The import tariffs and quotas for some Australian and New Zealand dairy products (including whole milk powder, whey, cheese, and anhydrous milk) were removed on January 1, 2021, while import tariffs and quotas for milk, cream, flavored milk, and skim milk powder will be eliminated in 2025. The removal of the import tariffs and quotas for Australian and New Zealand dairy products will impact the competitiveness of U.S. dairy products (skim milk powder and cheeses) in the Thai dairy market, which is already highly competitive and price sensitive. The export of both skim milk powder and cheese to Thailand was nearly U.S. $20 million in 2019.
Thailand’s domestic raw milk supply is insufficient to meet the country’s demand as almost all domestic raw milk supply is directed toward producing liquid milk for ready-to-drink milk and school milk. Thailand’s major dairy exports are pasteurized and ultra-high-temperature (UHT) milk, condensed milk, evaporated milk, ice cream, drinking yogurt, yogurt, and butter. Almost all of Thailand’s dairy exports are produced from imported dairy products including concentrated milk and cream (skimmed and whole milk powder). These are important raw materials for Thailand’s dairy food processing. The country’s major export markets are ASEAN countries including Myanmar, Laos, Cambodia, Malaysia, Singapore, and Philippines. In 2019, Thailand exported U.S. $389 million of dairy products, an 8.7 percent increase from the previous year.
The value of imported dairy products was U.S. $807 million in 2019. Imports of dairy products have grown at a compound annual growth rate (CAGR) of 2.3 percent by value since 2010. The top three leading exporters of dairy products to Thailand are New Zealand (40.6 percent market share), Australia (11.1 percent), and the United States (6.6 percent). New Zealand and Australia together make up about 50 percent of Thailand’s dairy imports and have free trade agreements (FTAs) with Thailand.
The Thailand Australia Free Trade Agreement (TAFTA) went into effect on January 1, 2005, while the Thailand New Zealand Closer Economic Partnership (TNZCEP) became effective on July 1, 2005. These two free trade agreements are the most comprehensive in product coverage and are the first bilateral trade agreements into which Thailand has entered. These FTAs provide significant quantities of duty-free dairy product access to Thailand in ways that will make it challenging for U.S. dairy exporters to compete.
Import tariffs and import quotas under Special Safeguard measures (SSG) for Australian and New Zealand dairy products, such as whole milk powder, whey, cheese, and anhydrous milk, were eliminated under TAFTA and TNZCEP on January 1, 2021, while import tariffs and import quotas for milk and cream, flavored milk, and skim milk powder will be eliminated in 2025. Thailand imported U.S. $327.7 million worth of dairy products from New Zealand in 2019 and U.S. $89.2 million worth of dairy products from Australia. Thailand’s dairy imports from New Zealand have grown at a compound annual growth rate (CAGR) of 5.2 percent by volume and 2.7 percent by value since 2010, which is more than the growth of dairy imports from all countries. Dairy import from all countries grew at a CAGR of 4.6 percent in volume and 2.3 percent by value since 2010. Thailand’s main dairy imports from New Zealand are whole milk powder, skim milk powder, butter, buttermilk, caseinates, whey, and cheese.
Milk processing in Thailand is dominated by large processing businesses such as CP Meiji, Nestle, FrieslandCampina Thailand, The Thai Dairy Industry, and Dutch Mill. These companies are also the largest importers of dairy products, which they use as ingredients in their recombined milk products and other dairy foods destined for the domestic market and for export. Total removal of tariffs and special safeguards of Australian and New Zealand dairy ingredients will significantly reduce the costs of their dairy products used as ingredients. Read the full report from the USDA Foreign Agricultural Service HERE.