Food Industry Overview: Thai cuisine is renowned the world over for its rich and enticing flavors

and exotic blend of spices. The richness of this food will not only reward ones palate, but can also be discovered with investments in the vibrant and rapidly growing food industry. Thailand has the second largest economy in Southeast Asia and is one of the worlds leading food exporting countries. And, it is the worlds number one producer of natural rubber, rice, canned and frozen seafood, canned tuna, canned pineapples, and cassava, and the number two producer of sugar. Food exports alone in the first half of 2006 were in the amount of US$6.8 billion, representing a 5.9% annual growth. Major products include seafood and processed foods, in particular shrimp, processed tuna, canned fruit, and cooked chicken. And, according to the Thai National Food Institute (NFI), the countrys export earnings from the food sector will continue grow by 10.3% in 2007, due to improved product quality. With one of the most advanced processed food sectors in Southeast Asia, this sector accounts for near 15% of Thailands manufacturing output and is getting stronger. Approximately 9,000 food processing companies in Thailand produce annual earnings of about US$25 billion. Thailands food sector has superlative growth potential as the country maintains its position as an industry world leader through increased use of technology and improved standards in efficiency, production and hygiene.

Thailands many strengths: An increasing GDP growth rate projected to reach 5.5% in 2007 One of the worlds leading producers and top-five exporters of agricultural products A skilled, educated and motivated workforce An existing infrastructure for logistics and for food processing, which accounts for 15% of its manufacturing output. A much higher availability of arable land than neighboring countries A signatory of the ASEAN Free Trade Area, granting access to a market valued at US$700 billion
Companies such as Herbalife International are enjoying terrific growth in Thailand, expecting to finish 2006 with a 25-30% growth rate. The company has reported an average growth of 20% each year since it began operations in Thailand in 1997.

Thailands food industry spans global markets: Approximately 50% of the total European Union import quota for chicken products Thailand has gained the largest export quota allocation 252,643 tons from the European Union, at a lower tariff rate Thai-Chinese joint venture to build a new distribution center in Zhongshan, China, giving greater access to the Pan Pearl River Delta: population of 464 million people and a GDP of THB22.6 trillion). -- equipped with modern cold storage facilities and stateof-the-art logistics system to ensure fresh and prompt delivery. Growing export values

Export Food Products

Export Quantity (ton) 2005

Total Jan-June

2006
Jan-June

Quantity Change (%) 2005 2006

Total JanJune

Export Value (Million US$) 2005 2006

Total JanJune Jan-June

Value Change (%) 2005 2006

Total Jan-June

Food Products with growing export values Shrimp 282,994 107,937 Processed Tuna 454,909 210,998 Chicken and Poultry 284,864 127,581 Processed fruit 832,731 415,267 Vegetable 489,163 266,180 Frozen Fish 353,232 174,219 Squid 101,017 53,944

130,904 244,177 146,545 485,356 288,225 193,365 52,460

17.0 20.5 24.4 5.4 -4.3 -11.1 -6.4

21.3 15.7 14.9 16.9 8.3 11.0 -2.8

1,873 1,191 914.8 739.7 448.2 478.7 425.6

704.4 524.0 396.7 350.6 227.4 232.5 217.1

872.1 621.0 465.0 403.0 250.4 234.2 224.0

6.1 25.7 28.9 12.0 5.7 9.8 -5.4

23.8 18.5 17.2 14.9 10.1 0.7 3.2

More than US$192 million in machinery for bottling, filling, sealing, labeling and washing was imported in 2005 reflecting tremendous new investment opportunities

Thailands food export market in 2005 Japan (US$2.39 billion) *chicken meat: prepared and preserved 19.5% *shrimp: prep and pres 8.2% *raw sugar: 8.2% *cuttlefish: 6.8% *shrimp: frozen, chilled 6.7% *fish meat: frozen 3.9% United States (US$2.26 billion) *shrimp: frozen and chilled 22% *shrimp: prep and pres 21.2% *canned tuna: prep and pres 13% *rice: 6.8% *canned pineapple: 3.9% *juice: 1.6% EU (US$1.6 billion) *chicken meat: prep and pres 22.1% *canned tuna: prep and pres 11.6% *rice: 6.3% *canned pineapple: 5.9%

*cuttlefish: 5.3% *shrimp: 4.3% *sweet corn: prep and pres 2.2% ASEAN (US$2.1 billion) *rice: 13.7% *white crystal sugar: 13.5% *raw sugar beet: 5.4% *palm oil: 3.4% *tapioca starch: 3.3% China (US$766.1 million) *tapioca feed: 38.6% *jasmine rice: 14.9% *tapioca starch: 4.6% *raw sugar beet: 4.4% *longan, dried: 3.5% *durian, fresh: 3.3%

19% 28% 18% 6% 16% 13%

Japan United States EU ASEAN China Others

Thailands Top Food Export Markets (H106) 1. Japan 2. United States 3. European Union 4. China US$ 1,196.5 billion US$ 1,176.6 billion US$ 978.1 million US$ 433.9 million Rate of Growth -1.3% 23% 23% 31.6%

Export quantity and value of ten major food and agricultural products January to July 2006
HS Code Products Jan-Jul 06 Quantity (Ton)
235,102.82

Value (Million Baht)

22,959.24

% Change/ 2005 Quantity Value

14.53 17.46

Value Proportion (%)

7.36

1604140100

1602320000

0306130090 1605200290

1006300111 2106900409

1006300222 0714100906 2008200101 1701110014 Total 10 items Others Grand Total

Tuna, skipjack and bonito (Sarda.SPP) in airtight containers Fowls of the species Gallus domesticus (Ready-to-eat) Other shrimps and prawns (frozen) Other shrimps and prawns, not in airtight containers Thai Hom Mali rice 100% grade 2 Other food preparations not elsewhere specified (type5) Parboiled rice Other cassava except roots Pineapple in airtight containers Cane sugar, centrifugal

140,741.60

16,475.58

8.94

12.41

5.28

65,819.02 50,041.71

16,149.53 13,984.89

8.65 39.49

16.41 44.81

5.18 4.49

667,776.76 225,092.81

12,318.94 9,313.67

18.08 -3.35

24.13 -4.09

3.95 2.99

806,730.21 2,225,885.25 356,003.98 642,747.94 5,415,942.10 8,097,984.69 13,513,926.79

9,277.25 9,052.78 8,215.10 7,197.47 124,944.46 186,810.25 311,754.71

-20.76 32.37 23.86 -37.15 3.38 -13.01 -7.11

-19.12 28.12 16.82 -13.86 12.27 3.59 6.90

2.98 2.90 2.64 2.31 40.08 59.92 100

Source: www.nfi.or.th

Frozen Food As more and more people seek the convenience, quality and nutrition of prepared dinners, Thailands market for frozen instant food is expected to

total THB 3 billion in 2007, compared with 1 billion baht in 2004 source: Kasikorn Research Centre.

Halal Food Thailand was the first country to implement a scientific standard for Halal Food, carried out by the Halal Science Center, with companies accredited by the Central Islamic Committee of Thailand. There are approximtely 60 factories in the Kingdom that hold certification. Rice Thailand is the number one exporter of rice in the world, and with exports to China tripling in the first four months of 2006 the industry is in the midst of a boom. The Kingdom will export 8.5 million tons of rice in 2006, and was awarded a quota of 73,455 tons from the European Union for 2007. Thai rice is free of genetically modified organisms (GMOs) Production of GMO-rice is prohibited in Thailand

Food safety The Food and Drug Administration ensures product safety through manufacturing licenses, food labeling, pre and post-marketing control and adherence to Good Manufacturing Practices (GMP), which is a mandatory measure for 54 types of food products. The Asia-Pacific Economic Cooperation (APEC) members have accepted Thailands food-safety standards and the Agriculture and Agriculture Cooperatives Ministry is accelerating its standards and certification project. Food Safety Equipment Thailand has enforced the Good Manufacturing Process (GMP) standard since 2003, leading to significant growth in the food safety equipment market of about 20-25% per year. Currently, most food safety equipment is imported. US$ Million 2004 2005 2006 Growth Rate for the next 3 years

Total Market Size Total Local Production Total Exports Total Imports Import from the U.S.

228.66 69.25 34.95 194.36 65.20

282.55 139.59 97.21 240.17 69.51

252.06 132.24 94.43 214.25 68.77

+10% +10% +20% +15% +10%

Kitchen of the World Thailand plans to expand its presence around the globe through its Kitchen of the World project, which includes nearly doubling the number of Thai restaurants in foreign counties. There are currently approximately 11,000 Thai restaurants outside of Thailand, of which about 28% are located in Europe. The aim of increased restaurants is to expand a Thai food presence and increase exposure to Thai food products. Supporting infrastructure: To update and support pertinent government and private food sectors with relevant and current food-related intelligence, the National Food Institute selects, analyzes, synthesizes and disseminates useful and up to date information. Information relevant to decision making, marketing, trade negotiations, standards setting and policy development include: Local and foreign regulatory developments with possible impacts to Thai Food Industry Pertinent scientific information Information on consumers' preferences and world markets Local and international food production, costs, price, import and export statistics Food situational analysis Food production and consumption trends Food market forecast The NFI helps in installing part of the team responsible for "Food Safety Management" in Thailand. Working in collaboration with Government Authorities including the Ministry of Agriculture and Cooperatives, Ministry of Public Health and Ministry of Industry, the team promotes food safety

and helps entrepreneurs produce products to international standards by providing the following services: Consultancy services in the implementation of GMP / HACCP / ISO 9000 / ISO 14000 / ISO/IEC 17025 and Clean Technology systems Risk Assessment studies Assistance in working out a traceability model system Dissemination of analyzed and synthesized information related to food safety regulatory laws and standards Chemical and microbiological testing of food samples to ensure that products destined for commercial distribution are up to international regulatory requirements and standards Some BOI promoted investments enjoy

exemption on import duty on machinery and corporate income tax for 8 years
The Production or preservation of ready-to-eat or semi ready-to-eat food; Grading, packaging and storage of plants, vegetables, fruits or flowers using modern technology; Cold Storage; Cold storage transportation; Inspection, analysis and certifying quality standards of agricultural products;; Inspection and analysis of diseases of crops, livestock or aquatic animals; Inspection analysis of soil or water for agriculture usage; Farm management; Production of packaging material for food packages Other incentives can be found at the Board of Investment, or through our web-site at www.boi.go.th