Meat expenditure in 2021 to rise 2.0% due to higher price and cost (Current Issue No.3261)

KResearch assesses that meat prices will remain high over the remainder of 2021, stemming from cost of disease prevention and control in humans and animals, increased cost of animal feeds, import charges that tend to remain high, and the Baht's volatility. Given the prolonged COVID-19 outbreak and the status of meat as one of the items on the government's price control list, only a portion of the cost burden can be shifted to consumers. Challenges thus lie in ability of operators within supply chain, especially SMEs, to manage production costs in order to ensure business continuity during this crisis.

KResearch projects that meat expenditure in 2021 will continue to grow at around 2.0 percent, with an estimated market value of THB 250 billion (compared to the 6.3-percent growth of the previous year). This is mainly attributed to the average retail price for meat, which is expected to climb approximately 2-3 percent YoY. Meanwhile, the level of consumption will likely stay the same, owing to decreased consumer purchasing power and the impact of the pandemic on important suppliers like restaurants. These operators are not expected to recover by year-end, since the ongoing COVID-19 outbreak will take a considerable amount of time to be resolved.

Looking forward, focus should be on R&D into alternative raw materials to mitigate the risk of raw material price volatility  – a major issue that has plagued the meat industry over recent years. Moreover, meat processing plants should adopt stricter food safety measures in factories to curb the risk of potential COVID-19 clusters that could become more widespread than in previous periods. Such rules and restrictions are necessary to create consumer confidence in food safety, consistent with improved production standards in Thailand and in export markets. The competitiveness of Thai meat operators will be influenced by such factors going forward.​