costs. Due to a potential growth in export demand and an anticipated increase in chick production capacity, Thai chicken meat production is forecast to further increase from the 2016 level by 5-7 percent in 2017. Brazil and the US are Thailand's main export competitors, largely because of lower production costs. Approximately 70 percent of the total poultry production in Thailand, 1.2 million tons in 2015, is consumed domestically, whereas 30 percent is exported. Domestic consumption of chicken meat is expected to increase by 4-5 percent in 2017, from around 670 million tons in 2016, which is largely related to Thailand's growing tourism industry and gradual economic recovery. Both cooked and uncooked chicken meat exports, increased by 11 percent to 355,000 tons over the first half of 2016, according to Thailand's Office of Agriculture Economics. Uncooked products export growth reached 14 percent, while cooked products only increased by 6 percent. It is expected that in 2016 cooked chicken meat products will make up around 70 percent of total chicken meat export.
Indonesian Oversupply
The poultry sector supplies 65 percent of Indonesia's animal protein according to the Indonesian Feed Producers Association (APPI/GPMT). It currently provides jobs to 12 million people. The industry is primarily made up of broiler and layer chicken farms, but also features duck broilers and layers, quails, and local/native broiler and layer chickens in smaller quantities. Estimates measure Indonesia's commercial chicken flock at 3.5 billion broilers, 200 million layers, and 24.8 million breeders (2015) with 81 percent of Indonesian poultry genetics originating from the United States (2014), according to USDA's report. In addition, Indonesia's poultry farming system is slowly adopting the automated housing system farms. This change is the result of increasing poultry market competitiveness, characterized by increasing labor costs, the quest for higher yields, and disease pressures such as highly pathogenic avian influenza (HPAI). Although the HPAI outbreak was limited to layer flocks, public fears drove down broiler demand, pushing prices to levels below production costs and caused many farms to shut down. Inspired by the strong economy during 2010-2012 periods, Indonesia's Ministry of Agriculture (MOA) promoted an agenda to double poultry meat consumption from approximately 7.5 kg/capita in 2012 to 15 kg/capita by 2017. The industry began to expand, fueled by a growing economy and unrestricted access for Grand Parent Stock (GPS) and Great Grand Parent Stock (GGPS) imports. Poultry expansion faced challenges, however, as economic performance started to fall off in 2012, with producers reporting that they faced an oversupply of day old chicks (DOC). The oversupply situation, combined with the previously mentioned HPAI pressures suppressed farm gate prices, leading to the bankruptcy of independent broiler farms. The Indonesian Public Poultry Association (PINSAR Indonesia) reports that the number of independent farmers not bound to any poultry company, has fallen from 100,000 in 2008 to 6,000 today. This represents a dramatic shift in the Indonesian poultry industry, with market share of independents decreasing from 70 in 2008 to 18 percent in 2016. Indonesia imports poultry genetics, but it does not import or export chicken meat. Although Ministry of Trade regulation 59/2016 and Ministry of Agriculture regulation 34/2016 allow the import of whole poultry carcasses, they do not issue import licenses. The Government of Indonesia pushed forward an initiative in 2015 to formalize exports of processed poultry products to Japan. This effort was postponed due to quality concerns and price constraints.
