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NEWS UPDATES Asean Affairs           30   July  2011

Thailand should focus on agriculture

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The next Thai government needs to focus on water management and labour shortages if it wants to keep the agriculture sector competitive, says Thailand’s National Economic and Social Development Board (NESDB).

Agriculture accounted for 8.3 percent of gross domestic product (GDP) in 2010. If agro-industrial activities are included, the figure reaches 12.5 percent. The country aims to increase the contribution from agriculture and agribusiness to 15 percent of GDP in five years.

However, natural disasters may limit production in the region. In Thailand, production of palm and tapioca decreased due to floodsin 2010 and this year, but it only affected farmers marginally as crop prices also rose.

Ladawan Kumpa, the deputy secretary-general of the state planning agency, said the disasters had not been as drastic recently in Thailand as in other countries, but policymakers were worried about more frequent floods nationwide without a plan to protect the sector.

The sector also faces a labor shortage, both in household agriculture and agribusiness. In 2010, the sector employed 16-17 million people, or 43 percent of Thailand's total workforce of 38 million.

Many of these workers are old so the industry needs to concentrate of finding young workers to replace those who retire or die.

The industry also needs to develop better machinery to produce raw materials for agribusinesses, says the NESDB. This will help attract a better educated workforce to the sector. Ms. Ladawan said research and development would be the answer to develop new technology and machinery to add value to the industry. A study showed R&D could increase the value of farm products by 30-40 percent "It is the duty of the government to support an R&D budget to improve productivity. Thailand aims to increase its productivity by 5% for this sector," she said, adding that R&D may lag if farm prices rise too high as prosperity erodes incentives to improve.

For example, when rubber prices increased to 170 baht per kilogramme, farmers sold all their raw crops before any R&D could be done. However, such a high price for rubber is not sustainable with more output expected to enter the market from China, Laos, Cambodia and Burma in the next few years.

Ms Ladawan said privileges should be offered to farmers who preserve special crops in fertile land such as locations for Hom Mali rice, or local crops that are disappearing due to urban sprawl such as Bang Mod oranges and Nonthaburi durian.

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