Out of the Fire, into the Frying Pan

The downturn in the global economy has reached Phana. At least one small enterprise that had been looking to expand is currently feeling the chill of currency disparities despite basing  its business on applying some pretty high temperatures.

Behind the innocent-looking facade of this rural scene on the outskirts of Phana, an unlikely business is carried out.

 

 

And this is Mr Arporn, the man who lives here. His field of expertise is in  producing chicken for human consumption. He worked away from Phana for more than twenty years but like many people he has returned here to start his own little business.

 

His career as an employee was fairly evenly spread in terms of time between five different companies. Two of them, the first and the last, were wholly Thai companies, but three of them were joint ventures, one with a Japanese company, one with a Dutch company and one with a company from New Zealand.

Mr Arporn speaks pretty good English, though naturally it is better when he is talking about chickens and chicken parts and the various processes involved in preparing them for consumption.

The business he runs behind the bamboo curtain is the production of cooking oil. He has installed what looks like a giant wok which is heated using wood as fuel. He buys chicken fat from a factory in Warin Chamrap, in Ubon Ratchathani Province. This factory is currently processing 30,000 birds a day. Roughly 70% of their product is for the export market and the remainder for domestic consumption. The meat sold on the domestic market is of lower grade than that for export. That is not quite as bad as it sounds because apparently it is mostly graded on size, the smaller size not being exported. But the lower grade does also include slightly bruised meat and meat which Mr Arporn describes as 'ugly'.

Mr Arporn buys all the chicken fat which is cut off as part of the factory process. It is delivered to him in Phana every day. He pays 12 Baht a kilo and reckons to need about 1,000 kilos a day. During the night the fat is rendered into oil in his giant wok, producing about 750 kilos of usable oil. After mixing the residue with used oil from KFC in Ubon, he supplies it to another business which produces animal feed. This mixture he sells on at 20 Baht a kilo, whereas the oil destined for use by food vendors and restaurants he sells at 25 Baht per kilo. Mr Arporn's younger brother and sister-in-law work for him, carefully decanting a measured quantity of oil into plastic bags and delivering them to customers.

The problem for the factory in Warin Chamrap and hence fro Mr Arporn at the moment is the strong Thai Baht and the relatively weak US Dollar. The factory  is processing 30,000 birds a day as I said, but this is down from the 70,000 a day up to the beginning of November and their break-even figure is 50,000 a day. So there is a lot less chicken fat coming Mr Arporn's way, and his customers are crying out for more cooking oil. The other downside for him is that the factory in Warin Chamrap had asked him to try to get more customers for the processed chicken pieces they produce, specifically in Laos and Vietnam where he has some contacts still from his years working in the industry. Laos, it seems, counts as the domestic market (ie they get the lower grade product) while Vietnam is an export grade market. Either way, Thai chicken is very expensive right now outside Thailand so demand has fallen considerably.

All of this may be more information than you needed about one of those topics that is rarely thought about and perhaps best not thought about at all. So it is probably time to draw the bamboo curtain across the subject.

 

I will just add that Mr Arporn tells me that he does eat chicken but only the scrawny, free-range local variety. Who can blame him? We do the same ourselves, buying it in the fresh market on Wednesdays and Saturdays.

Comments

[Steve]

I don't know that I have good news for Mr. Arporn as the BoT expects the Baht to continue to strengthen throughout 2010, perhaps as low as 31 to the dollar. As a positive note though the BoT is willing to intervene to keep the baht above 30 to the dollar. In many countries I'm not sure how important this would be in a global forex market, but considering the way that the THB exchange is conducted I think BoT intervention will work.

Ahhhh to return to the days of 40+ to the dollar.

[Mike]

Lawrence what a fascinating article. Now I have a couple of questions please.

Is chicken oil widely used in Thai cooking?

Is it healthy?

Sounds a bit yuk to me but what do I know?

[Lawrence]

Steve, thanks for the insider information. Maybe I should move my tiny fortune int Kip. At least it would sound like more.

Mike, I think food vendors would use it if they could. Palm oil costs twice as much. But I guess if we want pad see yiew at 20 - 25 Baht ...
The product must be really pure after being subjected to such temperatures for so long in order to render out all the water. But all animal fat contains cholesterol so the vegetable oils are much more healthy. Chicken oil is probably more tasty, though. Sweings and roundabouts.

[Martyn]

Lawrence I must repeat myself and say again how impressed I am with the new look of the site. The way you've cut the photos into the text adds style as well....Chicken fat.

...'All of this may be more information than you needed about one of those topics that is rarely thought about'....

Quite the opposite, I found the post most interesting. I do like to learn new things about Thailand and this comes into that category. I keep trying to imagine what this giant wok looks like and I just can't picture it without the handle it obviously hasn't got. Does he keep it burning away overnight?

He pays 12 baht a kilo and produces 750 kilo which he sells on we'll say for 22 baht per. That's 7,500 baht gross profit less overheads. Mr Arporn is doing well.

Work in the morning, I'd best get the picture of the wok out of my head. I imagine dreams of being boiled alive in the thing and waking with my nose pecked to bits.

If only Colonel Sanders and KFC knew the truth, the chicken industry isn't all about well deck outlets and pristine red uniforms. Behind the bamboo curtain in South East Asia a giant wok burns away. Big pharmaceutical companies and the Colombian jungle spring to mind.

The post...I'd rate it finger licking good.

[Lawrence]

All this praise is going to my head, Martyn. Enough. That's pretty much what I want to say when Arporn goes on about the chicken processing industry. I could have told you about the head, the neck, the intestines, the liver, the BLOOD! All gets used. But I spared you that or it wouldn't be giant woks in your dreams.

Sorry no picture of the wok (vat, in fact) but it was too big, quite high off the ground and in a confined space. The wok/shallow bowl shape is very efficient at spreading the heat, that's the main thing.
Hope my links work in tomorrow's post. No pics though.