AGRICULTURE

Thailand's agricultural economy is expected to grow at a slower pace of 3.5% to 4.5% in 2013, with a weak global economy and natural catastrophes remaining major risks.

The forecast assumes world economic growth of 3.6% and Thai economic growth of 4.5% to 5.5% as determined by the National Economic Social Development Board and 4.1% to 5.1% in the view of the central bank.

For 2012, the economy of the Thai farm sector is on course to expand by 4% on top of 2011, lower than the projection of 4.5% to 5.5% from earlier this year.

Falling exports of several cash crops, especially rice and rubber, were to blame for the sluggish farm economy this year, according to the Office of Agricultural Economics (OAE).

Exports of major agricultural products fell substantially in the first 10 months of 2012 to some 724 billion baht, a 37.5% decline from the same period last year.

Rice exports fell by 30% in terms of value and 41% by volume during the period, while rubber exports dropped more than 30% in value though the amount shipped was unchanged.

Agriculture Minister Yukol Limlaemthong said weak demand in the global market resulted in falling rice exports as buyers shifted to lower-priced rice from India and Vietnam.

Other food items also saw adverse effects from the stiff economies in the Europe and the United States, which both showed a big reduction in buying Thai foods during January to October.

Thailand's food exports to the EU fell 45% year-on-year to 70 billion baht, while those to the US slipped 46% to 69 billion baht.

However, growth in the crop sector is seen finishing at 5.5% in 2012 and in a range of 4% to 5% next year under good climate conditions and expansion of growing and harvesting areas.

As for farm prices, they are expected to remain stagnant because of the continued rice pledging plan, under which the government pays 15,000 baht a tonne for regular white rice paddy and 20,000 baht a tonne for fragrant Hom Mali paddy.

Despite falling exports, rice production has increased sharply as farmers have expanded plantations to benefit from high payments from the rice pledging scheme.

Rice plantation area rose to 79.59 million rai for the 2012-13 main and second crops, up from 78.81 million rai for the previous crop. Notably, area for growing second-crop rice _ mainly at well-irrigated sites _ rose by more than 1 million rai to reach 17 million rai.

OAE secretary-general Apichart Jongskul said rice production for 2013 may increase to more than 37 million tonnes, with 26 million from the main crop and 11 million from the second crop.

Mr Apichart had suggested earlier that the government improve its marketing plan by accelerating exports of rice to reduce state burdens.

Yesterday he cautioned that climate phenomena would be a critical risk in 2013 after a severe drought hit harvests in the US this year and harsh cold harmed grain production in Russia and elsewhere.

Aside from dry weather, Mr Apichart said local high interest rates could dampen exports because the condition could draw significant foreign capital inflows and strengthen the Thai baht, ultimately reducing the competitiveness of Thai exports.

But he expressed optimism that farm and food shipments will still have export opportunities, even in the EU countries, if Thai manufacturers can improve production to add value and meet market demands.

"People in Europe are still rich, but they will be more selective when buying luxury items, not food," Mr Apichart said after visiting the continent last week.