What's new in business news: March 25, 2014

Brighter outlook for farm sector, waste disposal crackdown ordered & rubber prices rise as drought cuts supply.

TOXIC TORNADO: Thick smoke billows from a fire blazing through a rubbish dump on Phraeksa Road in Samut Prakan. The fire forced many residents living near the dump to evacuate. PHOTOS: THANARAK KHOONTON


Brighter outlook for farm sector  

The farm sector is on a path to recovery, with 2014 growth forecasts ranging from 2.3% to 3.3% thanks to the improving global economy and baht depreciation but drought and shrimp problems persist.  The weak global economy, severe drought and a declining shrimp industry were factors holding the farm economy's growth to 1.1% last year. The farm economy grew by 0.5% year-on-year in the first quarter compared with a 0.4% contraction in the same period last year.

Early mortality syndrome, the disease which began ravaging local shrimp farmers in late 2012, still plagued the fisheries sector in the first quarter, resulting in a 1.3% year-on-year contraction, which was actually an improvement from the abysmal 7.2% year-on-year contraction for all of 2013.

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Waste disposal crackdown ordered 

A fire that ravaged a garbage dumping site has prompted officials to beef up actions against illegal industrial waste disposal. Thailand currently produces 45.7 million tonnes of non-hazardous waste and 3.9 million tonnes of hazardous waste annually. Of the hazardous waste figure, only 25% is disposed legally.

Waste sorting and recycling factories are major problems causing illegal disposal, as they are not required to do environmental impact assessments (EIAs) and are not strictly regulated. These plants have mushroomed nationwide and are a likely loophole for illegal waste disposal. There are 1,256 waste sorting factories and 446 recycling factories nationwide. Operators can ask for waste sorting and recycling permits for only 800,000 baht each without the existence of any machinery. 

Ministry of Industry offices in each province have been asked to take action against the illegal dumping of industrial waste in landfills. Measures to be taken include the registration of vehicles transporting waste and the use of radio frequency identification (RFI) in tracking waste. The ministry is also planning to increase penalties for wrongdoers, who are currently liable to a maximum penalty of two years in prison and a 200,000-baht fine.

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Rubber prices rise as drought cuts supply

Bloomberg News agency

Rubber export prices from Thailand, the largest producer and shipper, will probably advance through May as raw material rates surge because of a drought. Latex prices are rising at a much faster pace than rubber sheet, which is unusual. Latex is the milky fluid produced by rubber trees. Buyers are accelerating purchases in anticipation of shortages during wintering.  Wintering typically takes place from February to May when there is a seasonal drop in latex output. Output in Thailand may total about 4 million tonnes this year, little changed from 2013, as wintering losses are compensated by new plantations.

Futures in Tokyo rallied from the lowest level since 2012 in February amid concern that drought in Southeast Asia will cut supplies. Production in Thailand, Indonesia and Malaysia may drop 6% to 8% this year because of drought conditions. It takes about two to four weeks for supply to decline after drought conditions occur, causing a lack of rubber for processing plants.  This low-production cycle may last longer than usual, which would  boost prices further. 

Rising latex prices are a sign that prices of rubber sheet will follow. The increase in export rates will be limited by ample global stockpiles. World production will outpace demand by more than 241,000 tons in 2014 for a fourth consecutive year of glut.

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About the author

Writer: Jon Fernquest
Position: Online Writer