DEVELOPMENT: A Grim World Bank Prediction for Thailand’s Farmers

By Marwaan Macan-Markar Reprint | | Print |

Marwaan Macan-Markar

BANGKOK, Apr 27 2005 (IPS) - It’s all bad news this year for Thailand’s farming communities, from where the bulk of the country’s poor come.

On Wednesday, the World Bank forecast that a combination of a severe drought in the country and falling agriculture prices in the global market would lead to a drop in farm incomes.

Such a dismal prediction comes on the heels of a seemingly good year Thai farmers had, at least on one front during 2004, when the price of rice – the main product of the rural agriculture sector – rose by 20 percent on the world market.

In 2005, however, the picture would not be that rosy. Global rice prices will only increase by 5.2 percent, the World Bank stated in a report assessing the state of Thailand’s economy. The bank also predicted that the prices of other major commodities like maize and palm oil would see sharp declines.

”The drought and expected fall in agriculture prices on international markets will combine to make rural income low this year,” said Kirida Bhaopichitr, the bank’s chief economist for Thailand, during the launch of the ‘Thailand Economic Monitor.’

The predictions for 2005 are in stark contrast to that of previous years where farm incomes rose by 20 percent between 2002 and 2004, helping to lift an estimated two million people out of poverty, she added.

The good year that farmers enjoyed in 2004 was largely due to the rice prices ”recovering from a slide in the price of rice in the global market since 1998,” a spokesman for the Food and Agriculture Organisation (FAO) told IPS.

But for the world’s rice exporting countries, of which Thailand is the leader, the upswing in prices last year was not as high as that fetched by the various rice varieties in 1996 – a record year in recent times.

According to the Rome-based U.N. food agency, the drop in rice production this year has also been due to floods. Last year, severe flooding destroyed huge crop areas and that saw significant falls in the annual harvest cycles between last June and this April. Coupled with that, this year the country is experiencing a severe drought – which has affected rice production figures badly.

Consequently, Thailand is expected to harvest only 25 million tonnes of rice this year, which is a seven percent decline. This will be the country’s lowest level of production since 1999.

In terms of exports, it will translate to Thailand shipping out 8.5 million tonnes this year, down from the 10.1 million tonnes sent to its overseas markets last year.

The World Bank’s forecast about a drop in farm incomes comes at a time when thousands of rural families are still trying to get over their huge poultry losses – due to the spread of bird flu.

The avian flu outbreak swept through Thailand and parts of South-east and North-east Asia since the beginning of January last year, resulting in millions of chickens being culled or dying due to the disease.

In Thailand, the lethal virus affected the incomes of over two million people, who make up the small-scale poultry sector in this country. ”Local chicken farming has dropped by 60 percent, with the number of farmers in 2004 dropping to 45,000 families,” the ‘Bangkok Post’ newspaper reported in its end-of-the-year review of the Thai economy.

The current drought, which has left a trail of destroyed crops in Thailand and its neighbours in South-east Asia, such as Cambodia, Laos and Vietnam, has been described in some quarters as the worst in recent years.

In mid-March, Thai authorities confirmed that 63 of the country’s 76 provinces had been hit, resulting in the destruction of an estimated 809,000 hectares of agricultural land at a cost of over 190 million U.S. dollars.

Ten areas in such agriculture rich provinces like Chiang Mai, in northern Thailand, were declared disaster zones by the government due to the bone-dry conditions.

In all, some 9.2 million people have been affected by this year’s drought, which began soon after the rainy season ended in December.

Last year, by contrast, an estimated four million people were affected by this seasonal drought in 47 of the county’s provinces.

Currently about 60 percent of the country’s population of 63.8 million people depends on farm incomes for their livelihood. Yet, they are among the lowest income earners in the country, with average monthly farm incomes of about 2,500 baht (62.50 U.S. dollars), according to government reports. Non-farm workers, by contrast, can fetch up to 7,500 baht (187.50 dollars) per month.

For the moment, the rural poor have little choice but to depend on the government’s assistance programmes, said the World Bank’s Kirida. ”This government (of Prime Minister Thaksin Shinawatra) has introduced many schemes to help people affected by the drought.”