A guide to Thailand’s global food & beverage export industry

The global COVID-19 pandemic has disrupted many industries and the Thai food and beverage export industry is no exception. Many problems have been experienced like supply chain issues due to lockdowns and other COVID related measures. Through it all, the Thai B2B industry has experienced challenges and disturbances but is now looking to drive exports on through government measures and customer incentives, all of which can be taken advantage of through eCommerce platforms that excel in customer advice and service in these matters. Here we offer a thorough overview of the Thai food and beverage industry and advise how best to utilize it for profit.

International trade in the Thai food & beverage industry

Thailand, a country in southeast Asia, is one of the world’s leading exporters of food products and specializes in farmed agriculture and seafood. It has a well-developed modern food-processing sector which allows for mass export to countries like the USA, China, Africa, and Japan as well as trade blocs such as ASEAN and Europe. In total, Thailand’s food exports constitute 21% of the country’s GDP. Major food exports include rice, canned tuna, sugar, various meats, cassava products, and canned pineapple, which make up Thailand’s third-largest industry.

Figures from the National Food Institute estimate that before the COVID-19 pandemic (2020), the value of Thai food exports reached $34.9 billion, seeing an increase of 5.4% over the previous year.

Thai food products have long been an important part of Thailand’s economic development with the worth it augments in the agricultural segment and industrial supply chain. The industry encompasses 128,000 enterprises, most of which are micro-enterprises that employ in excess of one million people. This figure represents about 3% of Thailand’s workforce and produces around 6% of Thailand’s gross domestic product.

Seafood products make up the largest share of this industry at about 18.2 percent, closely followed by rice, chicken, sugar, processed fruits, and beverages.¹

Best Thai food & beverage that exports globally

How Thailand’s food processing industry helps to boost export

The food processing industry has developed rapidly over the last ten years and continues to grow in volume and in expertise. This industry is one of the most developed in Southeast Asia, with Thailand boasting over 10,000 food and beverage processing factories. Many of these are small to medium-sized factories that mainly service the domestic sector, but the bigger food processing businesses produce higher-value products for export markets. These higher-value products include frozen shrimp, canned tuna, poultry, sugarcane, confectionery, snacks, canned pineapple, and tapioca.

The increase in Thai food processing has attracted custom from around the world including the huge export markets of Japan, the USA, and the EU, with Thai seafood production at $5.5 billion accounting for the third-largest seafood processor industry in the world, after China and Norway. Of this figure, 90% of the seafood is exported. Here below, we offer a comprehensive report on Thailand’s top 3 food export products.

Thailand’s seafood product export trade

As mentioned, processed seafood export has become a vital trade for the Thai economy. Prior to the outbreak of Covid-19, the industry was worth $3,775 million (2019), and annual growth was predicted to be limited to 1 or 2% due to an economic slowdown and growing competition from rival seafood processing countries. However, a growing awareness of the health values of seafood has fuelled growth to the extent that sales are now predicted to reach $570 million in 2023.

Thailand’s seafood processors produce and export a variation of products, from basic raw seafood like frozen foodstuff to specialist, value-added products that yield bigger profits.

Canned seafood mainly consists of traditional fish such as tuna, sardines, and mackerel, but other processed seafood is also available like salmon, cuttlefish/squid, and pollock. Globally recognized Thai brands include Nautilus, Three Lady Cooks, Roza, Sealect, Hi-Q, and Ayam.

Thai rice exports drop to third place in the world

As much as the Thai seafood export trade is increasing, rice exports are going in the opposite direction as they have dropped 23% year on year in volume and value in the first quarter of 2021. This decrease has relegated Thailand to third place among the top rice exporting countries behind India and Pakistan.

The Thailand Customs Department data for the period of January to March 2021 has shown export figures of 1,131,944 tons of rice, with a value of THB 21.80 billion ($732.9 million). This is a 23% reduction in export volume and a 23.6% decrease in value. In the same 3 months of 2020, Thailand had exported 1,469,664 tons of rice worth THB 28.53 billion ($939.0 million).

Economic experts have identified the problems as rising freight costs due to container shortages and other logistical expenses. Additionally, the cost of Thai rice, (especially white and parboiled rice), is considerably more than that of India and Pakistan, resulting in a big decrease in export orders compared to recent history.

According to the latest figures, In March 2021, only 87,305 tonnes of white rice were exported, down 49.2% whereas exports of parboiled rice only reached 60,803 tons, down 22.3% month on month.

Jasmine rice exports from Thailand amounted to 90,508 tons, down 9.6% month on month. Most of this product's exports were shipped to markets, such as the United States, Hong Kong, China, and Canada.

In Thailand, broken white rice costs $493 per ton, whereas prices in Vietnam, India, and Pakistan stand at $488-492, 398-402, and 438-442 per ton correspondingly.

Parboiled rice in Thailand is priced at $496 per ton, whereas the price in India and Pakistan is lower at $368-372 and 441-445 per ton. This disparity of pricing has caused Thailand to lose superiority in white and parboiled rice markets to India and Pakistan for the foreseeable future.²

Thailand’s fruit exports

Thailand has experienced an upsurge in the agricultural exports of its fresh fruit harvests. Back in 2018, Thailand exported $2.65 billion worth of fruit, but this figure was soon surpassed in the first 10 months of 2019 when the country generated more than $3.2 billion from fruit exports.

The Thai Ministry of Agriculture has attributed this rising appetite for Thailand’s fruits to customers who have implemented more health-conscious diets. This phenomenon is also due to the setting up of many free trade agreements (FTA) that have relaxed the conditions on agriculture imports and reduced tariffs on Thailand’s food products. Currently, Thailand has ongoing FTA arrangements with China, Australia, New Zealand, Chile, Peru, and Hong Kong. These countries and regions have relinquished all import tax duties on fresh and frozen Thai fruit. Further FTA partners such as Japan, South Korea, India, and Malaysia have begun to start lowering or removing import taxes on most kinds of fruit from Thailand.

Thailand’s main fruit export is the pineapple, and Thailand is the top exporter of canned pineapples in Asia although Thailand enjoys a growing trade in the export of many tropical fruits, in particular the durian, mangosteen, and longan, of which Thailand is the largest exporter globally.

This rise in fruit export shipments is doubly impressive if you consider that Thailand’s currency, the baht, appreciated against the dollar in 2020, inhibiting the performance of some other Thai exports due to inevitable price increases.

Thailand is now the 6 biggest exporter of fruits in the world following Spain, the Netherlands, Mexico, the U.S., and Chile.³

As mentioned above, 18 countries have now agreed to FTA arrangements for fruit with Thailand, allowing the country to garner U.S. $461 million in export revenue in the first 2 months of 2021 but it’s not all good news for the industry as Thai durian farmers have become concerned about the consequences of the third wave of Covid-19 in Thailand and how it will possibly affect their profitable exports to China.

Durian exports have provided a continual stream of revenue for Thai farmers and exporters, even during global slumps. Fresh durian exports were up 259% in January and February of 2021 year-on-year with exports to China- totaling 575,000 tonnes of durian- up an astonishing 497%.

This trade could now be in jeopardy as health authorities in China have stated that imported cherries from Chile had been tested and found to be contaminated with COVID-19, causing a huge drop in Chilean cherry export prices. Farmers in Thailand are concerned that the same thing might happen to Chinese durian imports. With Coronavirus in Thailand reaching unsurpassed levels, one example of a durian shipment being connected to COVID-19 contamination could result in a total ban on imported fruit from Thailand.⁴

Regulations of exporting food & beverage from Thailand

All food and beverage products exported from Thailand should be declared to Customs and are subject to normal goods customs controls. Follow the guidelines below.

• Register on the e-Customs system

If you are both importing and exporting goods from Thailand, you only need to register once on the e-Customs system.

Checks will be needed for goods requiring an export permit and potential red line shipments.

In terms of food export, goods such as sugar and rice will require a permit to check the quality. Other agricultural products, including trees and seeds, require permits under other laws. The Thailand Customs Department website offers a thorough outline of restricted goods.

• Submission and verification of the declaration

An exporter is required to submit an Export Declaration, with an invoice and cargo data information to the e-Customs system. The system will issue a declaration and payment numbers and decide if the shipment is green or red line.

• Payment of duties and taxes

3 methods enable you to pay Export duties, namely payment at the Customs Department of the port of exit; e-Payment via the e-Customs system; or payment at a bank.

• Inspection and release of cargo

Your freight forwarder needs to send a cargo control report to the e-Customs system. This report will automatically produce a report and also alert the customs officials to whether the goods are green or red lines. Green line goods will be cleared to proceed. Red line goods need a physical examination and additional document checks before they can be cleared.

When the shipment arrives, it becomes the obligation of the shipping company/ agent to submit the manifest information to the e-Customs system.

FAQs

Here are some often asked questions about the Thai food export industry.

• Can I import ivory from Thailand?

No, you cannot. The trade in ivory products is strictly prohibited, so products made from ivory can not be exported from Thailand.

• Which is the largest fruit export from Thailand by percentage?

Fresh durian fruits made up 44% of the total fruit exports from Thailand.

• What are the main export markets for Thai rice?

Thailand’s most important export markets for rice are China, the United States, the ASEAN region, Africa, and the Middle East.

• Who is the largest privately owned rice exporter in Thailand?

The Thai Rice and Food Co., Ltd. (TRF) is the largest privately owned Thailand rice exporter.

• What kind of seafood does Thailand export to the world?

Thailand's fishery industry has become one of the world's principal fishery exporters, accounting for 20% of Thailand's total food product exports. Canned tuna, sardines, processed shrimp, prawns, and squid are also major export items making up over 70% of total fishery products.

What the future holds for the Thai food and beverage export industry

It is clear that there is vast potential in the Thai food export industry when you consider the profusion of foodstuff, advanced infrastructure, the pool of skilled labor, and national support for the trade. Thailand’s governmental agencies have been promoting an infrastructure that will create productivity through technology, research, and development, showing that it considers the food industry to be of paramount importance to the Thai economy. With these measures in place, it will not be a surprise to see Thailand well-positioned enough to be the largest center in Asia for the global food market and to grab a bigger share for itself globally.

With the pandemic negatively affecting many industries, the food industry has become a beacon of light in dark times and has bucked the current trend of downturns with the demand for processed and canned foods leading Thailand to a better exporting future.

This demand is driven mainly by tendencies towards home cooking and ready-to-eat foods caused by lockdowns globally.

In terms of advantages, Thailand enjoys an all-year-round agricultural season and an exciting agri-food industry that produces the biggest exports of canned tuna, canned pineapple, cassava, rice, and sugar globally.

Thailand’s food processing business presently utilizes 80% of local raw materials in its products, thus allowing businesspersons to operate with minimum costs. This program increases the attractiveness of Thailand’s food processing industry to the global market.

Thailand’s expertise in food processing has made it one of the top ten most competitive countries according to a statement by Oxford Economics. The country ranked 9 in 2016, encouraging the Thai government to pledge to reach 3 position by 2026. It is their commitment to the promotion of biotechnology and R and D, which is leading the surge and increasing confidence in the industry. Food processing has also benefited from continuing investment in logistics as well as utilities and a set infrastructure for a modern economic zone. These measures, they hope, will make Thailand the best-connected country in this industry in ASEAN. Thailand has taken up a central position in the ASEAN zone, which has a population of 650 million people, making it a huge potential market. Also, the China-Thailand Free Trade Agreement and Thailand’s membership in the ASEAN Free Trade Area have strengthened the nation’s trade and economic evolution.

The Thai government has also prioritized the agri-food industry, intending to strengthen food technology ecosystems and improve the financial value of the farming and food industries. Part of this project is the offering of incentives like the exemption of corporate income tax and import duties on raw materials. These motivations cover a wide-ranging assortment of activities, particularly those connected to investment in R&D and adopting biotechnology, digital services, robotics, and automation. All of these programs are hoped to further increase the competitiveness of Thailand’s food export industry.

In terms of the agri-food industry, the Thai government has set up a development plan (effective until 2028) with a target of generating 7% of GDP through a concerted focus on R&D and productivity improvement.

Thailand has an extremely skilled agricultural and food processing workforce with firm official support and efficient recruiters designed to meet the labor force demands of investors displaying that innovative programs and technology are the sectors where Thailand is taking major actions to drive the development of the food export industry forward.

The production of Halal food is also a segment that the Thai food export industry is prepared for. A big and rising percentage of the world’s inhabitants consume Halal food, and the “Made-in-Thailand” brand has become well-regarded in this area meaning that Thailand’s food industry is well-positioned to grasp the opportunities that derive from servicing this consumer group.

Thailand has a differentiated food export industry which also displays the ability to exploit the potential of medical and functional foods which serve the increasing demands of an aging global demographic.

The Thai government policies have consistently reinforced its technological capacity in the future food industry and have endorsed a wide range of actions designed to help businesspersons increase their effectiveness in the food supply chain. It is also supplying new motivations to further reinforce Thailand’s excellent position in the world food export market.

How Alibaba.com can help you with food and beverage from Thailand

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