The Thai coffee industry remains promising but needs to shift its focus to specialty coffees to cope with intensifying competition induced by regional economic integration over the next three years, say industry experts.
"Although Thailand's coffee production remains low compared with other Asean countries such as Vietnam and Indonesia, Thailand has high potential to grow as the regional centre for coffee, given the quality of Thai-grown coffee, production processes and the favourable geographical location," said Varri Sodprasert, president of the Thai Coffee Association.
"We may blend Thai indigenous coffee with imported ones, but its quality, odour and flavour need unique development to make it a Thai formula."
The association's members, which include exporters, instant-coffee makers and coffee growers, will team up to focus on specialty products to raise Thai coffee's competitiveness.
Even as coffee consumption grows in Thailand each year, the country remains a net coffee importer. Several coffee growers have shifted to other lucrative plants such as rubber and oil palm because of their higher market prices.
Thailand's coffee production has dropped over the last six years to an estimated 40,000 tonnes this year.
Coffee has been grown in Thailand for more than 100 years. The country officially became a coffee exporter in 1976, selling 850 tonnes of robusta coffee.
Helped by strong world market prices in the 1980s, exports thrived, culminating in a peak in 1991-92 of 60,000 tonnes.
The collapse of the International Coffee Agreement in July 1989 and the following slump in world prices hit farmers hard. Facing an oversupply, the Thai government initiated a five-year plan in 1992 to encourage coffee farmers to switch crops.
From having a plantation area of almost 400,000 rai in 1992, Thailand is estimated to have only 280,000 rai this year, down from 310,000 rai last year.
Domestic consumption is estimated at 70,000 tonnes a year, with average growth of about 10% a year.
Thailand imports about 25,000 tonnes to supply instant coffee makers.
Per capita consumption of coffee is estimated at about 200 cups per year in Thailand, relatively low compared with 500 cups in Japan and 700-800 cups in the United States.
The Thai coffee market is worth about 30 billion baht but is mainly dominated by instant coffee and three-in-one packs.
Suthum Vichutraipop, president of the Coffee Farmers Foundation, said the lucrative market is expected to attract capital-rich investors to invest in plantations and development.