The Russia-Ukraine war has severely affected the supply of fertiliser which is an important material for the farming sector. The situation, nevertheless, should be a trigger for the government to turn a crisis into opportunity.
Prime Minister Prayut Chan-o-cha has ordered a close watch on the retail price of the product. However, the government has yet to come up with any measures to deal with the problem which has resulted in an increase in production costs, affecting Thai food prices and export competitiveness.
Russia is the world's second largest oil exporter, and top producer and exporter of chemical fertiliser, a by-product of petroleum production, representing about 13% the world's total output.
Russia is a major producer of potash, phosphate and nitrogen-containing fertilisers, which are major crop and soil nutrients. It produces more than 50 million tonnes of fertiliser a year, around 25% of the world's production.
In fact, fertiliser prices had already increased substantially over the last several months prior to the Russian invasion of Ukraine due to high oil prices, and the prices are currently exacerbated by the Russia-Ukraine conflict.
Thailand imported 500,000 tonnes of fertiliser from Russia last year, using a port in Ukraine. Each year, Thailand imports a total of 5 million tonnes of fertiliser worth about 70.1 billion baht, mainly from the Middle East, Belarus, Russia, Canada, China and Europe.
Thailand's demand for fertiliser is about 5 million tonnes a year, but the country is capable of producing only 8% of domestic demand. The government should learn from the situation and turn a crisis into an opportunity to drive its policy to reduce the dependence of imported fertilisers by promoting organic farming.
The amount of organic farm products in Thailand is small compared to rising demand worldwide. BlueWeave Consulting, the marketing research consultant, estimated the global market size of organic farm products at US$96.1 billion, or about 3.2 trillion baht, in 2020, while Thailand's export value of the products is as small as two billion baht a year.
A strategy for organic farming promotion and development appears in the Prayut government's 20-year national strategy but it sounds like hot air because so little is put into practice. That may be because the country's agriculture sector enjoyed low prices of fertiliser over the past several years.
The government has an ambitious goal to make Thailand a global food-producing "superpower" within two decades but it been slow in preparing for the change. Last fiscal year, the government spent 1.9 billion baht promoting organic farming projects nationwide. Needless to say, the budget was too meagre to cause any change.
It could have invested more resources to improve its capacity to test agriculture products for chemical residues and educate consumers and farmers on the matter.
The government is set to introduce a package of reforms that would help transform the sector's cultivation, processing and marketing techniques through new innovations, strengthening both agriculture and manufacturing, and promoting food security and innovation.
The state must create an economy that fosters organic farming and sustainable agriculture by providing subsidies to boost the prices of chemical-free farm products.
Importantly, shifting to organic and higher-value production requires more incentives not only for farmers, but also for other partners in value changes as well as effective marketing support.