After flooding in many provinces last month, the Thai economy and its crucial export sector face another threat as the weather becomes more arid -- drought.
Though exports improved in August for the first time in 11 months after a long decline, a drought could deal a blow to food manufacturing and shipments.
Water scarcity has been a concern since early this year, and despite higher rainfall from June to October, the Agriculture and Cooperatives Ministry remains worried about the upcoming dry season as El Niño-induced drought is expected to begin in November.
Water shortages can cause a wide range of impacts on exports, people's purchasing power, GDP growth and even food security, warned the Federation of Thai Industries (FTI).
The Thai agricultural sector is dependent on water supplies. Without a sufficient amount, farmers will harvest fewer or no crops, which affects food manufacturers who use farm produce as raw materials, as well as food exporters.
"Thailand is a major food exporter globally. Its rice and sugar cane are among the famous agricultural products," said Kriengkrai Thiennukul, chairman of the FTI.
He stressed the need for the government to prepare for drought conditions and implement solutions to limit the impact.
A shipping vessel is docked at Laem Chabang deep-sea port in Chon Buri province. Drought can deal a blow to the export of agricultural and food products.
FEWER HARVESTS
Sugar cane is one of the crops that will struggle during a drought.
The FTI expects lower rainfall to reduce sugar cane output in the new crop year of 2023-24 to 80 million tonnes, down from the 100-105 million tonnes projected earlier.
The smaller yield not only affects farmers' earnings, but also sugar production in the country.
"Thailand is a top five sugar exporter. If drought occurs, the Thai sugar industry may lose out to the competition," said Mr Kriengkrai.
Roughly 16.5 million rai of farmland across the country will be affected by lower rainfall caused by the El Niño phenomenon this year, the Agriculture and Cooperatives Ministry said earlier.
El Niño is a cyclical phenomenon that causes ocean warming in the tropical Pacific, bringing drought to many countries and rainfall and flooding to others.
In August, water levels at Lam Takhong Dam in the northeastern province of Nakhon Ratchasima dropped to the lowest in a decade, with the dam holding 133 million cubic metres of water, or 42% of its capacity.
The situation affects an area of 277,000 rai across 10 villages, officials said.
According to the Royal Irrigation Department's forecast, by the end of this year's rainy season in November, the nation's 35 major reservoirs will hold about 22.8 billion cubic metres of water, about 13 billion cubic metres less than last year.
To brace for the dry season, farmers are advised to grow crops that are more drought-resistant, such as beans, in lieu of a second crop of rice.
Local authorities will also seek alternative water sources to help irrigate affected farmlands, Mr Kriengkrai said.
A farmer tills the land in Suphan Buri's Sam Chuk district to grow sugar cane. Patipat Janthong
NEW THREAT
If a drought turns severe in the dry season, harvests will be reduced and crop quality will be affected, damaging food manufacturing businesses and the export sector.
A number of workers will suffer as food manufacturing is a labour-intensive industry, he said.
The FTI expects the Thai agricultural sector to experience reduced rainfall for at least three years, from 2023 to 2025.
According to the 2021 Global Climate Risk Index, Thailand was ranked as No.9 among 180 nations in terms of direct economic losses from weather-related impact between 2000 and 2019.
Drought can cause economic damage worth 53 billion baht if its impact is not curbed, said Mr Kriengkrai.
The economy is already trying to overcome sluggish exports, while the tourism industry has yet to see a full recovery, he said.
According to the Commerce Ministry, exports increased for the first time in 11 months in August, supported by improved signals from the global manufacturing sector, positive consumer spending and an expanding service sector among trading partners.
The customs-cleared value of exports rose by 2.6% year-on-year in August to US$24.3 billion, while imports contracted by 12.8% to $23.9 billion, resulting in a trade surplus of $360 million.
Exports of agricultural and agro-industrial products contracted by 1.5% year-on-year in August to $4.03 billion, while industrial product exports expanded by 2.5% to $19.2 billion.
The Joint Standing Committee on Commerce, Industry and Banking announced in early September it would downgrade its export growth forecast to a contraction of -2% to -0.5% this year, dipping from an earlier projection of -2% to 0%.
The committee also slashed its GDP growth prediction for 2023 from 3-3.5% to 2.5-3%.
The revised outlook was attributed to GDP growth of only 1.8% in the second quarter of this year, missing the private sector's projection of 3.1%.
However, if Thailand is spared from the severe impact of drought and does not encounter other obstacles to farming yields, then food exports, a key driver of GDP, will increase by 2.1% year-on-year to 1.5 trillion baht in value this year, said the National Food Institute.
The increase results from the easing of the pandemic and worries over food insecurity, which caused foreign countries to stockpile food, said the institute.
A truck loaded with freshly harvested sugar cane heads for the mill. Sugar cane output in the crop year of 2023-24 is likely to reduce due to lower rainfall. Thanarak Khunton
FOOD INSECURITY
In the 2022 Global Report on Food Crises, the Food and Agriculture Organization reported nearly 193 million people in 53 countries faced food insecurity.
An additional 40 million people were affected in 2022 as food prices rose, dealing a blow to low-income earners, who usually spend at least half of their earnings on food, noted the report.
Climate change, which results from human-made global warming, was blamed for causing natural disasters, including severe drought, which marred agricultural production.
A growing global population, shrinking amounts of agricultural land, and the emergence of epidemics and geopolitical conflicts also intensified food insecurity.
"Many countries such as India and Vietnam are preparing food security plans by controlling their rice exports to ensure there is ample rice for domestic consumption," said Mr Kriengkrai.
AFFECTED INDUSTRIES
In the manufacturing sector, the government must accelerate measures to reduce the impact of drought, especially in the Eastern Economic Corridor (EEC), said Somchai Wangwattanapanich, vice-chairman of the FTI and chairman of the Water and Environment Institute for Sustainability under the FTI.
The EEC, which covers parts of Chon Buri, Rayong and Chachoengsao, is being developed into a high-tech industrial hub.
The rainy season can often ease concerns over water scarcity, but the amount of rainfall in Thailand this year is expected to significantly decline, with the eastern region forecast to be particularly dry, said Mr Somchai.
"We want water management that has both short- and long-term plans for factories in the East, especially those in the EEC," he said.
Urgent measures should include a plan to prepare water pumps and divert water from areas, including the Bang Pakong River, to the Prasae Reservoir in Rayong, which is in the EEC area, said Mr Somchai.
Authorities also need to revise the 20-year water resource development plan to better cope with drought for the next 1-3 years, he said.
"As for manufacturers, they plan to focus on the three R's -- reduce, reuse and recycle water -- as well as supporting farmers to adopt technology to save water," said Mr Somchai.
