Oct 15, 2012

Thailand - Move up the regional value chain, food firms urged

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More food producers need to shift from supplying raw materials and unprocessed food to value-added products, including functional foods and ingredients, to cope with rising labour costs at home, as other Asean countries now enjoy a competitive edge, food experts and producers said last week.

At Food Ingredient Asia held here, Thai food companies and experts said Thai food producers must develop themselves to show differentiation from their rivals in Asean.

Darunee Edwards, president of the Food Science and Technology Association of Thailand, said ingredients would play a more significant role to serve rising demand of the food industry.

Thai food producers should no longer rely on producing materials for food manufacturers, otherwise they could not maintain their growth amid the changes in the demands of the food industry, she said.

Functional foods are another product in high demand because people are growing more health-conscious. Functional foods are by-products of food such as collagen abstract from fish skin, or calcium from shrimp shells, rice bran and fruit seeds.

Businesses should focus more on innovation to ensure their survival amid the rising cost of labour in the country. However, to encourage the development of the food industry, the government must issue a clear policy on promoting education in food science, she added.

Suranart Kittirattanadetch, general manager of Premium Foods Co, a producer of food ingredients, said the company needs to enter the Indonesian and other Asean markets after facing higher labour costs in Thailand.

Some foreign customers such as those from Japan have shifted to ordering from Indonesia due to cheaper prices, so the company needs to focus on innovation to create value-added products to satisfy the variety of requirements of customers in order to keep them with the company.

The company has also replaced some line workers with machinery to reduce production costs and ensure its competitiveness within Asean, he added.

Noparatana Pliankum, export manager at Yearrakarn Co, a producer of powdered coconut milk, said the Asean Free Trade Area has not only created opportunities for Thai firms to penetrate other markets but also threatened those that have not adapted to compete with other Asean producers.

Thai food producers still had plenty of room to grow in the global market if they opened their eyes to world trends and responded to consumers' demands. For instance, Yearrakarn has adapted by creating innovative dried coconut milk and non-dairy creamer for cooking. That has also paved the way to export more to Asean and other countries especially in the Middle East.

Overseas sales now account for about 30 per cent of the company's revenue but should grow gradually following the formation of the single Asean market and the company's development of more value-added products for customers, he added.


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