National Industry - Asia Beef Network

Thailand COUNTRY PROFILE

National Industry

Background

Thailand’s population in 2013 was about 67 million people (World Bank, 2014). The country is classified as an upper middle income country by the World Bank with the gross national income per capita of USD 4,210 in 2011 (World Bank, 2011). Thailand’s high economic growth of 8-9% per year during the late 1980s and early 1990s was interrupted by the Asian Economic Crisis in 1997-1998 (World Bank, 2014). The GDP growth has since remained at 4.5% at an annual average over the period 2000-2012 (ADB, 2014).

Thailand has been regarded as a development success story, with sustained strong growth and impressive poverty reduction. Poverty in the country fell from 21% in 2000 to around 12.6% in 2012 (UNDP, 2014). However, regional differences remain, with over 80% of the country’s 7.3 million poor living in rural areas in 2013 (UNDP, 2014). Some regions—particularly the North and Northeast—and some ethnic groups lag greatly behind others and the benefits of economic success are not shared equally. Income inequality and lack of equal opportunities persist (UNDP, 2014).

Agriculture is still one of the main sources of the national income. The sector currently employs about 39% of Thailand’s workforce, and contributes to 11% of GDP (ADB, 2014). As it would be expected in an industrialising economy, the growth of agriculture has been modest at 2.8% annually averaged over the period 2000-2012. Livestock plays an important role in agricultural sector, accounting for 22% of agricultural GDP (Office of Agricultural Economics, 2014). Cattle raising has been identified as 1 of 14 main products in Thai agriculture.

Traditionally, cattle and buffaloes were raised by smallholders for draught purposes, transportation and for manure to be used as fertiliser. However, as mechanisation has replaced draught animals, small farmers have become increasingly specialised in beef production.

Thailand was a net importer of beef cattle up until 2008 as the domestic production had not been able to meet local demand. Thus, the majority of cattle flows were from Laos, Cambodia and Myanmar to Thailand. However, since 2008, the direction of cattle flows has been reversed due to strong demand for beef cattle from China and Vietnam (Bourgeois-Lüthi, 2010). Thailand has become an exporter and a transit country for cattle movement between Myanmar and Vietnam/China.

Macro production statistics

The statistics² in Table 1 provide an overview of the cattle and beef industry in Thailand. Based on the data from the Office of Agricultural Statistics³ , the country had 5.15 million cattle head in 2013 (including draught cattle). Growth in cattle numbers in Thailand is modest (0.8 % per annum).

The slaughter numbers were relatively high compared to other ASEAN countries, at over five hundred thousand head (growing at 3% per annum). The official slaughter levels seem to be lower than the actual slaughtered as the figures may be underestimated. The high turnoff levels are an indication of increased cattle specialisation. The growth in beef supply per capita in Thailand has increased slowly over the period 2000-2013 (1.0%).

Table 1: Key facts about the industry 2000-2013

Source: adapted the Office of Agricultural Statistics (2014).

² Data is provided by the Office of Agricultural Statistics. Cattle number is reported at the end of each fiscal year. Data on buffaloes and buffalo meat is not included.
³ The Office of Agricultural Statistics is under the Ministry of Agriculture and Cooperatives.
⁴ The cattle meat production figures were calculated from reports on number of cattle slaughtered. Average carcass weight is 144 kg/head.

Macro drivers of the industry change

The cattle industry in Thailand is driven by a number of factors. Firstly, the Thai economy has developed rapidly, thus demand for meat products has increased. Income per capita has grown at a faster rate than other ASEAN countries, and the development of a new urban-based middle class has stimulated a westernisation of tastes and preferences. High income elasticity of demand for beef has influenced in domestic beef production. In addition, these changes have also promoted extensive development in Thailand’s international trade in cattle products.

Secondly, private sector innovations such as improved breeds, feed technology, housing, farm management and contractual arrangements have been the prime drivers of growth (Office of Agricultural Economics, 2014). Farm sizes have become significantly large and the expansion is made possible by imported technology and increasing domestic demand.

Thirdly, the cattle industry development has been significantly driven by governmental regulations of slaughterhouses and subsidies (DFAT, 2014). In addition, the export market is a driver for the Thai cattle industry. The demand of cattle and cattle products from Vietnam and China has rapidly increased in the past few years. This includes the demand for high quality feeder cattle for the feedlot industries in these countries. As a result, the prices have increased in these countries, and live cattle have been moved from Thailand through Cambodia and Laos to Vietnam.

Cattle and beef production

Figure 1 below indicates that the cattle number in Thailand increased from 4.6 million head in 2000 to 6.7 million head in 2007. This was due to the Thai government’s policy such as Beef Cattle Farm promotion in the north-eastern region and the One-Million Beef Cattle Households to support farmers to raise beef cattle in an effort to reduce the amount of imported beef (Charoensook et al., 2013). In addition, farmers have replaced traditional buffaloes by cattle (FAO, 2005). This trend reflects the reduced use of draught power, the greater suitability of cattle on newly cleared areas, and the greater productivity of cattle in beef production.

However, the number of cattle dropped from 6.7 million head in 2007 to 5.1 million head in 2013 (Figure 1). Some obvious reasons are the increased mechanisation of agriculture during this period, lack of grazing areas, lack of labour, and strong demand for live cattle from China and Vietnam (Skunmun et al., 2001, Cocks et al., 2009).
Similarly, as shown in Figure 1, the number of cattle slaughtered annually increased from around 335,923 head in 2000 to 620,278 head in 2008, and then reduced to 525,575 head in 2013.

Beef production increased slowly from about 130 thousand tonnes in 2000 to about 160 thousand tonnes in 2013 (Figure 1).

Figure 1: Cattle production in Thailand