4. The poultry industry

Development of the layer industry began in 1950 at Kasetsart University. However, rapid development only began in the mid-1970s when commercial layer hybrids were introduced from western countries. Modern layer management is used in the industry, and each bird produces 250 to 260 eggs per year (Kanto 1991).

The broiler industry is completely integrated with feedmilling companies and mainly produces for export markets. The view of Siamwalla et al (nd) is that poultry has been the “clear success of Thai livestock production” (p. 7). They attribute this to a number of factors:

• The introduction of modern breed of poultry, particularly for chicken and eggs;

• The use of advanced techniques to raise poultry;

• The pioneering of contract farming by large agribusiness companies in the early 1970s; and

• Low feed prices, reflecting Thailand’s surplus in carbohydrates.

Between 1984 and 1995, chicken numbers increased by about 73 percent overall, with the largest increase in percentage terms occurring in the Central. Here chicken numbers more than doubled between 1984 and 1995 (Figure 4.1).

Figure 4.1 Distribution of chickens by region

Chicken farms are of three broad types (Kehren and Tisdell 1996). First, there are backyard farms where chickens are raised on a small scale for consumption by the farm family or as a source of supplementary income. In the mid-1980s, all but one percent of growers were backyard growers, and they produced about one third of production. By the mid-1990s, they accounted for less than 25 percent of production due to the expansion of commercial farms. Backyard growers provide little if any care to poultry; and consequently losses are high (Noppakun 1998). The second group of farmers are independent commercial growers who often engage in contract growing with smaller growers. The view of Kehren and Tisdell (1996) is that their numbers are likely to decline in the future because of their inability to benefit from economies of scale attained by the large commercial growers. The third group of growers are contract growers. They became important in the late 1970s when the Charoen Pokphand Company^[7] introduced wage and price guaranteed contracts between chicken growers and hatcheries and feed companies. Large multinational companies now dominate the industry. Kehren and Tisdell (1996) report for example that 10 to 12 companies control about 80 percent of broiler production. Figure 4.2 shows the small farms tend to be involved mainly with the breeding of native birds while the large farms with over 10 000 birds tend to be involved in egg productions. Obviously most poultry are found on large farms. For example, about 140 million birds used for producing eggs were on farms with 10 000 birds or more. Most of the broilers used to produce chicken meat are on the large farms.

Figure 4.2 Distribution of birds according to the numbers of birds per holding and the type of activity, Thailand 1995

Sornnuwat (1994) points out that in the past, chicken meat was limited to the high income groups because it was relatively expensive. Real poultry prices have been in decline, resulting in poultry becoming more important in the Thai diet at the expense of other meats, including fish, buffalo and beef and pork. The chicken meat sold domestically can be in the form of the whole carcass or parts, such as head, neck, wings and breast meat. Some is bone-in and some is deboned. There is also further processing of poultry meat into chicken sausage, chicken ball and partly cooked products ready for reheating. Consumption of poultry was about 6.6 kg per person in the late 1980s and almost double this level a decade later.

Thailand has had success in exporting poultry, principally to Japan. Recently its share of the Japanese market has been pressured by exports from the United States, Brazil and China. Under World Trade Organisation rules, subsidies on broiler production will be phased out. Thai officials believe that since the Thai industry receives little in the form of subsidies, it should be able to gain a competitive advantage on international markets. Not everyone agrees with this. There are some who say that Thailand’s competitive edge is beginning to be lost to neighboring countries such as Vietnam and China because of rising wage rates in Thailand. The industry faces additional difficulties, including the following:

• Parent stock and grand parent stock have to be imported causing high production costs;

• Some feed stuffs used in the industry need to be imported. The significance of this is that feed represents about 70 percent to 75 percent of total production costs; and

• Newcastle disease is a problem for exporters since most countries importing poultry require imports to be free of this disease.

Table 4.1 Production, consumption and exports of poultry from Thailand

Notes: The average broiler weight is 1.8 kg; the percentage of meat per broiler is 62.88 percent; and the weight exported per bird is 0.561 kg.

Source: Department of Livestock Development (1995) for data from 1984 to 1993 and Department of Livestock Development (1996) for 1994 and 1995 data.

Table 4.2 The quantity and value of exported frozen broiler meat, 1993 to 1999

Source: Department of Livestock Development (1995) for data from 1984 to 1993 and Department of Livestock Development (1996) for 1994 and 1995 data.

Ducks are of some importance but mainly for the small farmers who use them for pest control, for home consumption and as an income supplement. The data in Table 4.3 show that duck numbers have been almost unchanged since the mid-1980s.

Table 4.3 Numbers of ducks in Thailand

Source: Department of Livestock Development (1995) for data from 1984 to 1993 and Department of Livestock Development (1996) for 1994 and 1995 data.

Table 4.4 shows how government officials in the Department of Livestock Development (DLD) hoped the industry would have developed by 2001. The number of broilers in Thailand was expected to increase almost four fold to 2 753 million birds, from the 1997 level of 672 million. Domestic consumption of broiler meat was expected to increase more than 10 times between 1997 and 2001. Native chickens were forecast to provide an increased quantity of meat per person (from 5 kg per person in 1997 to 12.5 kg per person by 2001). This is despite the large expected increase in the broiler industry. About 234 767 t (equivalent to about 754 million broilers) were expected to be exported. With regard to egg production, the DLD predicted that approximately 12.6 billion eggs would be produced and that about 75 percent of these would be consumed locally. Domestic consumption of eggs was expected to climb to 155 eggs per person each year, about 55 percent above the 1997 level. At the time of preparing this report, publicly available information was not available to judge whether these goals had been reached.

Table 4.4 Features of the poultry industry, 1997 versus 2001