Feed-makers may link up for purchases

Today's Business News - Wednesday December 12, 2007

ANIMAL FEED / BIOFUELS

Feed-makers may link up for purchases

PHUSADEE ARUNMAS

The continued increases of animal-feed raw material prices will force feed producers to join together and buy in bulk to receive greater discounts when buying commodities, traders say.

Sethasan Sethakarun, president of the Soybean and Rice Bran Oil Processors Association, told a seminar yesterday that in order to counter the soaring demand for maize and tapioca from the biofuel industry, feed producers should team up to increase their bargaining power.

Another option would be to invest in downstream operations to raise animals and lower costs, he suggested.

Prices of maize, a key raw material for ethanol production, have risen sharply in the US market, driving up prices of soybeans and wheat this year by around 20% to 50% over the year before.

Demand for cassava, another raw material for making ethanol, has also increased and is expected to hit more than 30 million tonnes next year, surpassing domestic supply of 27.6 million tonnes.

According to Chen Wongboonsin, president of the Thai Tapioca Trade Association, the country will have three more new ethanol plants next year, which together need about 500,000 to 600,000 tonnes of cassava per year.

The Energy Ministry aims to raise the use of gasohol to eight million litres a day by year-end, up from six million litres at present.

Mr Chen said the government has to help increase the yield of cassava from 3.7 tonnes per rai now to at least five tonnes to cope with higher demand.

Pornsil Patchrintanakul, president of the Thai Feedmeal Manufacturers' Association, said the government should encourage the opening of maize and soybean plantations abroad, especially to countries under Acmecs, or the Ayeyawady-Chao Phraya-Mekong Economic Co-operation Strategy.

He said the government should also allow farmers to grow genetically modified organisms (GMOs) for use only in animal feed and biofuel industries as imports alone might not be sufficient. Officials should also speed up work on the new bio-safety law to control GMO planting.

He said the livestock industry had suffered the most from rising prices of feed, especially pig and chicken farmers.

Pig raiser Surachai Sutthitham, who is also president of the Swine Raisers Association, noted that costs have risen by more than 30% due to expensive feed prices. Farmers would have to increase prices of live pigs from 41-43 baht a kilogramme to 50 baht soon, pushing retail pork prices to 100 baht per kg, up from 85-90 baht today.

Bangkok Post