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Baht/$ 33.39/42
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14,950
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CHAROEN KITTIKANYA & PHUSADEE ARUNMAS
Livestock operators say banks' reluctance to lend money to them in the slow economy is complicating their efforts to stay afloat amid high feed prices fuelled by energy costs.
''The sector, notably small-scale raisers, is now facing tight cash flow. Commercial banks are not willing to extend them loans due to price volatility triggered by fluctuating oil prices.
''Besides, economic factors are not favourable either,'' said Nopporn Vayuchote, executive vice-president of Betagro Group, the country's leading pork producer and exporter.
According to Dr Nopporn, apart from the direct impact from rising fuel costs which generally account for about 10-12% of production costs of the livestock industry, the prices of animal feeds have risen by 30% since early this year.
But many raisers were forced to sell below their actual production costs to ease their cash flow, he said.
Somchai Kungsamutr, president and CEO for CP's Feed Ingredients Trading Business Group, said the prices of raw materials for feeds were now subject to big swings because cereals such as corn, soybeans and tapioca that are normally used to produce animal feeds are increasingly used to produce ethanol.
According to Mr Somchai, the prices of feed raw materials this year surged by 70-80% over a year earlier, dealing a big blow to livestock industries all over the world, not only in Thailand.
''The prices of raw materials for animal feeds will tend to increase further on the back of rising oil prices but no one knows by how much,'' said Mr Somchai.
''Livestock businesses are likely to cut their production in line with lower consumption as more consumers can no longer afford meat.''
Currently, Thailand uses about 11-12 million tonnes a year of animal feeds.
According to Dr Nopporn, Thailand is a net importer of soybean meal, which accounts for about 30% of the raw materials in feeds. Domestic use of soybean meal is 3.4 million tonnes, while local production is only 1.04 million tonnes.
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