New Import Quotas to Drive Down Feed Costs
Thai Foods Group Public Company Limited (TFG) is expressing a highly optimistic outlook for its future profitability and competitive standing, a sentiment that is primarily driven by Thailand’s decision to expand its import quota for US agricultural products. According to the company’s Chief Operating Officer, Mr. Phet Nuntavisai, this strategic trade move is expected to significantly lower feed costs, a crucial factor considering that these costs currently account for a substantial 70% of TFG’s total expenses. This reduction in a major operational cost is projected to improve the company’s competitive position in the domestic market while simultaneously boosting its capacity to drive higher export rates in the future. The company believes that securing a more stable and cost-effective supply of essential ingredients like corn and soybeans is a game-changer that will not only enhance its profit margins but also provide a strategic advantage in the volatile global agribusiness sector.
Strategic Expansion and Favorable Market Conditions
The company’s positive outlook for the second half of 2025 is also strongly supported by a number of other favorable market conditions and its own robust business expansion plans. TFG has been experiencing strong growth in its chicken exports, a performance boost that is partly attributed to a recent bird flu pandemic in Brazil, which is a major global competitor in the poultry market. This turn of events has allowed TFG to capture a larger share of the international market, a factor that is expected to positively impact the company’s results in the third and fourth quarters. In addition, the company is on a clear path of strong business expansion with its retail brand, Thaifoods Fresh Market. The company has revised its goal to grow its retail network to as many as 630 branches by the end of the year, surpassing its original target of 600. This aggressive expansion, combined with the favorable market conditions for its exports, is creating strong momentum and confidence for the company’s performance in the second half of the year.
Navigating Trade and Geopolitical Challenges
While TFG currently sources the majority of its feed ingredients from South America and neighboring countries, the new trade negotiations and expanded import quotas may lead to a strategic shift towards increasing imports from the US. This would serve to diversify the company’s supply chain and reduce its reliance on a single region, thereby mitigating future supply risks. The company also confirmed that a recent border conflict between Thailand and Cambodia had a temporary and minor effect on a small number of its retail branches in the southern Northeast region. However, operations have now returned to normal, and the company’s expansion is expected to proceed as planned. This demonstrates TFG’s resilience and ability to navigate external geopolitical risks and maintain a stable business trajectory, further reinforcing its optimistic outlook for the remainder of the year. The company’s strategic foresight in both its supply chain management and its expansion plans positions it well to capitalize on emerging opportunities while effectively managing potential disruptions.
