Agriculture in Thailand Part A

Agriculture in ThailandAgriculture in ThailandPart APart A

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Agriculture in ThailandAgriculture in Thailand

References:References:Peter Warr (ed.)Peter Warr (ed.) 1993 1993, , The Thai Economy The Thai Economy in Transition, in Transition, Ch.Ch.22 “Agriculture” by Am “Agriculture” by Ammar, Suthad, and Direkmar, Suthad, and DirekThai Agriculture: From Engine of Growth Thai Agriculture: From Engine of Growth to Sunset Statusto Sunset Status, by Ammar Siamwalla, , by Ammar Siamwalla, 1996 1996 The Decline and Recovery of Thai The Decline and Recovery of Thai Agriculture: Causes, Responses, Prospects Agriculture: Causes, Responses, Prospects and Challenges,and Challenges, by Nipon Poapongsakorn, by Nipon Poapongsakorn, 20062006

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Agriculture in ThailandAgriculture in Thailand

References:References: (Optional) (Optional)

Chris Dixon: Chris Dixon: The Thai Economy: Uneven The Thai Economy: Uneven Development and InternationalisationDevelopment and Internationalisation, Ch. , Ch. 55

Ingram, Ch. Ingram, Ch. 22

The Political Economy of Productivity, ThThe Political Economy of Productivity, Thai Agricultural Development ai Agricultural Development 1880 - 19751880 - 1975, , by David Feeny, by David Feeny, 19821982

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I. Importance of AgricultureI. Importance of Agriculture

Past leading sector in the economyPast leading sector in the economy

Most population work and live in the sectorMost population work and live in the sector

Food, labor, and foreign exchange (top Food, labor, and foreign exchange (top exporter of rice, rubber, cassava)exporter of rice, rubber, cassava)

Raw materials for industries e.g. canning Raw materials for industries e.g. canning and rubber industriesand rubber industries

Environment: closely related to land, forest Environment: closely related to land, forest and waterand water

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I. Importance of AgricultureI. Importance of Agriculture

Agriculture’s output share in the economy:Agriculture’s output share in the economy:– Declining continuously from > 50% to Declining continuously from > 50% to

30% in the 70’s, to 20% in the 80’s, 30% in the 70’s, to 20% in the 80’s, remained constant at 10% since the 90’s remained constant at 10% since the 90’s to 2003, and slightly declined in recent to 2003, and slightly declined in recent yearsyears– If include agro-industries (food, If include agro-industries (food,

beverages, wood, rubber), increasing beverages, wood, rubber), increasing GDP share by another 10%GDP share by another 10%

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1970 1980 1988 1996 1997 1999

Agriculture 27.0% 20.6% 16.9% 9.5% 9.4% 10.1%

Manufacturing 16.0% 21.7% 23.0% 29.7% 30.2% 36.0%

Construction 5.3% 4.5% 4.0% 7.4% 5.7% 2.9%

Wholesale and Retail Trade 17.4% 16.9% 17.0% 16.5% 17.2% 16.0%

Transport and Communications

6.5% 6.7% 7.4% 7.4% 7.8% 9.4%

Banking 2.5% 2.8% 3.6% 7.1% 6.5% 3.2%

Real Estate ** ** ** 3.4% 3.3% 4.1%

Other Services 25.3% 26.8% 28.1% 18.9% 19.8% 18.4%

Gross Domestic Product, (GDP)

100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

66

77

2000 2001r 2002r 2003r 2004r 2005r 2006p

Agriculture 10.3% 10.4% 10.0% 10.5% 9.6% 9.0% 8.9%

Manufacturing 36.4% 36.2% 36.8% 38.0% 38.7% 38.9% 39.2%

Construction 2.5% 2.5% 2.5% 2.4% 2.4% 2.4% 2.4%

Wholesale and Retail Trade 15.8% 15.3% 14.8% 14.2% 14.0% 14.0% 13.8%

Transport and Communications 9.7% 10.1% 10.2% 9.8% 9.9% 10.0% 10.1%

Banking 2.8% 2.8% 3.0% 3.2% 3.4% 3.5% 3.4%

Real Estate 4.0% 4.0% 4.0% 3.9% 3.9% 3.9% 3.9%

Others 18.5% 18.8% 18.8% 18.0% 18.1% 18.2% 18.2%

Gross Domestic Product, (GDP) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

88

200

3200

42005r

2006r

2007p

Agriculture10.5

%9.6

%9.0

%9.0

%8.7

%

Manufacturing38.0

%38.7

%38.9

%39.1

%39.6

%

Services51.5

%51.7

%52.1

%51.9

%51.7

%

GDP100

%100

%100

%100

%100

%

II. OutputII. Output

High agricultural growth from the 1960’s High agricultural growth from the 1960’s up to mid-1980s due to unused land and up to mid-1980s due to unused land and export opportunitiesexport opportunities

Sharp slowdown since mid-1980’s, due to Sharp slowdown since mid-1980’s, due to cost-price squeezecost-price squeeze

Strong recovery since the 1997 crisis, baht Strong recovery since the 1997 crisis, baht depreciation and commodity price surgedepreciation and commodity price surge

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Structure (1960- 2003):Structure (1960- 2003):– Crops: 70% - 75% of agri. GDP, fluctuatingCrops: 70% - 75% of agri. GDP, fluctuating

– Livestock: 17% - 11% of agri. GDP, increasingLivestock: 17% - 11% of agri. GDP, increasing

– Fisheries: 6% - 19% of agri. GDP, increasingFisheries: 6% - 19% of agri. GDP, increasing

– Forestry: 2% - 8% of agri. GDP, decliningForestry: 2% - 8% of agri. GDP, declining

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Crops: RiceCrops: Rice

– Most important crop (historical, Most important crop (historical, economic and social)economic and social)

– Biggest in production value, planted Biggest in production value, planted area, number of farmers, and export area, number of farmers, and export earnings (world’s biggest exporter)earnings (world’s biggest exporter)

– Staple foodStaple food

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Crops: RiceCrops: Rice– Regional variationsRegional variations– Central: “rice bowl”, 45% of rice area, more Central: “rice bowl”, 45% of rice area, more

than half of total production, and bulk of than half of total production, and bulk of exportexport

– Northeast: 43% of rice area, less than 30% of Northeast: 43% of rice area, less than 30% of production, some jasmine rice for exportproduction, some jasmine rice for export

– North: 6% of rice area, 10% of productionNorth: 6% of rice area, 10% of production– South: 7% of rice area, 9% of production, rice South: 7% of rice area, 9% of production, rice

deficitdeficit1212


Crops: RiceCrops: Rice– Long-term declining trend in yield per rai Long-term declining trend in yield per rai

reversed in the 1960’s due to irrigation reversed in the 1960’s due to irrigation (vs. rain-fed), improved seeds, and (vs. rain-fed), improved seeds, and mechanization (tractors)mechanization (tractors)– Other factors: soil fertility, fertilizers & Other factors: soil fertility, fertilizers &

pesticides, transplanting (more labor-pesticides, transplanting (more labor-intensive) vs. broadcastingintensive) vs. broadcasting– Thailand’s rice yield per rai is among the Thailand’s rice yield per rai is among the

lowest in Asialowest in Asia1313


Crops: Upland cropsCrops: Upland crops

– High growth in 1960s and 1970’s for High growth in 1960s and 1970’s for upland crops in new land areas, mainly upland crops in new land areas, mainly for exportfor export

– Maize (corn), kenaf, cassava, and sugar-Maize (corn), kenaf, cassava, and sugar-canecane

– Land expansion rather than yield Land expansion rather than yield increase explain most growthincrease explain most growth

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– Declining share of rice, due to relative Declining share of rice, due to relative scarcity of paddy landscarcity of paddy land

– Proportion of rice area dropped from Proportion of rice area dropped from 77% in 1960 to 55% in 199077% in 1960 to 55% in 1990

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– Land use in 2003:Land use in 2003:

Paddy 53%Paddy 53%

Upland crops 18%Upland crops 18%

Tree crops 19%Tree crops 19%

Vegetables & flowers 1.4%Vegetables & flowers 1.4%

Others 8%Others 8%

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Structure of crop Structure of crop production by crop production by crop

typetype

0%

10%

20%

30%

40%

50%

60%

1950 1955 1960 1965 1970 1975 1980 1985

Paddy

Upland

Vegetable

Tree crop

Other

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– What triggered rapid expansion?What triggered rapid expansion?

Maize: Guatemala variety suited to Maize: Guatemala variety suited to Thai conditionsThai conditions

Kenaf: crop failure in PakistanKenaf: crop failure in Pakistan

Cassava: unexpected demand from EUCassava: unexpected demand from EU

Sugar-cane: protection to promote Sugar-cane: protection to promote import substitutionimport substitution

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Crops: RubberCrops: Rubber– Thailand is now the world’s largest producer Thailand is now the world’s largest producer

and exporterand exporter– Now the second most important crop, in terms Now the second most important crop, in terms

of production valueof production value– Introduced from Malaysia (1901) and grown Introduced from Malaysia (1901) and grown

mainly in the South, with some recent mainly in the South, with some recent expansion in the East and Northeast; over 90% expansion in the East and Northeast; over 90% exportedexported

1919


Crops: RubberCrops: Rubber– 80% of planted acreage are small holdings of 80% of planted acreage are small holdings of

<50 rai (different from other major producers)<50 rai (different from other major producers)– Continuous expansion in planted area, Continuous expansion in planted area,

production and yield (with replanting of high-production and yield (with replanting of high-yield trees since 1950’s)yield trees since 1950’s)

– Enjoy high prices in the last few years, due to Enjoy high prices in the last few years, due to buoyant world demand, notably in Chinabuoyant world demand, notably in China

2020


Crops: Fruits, Vegetables, FlowersCrops: Fruits, Vegetables, Flowers– World’s major producer and exporter of World’s major producer and exporter of

pineapple and orchidspineapple and orchids– Wide variety of fruits and vegetables for Wide variety of fruits and vegetables for

canning and fresh products: longan, asparagus, canning and fresh products: longan, asparagus, baby corn, bamboo shootsbaby corn, bamboo shoots

– Good potential for expansion, with better skill Good potential for expansion, with better skill in farming, processing and marketingin farming, processing and marketing

– More competition from Australia, NZ, and More competition from Australia, NZ, and China through FTAChina through FTA

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Livestock: CattleLivestock: Cattle

– Slow growth due to decline in buffalo Slow growth due to decline in buffalo being substituted by tractors, and low being substituted by tractors, and low technology for small holderstechnology for small holders

– High income elasticity of demand for High income elasticity of demand for beef: good potential for beefbeef: good potential for beef

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Livestock: DairyLivestock: Dairy

– Small farms and cooperatives for milk Small farms and cooperatives for milk collection and processingcollection and processing

– Can it survive competition from imports Can it survive competition from imports from Australia and NZ, via “Free Trade from Australia and NZ, via “Free Trade Agreement”?Agreement”?

2323


Livestock: Poultry and pork Livestock: Poultry and pork

– Highly successful thru modern breeds, Highly successful thru modern breeds, advanced raising methods, and low feed advanced raising methods, and low feed pricesprices

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– Large agribusiness firms (e.g. CP) Large agribusiness firms (e.g. CP) pioneered contract farming: firms pioneered contract farming: firms providing breed stock (baby chickens), providing breed stock (baby chickens), feeds, medicines to contract farmers feeds, medicines to contract farmers (using labor and skill), and buy back at (using labor and skill), and buy back at guaranteed pricesguaranteed prices

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– Competitive prices promote domestic Competitive prices promote domestic consumption and exportsconsumption and exports

– Recent avian flu affecting poultry, Recent avian flu affecting poultry, particularly “open” small farmsparticularly “open” small farms

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Fisheries: Fisheries:

– Marine fishery more important than Marine fishery more important than fresh waterfresh water

– Rapid growth in 1960’s due to intensive, Rapid growth in 1960’s due to intensive, motorized fishing technique (destructive)motorized fishing technique (destructive)

– Fishing abroad limited by 200-mile Fishing abroad limited by 200-mile exclusive economic zones (1970’s) and exclusive economic zones (1970’s) and high oil priceshigh oil prices

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Fisheries: Fisheries:

– Canning of seafood, including imported tunaCanning of seafood, including imported tuna

– Prawn aquaculture: largest producer and Prawn aquaculture: largest producer and exporter of black tiger prawn and white exporter of black tiger prawn and white prawnprawn

– Prawn farming in coastal areas Prawn farming in coastal areas unregulated mangrove destruction, affecting unregulated mangrove destruction, affecting marine environmentmarine environment

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III. InputIII. Input

Land, Labor, Capital, TechnologyLand, Labor, Capital, TechnologyLand:Land:

– Major cause of crop expansionMajor cause of crop expansion

– Land expansion possible due to roads Land expansion possible due to roads (access to markets) and tractors (easier (access to markets) and tractors (easier land clearing by loggers/farmers)land clearing by loggers/farmers)

– Farm land expanded at expense of Farm land expanded at expense of forestsforests

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Land:Land:

– Forest VS farmland Forest VS farmland

19501950 19701970 19801980 19881988

Forest 66% 44% 24% 19%Forest 66% 44% 24% 19%

Ag. Land 32% 50% 54% 60%Ag. Land 32% 50% 54% 60%

– End of land surplus in 1980sEnd of land surplus in 1980s

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Land Utilization (1950-Land Utilization (1950-1990)1990)

0

10

20

30

40

50

60

70

80

1950 1960 1970 1980 1990

Forest land

Paddy land

Field crops

Tree crops

Vegetables and flowers

Other

3131


Land:Land:

– Agriculture of small holders, not large Agriculture of small holders, not large plantations: average farm size of about plantations: average farm size of about 25 rai (10 acres)25 rai (10 acres)

3232


LaborLabor

Agriculture’s labor share in total labor Agriculture’s labor share in total labor force:force:

– Declining, but not as fast as outputDeclining, but not as fast as output

– 1960: 82%; 1970: 78%; 1980: 71%; 1960: 82%; 1970: 78%; 1980: 71%; 1990: 66%; 2001: 41%; 2008: 39% (15 1990: 66%; 2001: 41%; 2008: 39% (15 million of 37 million labor force)million of 37 million labor force)

3333


LaborLabor


– Exaggerated agri. labor figures, as off-Exaggerated agri. labor figures, as off-farm income is found to be important: farm income is found to be important: about 80% of agri. households in 2003 about 80% of agri. households in 2003 earn also from non-agri. sources earn also from non-agri. sources (handicraft, factory work, etc.)(handicraft, factory work, etc.)

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– in 2003, 5.8 mill. households are in agri. in 2003, 5.8 mill. households are in agri. 22 mill. persons or 36% of total 22 mill. persons or 36% of total population (62 mill.)population (62 mill.)

3535


Public Capital:Public Capital:

– Roads and irrigation (up to 1984)Roads and irrigation (up to 1984)

– Irrigation mainly in central plain and Irrigation mainly in central plain and north, especially for rice; need upgrading north, especially for rice; need upgrading for non rice cropsfor non rice crops

– Road development: dominated by Road development: dominated by strategic rather than economic strategic rather than economic considerationsconsiderations

3636


Private Capital: Land development and Private Capital: Land development and machinery, particularly small tractorsmachinery, particularly small tractors

3737


Technology:Technology:– Little technological change in crop, Little technological change in crop,

except machine and new crop varieties except machine and new crop varieties (rice, corn, cassava), explaining low yields(rice, corn, cassava), explaining low yields

3838


Technology:Technology:– Passive government technological Passive government technological

promotion, inadequate R&D: no self-promotion, inadequate R&D: no self-sufficiency drivesufficiency drive– Public research following, not leading Public research following, not leading

comparative advantagecomparative advantage– Active private agro-business role in Active private agro-business role in

livestock and farmers’ new crop adoptionlivestock and farmers’ new crop adoption

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Agriculture in Thailand Part A

Documents

rice area

exporter of rice

rice bowl

jasmine rice

thai economy

recovery of thai agriculture

output crops

direkthai agriculture