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Agriculture in Thailand Part A

Agriculture in Thailand Part A. Agriculture in Thailand. References: Peter Warr (ed.) 1993 , The Thai Economy in Transition, Ch. 2 “Agriculture” by Ammar, Suthad, and Direk Thai Agriculture: From Engine of Growth to Sunset Status , by Ammar Siamwalla, 1996

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Agriculture in Thailand Part A

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  1. Agriculture in ThailandPart A

  2. Agriculture in Thailand References: • Peter Warr (ed.) 1993, The Thai Economy in Transition, Ch.2 “Agriculture” by Ammar, Suthad, and Direk • Thai Agriculture: From Engine of Growth to Sunset Status, by Ammar Siamwalla, 1996 • The Decline and Recovery of Thai Agriculture: Causes, Responses, Prospects and Challenges, by Nipon Poapongsakorn, 2006

  3. Agriculture in Thailand References: (Optional) • Chris Dixon: The Thai Economy: Uneven Development and Internationalisation, Ch. 5 • Ingram, Ch. 2 • The Political Economy of Productivity, Thai Agricultural Development 1880 - 1975, by David Feeny, 1982

  4. I. Importance of Agriculture • Past leading sector in the economy • Most population work and live in the sector • Food, labor, and foreign exchange (top exporter of rice, rubber, cassava) • Raw materials for industries e.g. canning and rubber industries • Environment: closely related to land, forest and water

  5. I. Importance of Agriculture • Agriculture’s output share in the economy: • Declining continuously from > 50% to 30% in the 70’s, to 20% in the 80’s, remained constant at 10% since the 90’s to 2003, and slightly declined in recent years • If include agro-industries (food, beverages, wood, rubber), increasing GDP share by another 10%

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  8. II. Output • High agricultural growth from the 1960’s up to mid-1980s due to unused land and export opportunities • Sharp slowdown since mid-1980’s, due to cost-price squeeze • Strong recovery since the 1997 crisis, baht depreciation and commodity price surge

  9. II. Output • Structure (1960- 2003): • Crops: 70% - 75% of agri. GDP, fluctuating • Livestock: 17% - 11% of agri. GDP, increasing • Fisheries: 6% - 19% of agri. GDP, increasing • Forestry: 2% - 8% of agri. GDP, declining

  10. II. Output • Crops: Rice • Most important crop (historical, economic and social) • Biggest in production value, planted area, number of farmers, and export earnings (world’s biggest exporter) • Staple food

  11. II. Output • Crops: Rice • Regional variations • Central: “rice bowl”, 45% of rice area, more than half of total production, and bulk of export • Northeast: 43% of rice area, less than 30% of production, some jasmine rice for export • North: 6% of rice area, 10% of production • South: 7% of rice area, 9% of production, rice deficit

  12. II. Output • Crops: Rice • Long-term declining trend in yield per rai reversed in the 1960’s due to irrigation (vs. rain-fed), improved seeds, and mechanization (tractors) • Other factors: soil fertility, fertilizers & pesticides, transplanting (more labor-intensive) vs. broadcasting • Thailand’s rice yield per rai is among the lowest in Asia

  13. II. Output • Crops: Upland crops • High growth in 1960s and 1970’s for upland crops in new land areas, mainly for export • Maize (corn), kenaf, cassava, and sugar-cane • Land expansion rather than yield increase explain most growth

  14. II. Output • Crops: Upland crops • Declining share of rice, due to relative scarcity of paddy land • Proportion of rice area dropped from 77% in 1960 to 55% in 1990

  15. II. Output • Crops: Upland crops • Land use in 2003: Paddy 53% Upland crops 18% Tree crops 19% Vegetables & flowers 1.4% Others 8%

  16. Structure of crop production by crop type

  17. II. Output • Crops: Upland crops • What triggered rapid expansion? • Maize: Guatemala variety suited to Thai conditions • Kenaf: crop failure in Pakistan • Cassava: unexpected demand from EU • Sugar-cane: protection to promote import substitution

  18. II. Output • Crops: Rubber • Thailand is now the world’s largest producer and exporter • Now the second most important crop, in terms of production value • Introduced from Malaysia (1901) and grown mainly in the South, with some recent expansion in the East and Northeast; over 90% exported

  19. II. Output • Crops: Rubber • 80% of planted acreage are small holdings of <50 rai (different from other major producers) • Continuous expansion in planted area, production and yield (with replanting of high-yield trees since 1950’s) • Enjoy high prices in the last few years, due to buoyant world demand, notably in China

  20. II. Output • Crops: Fruits, Vegetables, Flowers • World’s major producer and exporter of pineapple and orchids • Wide variety of fruits and vegetables for canning and fresh products: longan, asparagus, baby corn, bamboo shoots • Good potential for expansion, with better skill in farming, processing and marketing • More competition from Australia, NZ, and China through FTA

  21. II. Output • Livestock: Cattle • Slow growth due to decline in buffalo being substituted by tractors, and low technology for small holders • High income elasticity of demand for beef: good potential for beef

  22. II. Output • Livestock: Dairy • Small farms and cooperatives for milk collection and processing • Can it survive competition from imports from Australia and NZ, via “Free Trade Agreement”?

  23. II. Output • Livestock: Poultry and pork • Highly successful thru modern breeds, advanced raising methods, and low feed prices

  24. II. Output • Livestock: Poultry and pork • Large agribusiness firms (e.g. CP) pioneered contract farming: firms providing breed stock (baby chickens), feeds, medicines to contract farmers (using labor and skill), and buy back at guaranteed prices

  25. II. Output • Livestock: Poultry and pork • Competitive prices promote domestic consumption and exports • Recent avian flu affecting poultry, particularly “open” small farms

  26. II. Output • Fisheries: • Marine fishery more important than fresh water • Rapid growth in 1960’s due to intensive, motorized fishing technique (destructive) • Fishing abroad limited by 200-mile exclusive economic zones (1970’s) and high oil prices

  27. II. Output • Fisheries: • Canning of seafood, including imported tuna • Prawn aquaculture: largest producer and exporter of black tiger prawn and white prawn • Prawn farming in coastal areas  unregulated mangrove destruction, affecting marine environment

  28. III. Input • Land, Labor, Capital, Technology • Land: • Major cause of crop expansion • Land expansion possible due to roads (access to markets) and tractors (easier land clearing by loggers/farmers) • Farm land expanded at expense of forests

  29. III. Input • Land: • Forest VS farmland 1950197019801988 Forest 66% 44% 24% 19% Ag. Land 32% 50% 54% 60% • End of land surplus in 1980s

  30. Land Utilization (1950-1990)

  31. III. Input • Land: • Agriculture of small holders, not large plantations: average farm size of about 25 rai (10 acres)

  32. III. Input • Labor • Agriculture’s labor share in total labor force: • Declining, but not as fast as output • 1960: 82%; 1970: 78%; 1980: 71%; 1990: 66%; 2001: 41%; 2008: 39% (15 million of 37 million labor force)

  33. III. Input • Labor • Agriculture’s labor share in total labor force: • Exaggerated agri. labor figures, as off-farm income is found to be important: about 80% of agri. households in 2003 earn also from non-agri. sources (handicraft, factory work, etc.)

  34. III. Input • Agriculture’s labor share in total labor force: • in 2003, 5.8 mill. households are in agri.  22 mill. persons or 36% of total population (62 mill.)

  35. III. Input • Public Capital: • Roads and irrigation (up to 1984) • Irrigation mainly in central plain and north, especially for rice; need upgrading for non rice crops • Road development: dominated by strategic rather than economic considerations

  36. III. Input • Private Capital: Land development and machinery, particularly small tractors

  37. III. Input • Technology: • Little technological change in crop, except machine and new crop varieties (rice, corn, cassava), explaining low yields

  38. III. Input • Technology: • Passive government technological promotion, inadequate R&D: no self-sufficiency drive • Public research following, not leading comparative advantage • Active private agro-business role in livestock and farmers’ new crop adoption

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