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Published on March 13, 2008

The planned temporary cut in import duties for soybean meal will not be enough to reduce the rising burden on producers of animal feed-meal and aquaculture goods and cattle farmers, industry representatives said yesterday.

The animal feed-meal price subcommittee said the import duty for soybean meal would be temporarily reduced to zero. The proposal aims to reduce costs for animal-feed producers, focusing on pig farmers to cushion the price of pork.

The duty-free soybean-meal measure is expected to become effective after Cabinet approval and remain until the end of the year.

Soybean meal is currently subject to 4-per-cent import duty.

The Commerce Ministry said waiving the import duty for almost a year would decrease feed costs for pigs by 1.15 per cent, or Bt11.16 per 100 kilograms.

To increase efficiency in the animal-feed industry, feed producers called on the government to allow pork prices to increase in line with market mechanisms and their higher production costs. In addition, they want the government to set up a special fund to encourage development.

"The government should allow product prices to increase in line with rising raw-material prices, as these are up by 30-70 per cent," a source at Thai Feed Mills Association said, adding it wanted price increases of 15 to 20 per cent.

Thailand imported a record 2.1 million tonnes of soybean meal for animal-feed manufacturing last year, followed by soybean, maize and powdered fish, which are subject to import tariffs of between zero and 15 per cent.

The source explained that the tariff cut to zero for soybean-meal imports would only reduce the costs of producers by 1 to 2 per cent, but the major costs of production, which rose more than 30 per cent this year, have not decreased.

Sompong Chaowangsai, president of the Thai Aquaculture Association, said the tariff cut for soybean meal would help decrease shrimp feed-meal prices by 20-30 satang per kilo.

"The government needs to urgently enact concrete measures to save the shrimp industry, or else the industry might disappear as it would face the same problem of oversupply and falling prices every year," Sompong said. 

The costs of shrimp production are now close to the selling price, which has dropped to Bt110-Bt120 per kilo, he said.

Lomdet Junbut, chairman of Samut Prakan Quality Shrimp Farmers Club, said

the shrimp-feed price was up by 9 per cent in the past two months, from Bt610 to Bt770 per 100-kg sack.

He said the government should set up a fair system to prevent

price speculation by large animal-feed producers, as well as establish a fund to help farmers in the long run.

In its Thai Market Wrap, Phatra Securities said Finance Ministry plans to cut the import tariff on raw materials for feed meal would not help manufacturers greatly.

Since corn and fishmeal are locally sourced and prices are rising worldwide, the company does not think lowering import duties will have much effect.

Lowering the duty for soybean meal will help cut production costs, however, as 70 per cent of the requirements are imported. But since soybean meal makes up only 30 per cent of feed ingredients (corn is 60 per cent) and the import tariff is only 4 per cent, the duty removal is unlikely to lower feed production costs by more than 1 per cent, Phatra said.

Petchanet Pratruangkrai

The Nation