Thai agricultural officials saw the containers – valued at 35 million Thai baht (USD1.1 million) - off at a freight terminal in northerly Chiang Saen Province. Transported on the Mekong river through Myanmar into Yunnan province, the chicken comes from seven factories that have been allowed back into the Chinese market.
The seven factories are among 19 which in March were given the green light by Chinese authorities to ship into China. China banned imports of chicken in 2004 after outbreaks of bird flu but Thai exporters were allowed back into Japan and Korea in 2017.
Thailand could prove a useful substitute for China which barred imports from France, Mexico and Texas on bird flu grounds. Thailand also has an opening given China is investigating poultry imports from Brazil on anti-dumping grounds after Chinese broiler meat producers complained about competition from low-cost Brazilian imports. Brazil in 2016 took an 85% share of Chinese broilermeat chicken imports, at 600,000 tons worth USD1.2 billion. Thailand’s total chicken exports were 720,000 tons worth USD2.6 billion in 2016.
Thai poultry processors include the giant Charoen Pokphand (CP) conglomerate which has large feed and meat processing operations in China. Shipments from Thailand are an increasing option given China has sought to improve logistics and land transport connections between Southeast Asia and southern China, thus reducing the cost of goods and shipment times for Chinese trade.
Poultry producers in Thailand and China are both in recovery mode after avian influenza as a shortage of supply creates demand for produce. In 2017 Chinese domestic broiler supply was hurt by a shortage of grandparent breeder stock.
China has long been a competitor of Thai chicken exporters in markets like Japan, the EU and US but this is less so as China’s domestic market expands though the two vie for processed and cooked chicken export sales.
Significantly Thai chicken products could have a tax advantage given China has a free trade agreement with Thailand through the ASEAN China Free Trade Agreement: chicken is one of the products subject to a phase out of customs duties in 2018 under the Association of South East Asian Nations (ASEAN)-China free trade agreement. The deal encompasses about two billion consumers and has been a boon for Chinese exporters of processed and manufactured goods.
Thai access to China’s market comes as Washington has sought to increase meat shipments to China: Agriculture is the only area in which China has a trade deficit with the US which has been seeking to correct its huge trade deficits with China.
The lure of increased sales into China was a driving force in a free trade deal signed by ASEAN with China in 2002. Thailand as well as Indonesia, Philippines and Malaysia ship huge amounts of fruit and vegetables to China while Vietnam which shares a border with China has become a major source for agricultural goods as well as a conduit for a vast trade in legitimate and smuggled trade in agricultural goods into China.
Compared to Brazil’s highly efficient production model poultry farming in Southeast Asian nations remains characterised by low productivity with high numbers employed at low income next to a comparatively low contribution by the sector to GDP.