Drought drains farm economy

Drought drains farm economy

Thailand's farm economy shrank 4.2% in the first half as a result of the drought, says the Office of Agricultural Economics (OAE).

The severe dry spell prompted the government to persuade farmers to delay planting rice for two months. The postponement is a major reason crops contracted by 7.3% in the first six months, said Lersak Rewtarkulpaiboon, secretary-general of the OAE.

"Second-crop rice production along the Chao Phraya basin and Mae Klong River dropped sharply, while production of other crops such as rubber, pineapple and oil palm were also affected by the drought," he said.

Despite cheap fuel and baht depreciation, Thailand's farm sector could not escape the global slowdown in imports, as Thailand's agriculture exports plunged nearly 10% in the first five months this year, said Mr Lersak.

Falling fuel prices also weakened the purchasing power of our trade partners in Africa and the Middle East, he said.

The fishery and livestock sectors gained slightly in the first half, up 2.2% and 2.1% respectively on higher shipments.

The OAE expects continued weakness in the crop sector, causing the Thai agriculture economy to contract this year by 4.3% to 3.3% compared with 1.2% growth in 2014 and a 1.5% gain in 2013.

In a separate development, the Commerce Ministry plans to start opening bids for 1.29 million tonnes of poor-quality rice in the government's stocks for industrial use later this month.

Commerce Minister Chatchai Sarikulya said the bids will be open to not only industries but also the private sector. Selling prices will be based on the condition of the rice, which will be sorted out by qualified surveyors. 

Rice with fungus will be sold for ethanol or biomass production, while that without fungus will be sold for animal feed production. 

The minister insisted it has not set advance ceiling prices at one baht per kilogramme for poor-quality rice as speculated.  

As of June 30, the government reported it had 15.11 million tonnes of rice in its stocks, with 9.15 million fit for human consumption and 5.89 million for industrial use.

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