Nipon Poapongsakorn, Thailand Development Research Institute Presented at the ReSAKSS-Asia conference “Agriculture and Rural Transformation in Asia: Past Experiences and Future Opportunities”. An international conference jointly organized by ReSAKSS-Asia, IFPRI, TDRI, and TVSEP project of Leibniz Universit Hannover with support from USAID and Deutsche Forschungsgemeinschaft (DFG) at the Dusit Thani Hotel, Bangkok, Thailand December 12–14, 2017.

1. Transformation of the Thai agriculture in the
last three decades*
Nipon Poapongsakorn
Thailand Development Research Institute
“Agriculture and Rural Transformation in Asia : Past Experiences
and Future Opportunities” A regional conference organized by
RESAKSS-Asia, RESAKSS-Asia, IFPRI,TDRI and TVSEP Project of
Leibniz University Hannover, Bangkok.
12-14 December 2017
1
*Adapted from Ammar Siamwalla and Nipon Poapongsakorn,
“Transformation of the Thai rice economy in the last two decades”, the Thai
Studies International Conference. Chiangmai. 16 July 2017

2. Summary
 The presentation describes the major structural
transformation of Thai agriculture, including an
emergence of modern food value chain in the last
three decades using the historical approach
• The transformation is induced by industrialization, export
market opportunities, import pressure for safe food,
increasing per capita income, government policies and
institutional change
 The evaluation of long-term agricultural development
focuses on the sources of competitiveness of Thai
agriculture, using the trade theory of economies of
scale and clusters which is mostly neglected by
agricultural economists.
 Both internal and external challenges facing Thai
agriculture are identified, with some policy
implications focusing on boosting agricultural
productivity for smallholders, accelerate agricultural
growth, and reducing income inequality.
2

3. Topic of discussion
1. Preliminaries
2. Narrative history I
3. Narrative history II
4. Evaluation of the long-term development
5. Challenges to the future of Thai agriculture
3

4. 1. Preliminaries
 Some Historically Unique Features of Thailand (relative to other
countries of Monsoon Asia)
• Favorable man/land ratio due to remaining forest between 1960s and
early 1980s, yet most private lands did not have title deeds (see
Appendix 1)
• Population growth resulted in agricultural land expansion through forest
clearance in the 1960s-1970s;
• Relatively poor water resources; hence lower ratio of irrigated to total
land area;
• No policy urgency to provision the cities, except the rice premium
(export tax)
 Hence not suited to ‘classical’ Green Revolution in the 1970s and 1980s,
also because that phase of Green Revolution did not pay attention to
rice quality which is a major concern for the Thai rice market
 Unlike other Asian countries, Thai governments have always adopted
the laissez faire policy and invested heavily in rural infrastructure since
the late 1950s
• Rural road network, dams, rural electrification, rural schools and agricultural credit
bank, ports and logistics, etc.
 Therefore Thailand became regular exporter, and eventually the
world major exporter of rice, rubber, cassava, shrimp, canned
pineapple, etc. (Fig. 1-a and 1-b)

5. 2. Narrative History I: 1986-1998
 Agriculture as a sunset industry because of
several difficulties, particularly depressed world
rice price in the 1980s, and loss of traditional
comparative advantage (caused by Dutch
disease) in the 1990s
• The government was forced to cease its traditional
rice export taxing policy which had adverse impact on
rural-urban income disparity (Ammar and Suthad
1996).
• Since then, Thai trade policy has been neutral (Warr).
• Abolition of the fixed exchange rate in 1998 restored
agricultural competitiveness

6. 2. Narrative History I: 1986-1998 (cont.)
 Structural Transformation: The industrial boom
in the late 198os caused an exodus of one
generation of young rural workers resulted in
labor scarcity.
• Fig. 3: Agricultural workers by age groups
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Millions
15-24 Years old 25-34 Years old 35-44 Years old
45-54 Years old >54 Years old
crisis >54
45-54
35-44
25-34
15-24
Source: LFS, NSO.

7. 2. Narrative History I (cont.)
 Structural Transformation (con.)
• Emergence of labor scarcity leading
to early mechanization (in land
preparation); and later supplemented
by other labor-saving machineries
and agricultural practices (Fig. 3);
 Mechanization is possible for small
farms, thanks to the active market for
hired farm machinery services
 Fee for hiring combine harvester has
remained constant for 10 years.

8. 0
5,000
10,000
15,000
20,000
25,000
30,000
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
x100000
Number of agricultural machinery
Tractor (Left) Rice transplanter Combine Harvester
Fig. 4: Agricultural machinery sales growth 30%
Source: Brand new, Siam Kubota.

9. 2. Narrative History I (cont.)
 Other structural transformation
• Thai government began to do research and
release new rice varieties based on quality
 This establishes Thailand as a quality rice producer
(Fig. 5 - Thai rice price is higher than Vietnam).
• The emergence of contract farming, started in
the mid 1970s by agribusiness firms in poultry,
tomato and sugar cane, thanks to the adoption
of contractual institutional arrangements for
poultry & tomato from the US companies
 Number of contract farms quickly surged during the 1980s
and 1990s, thanks to the competition among contractors
and almost no government intervention

10. 3. Narrative History II: winds of
change between 2000-2016
 Structural change stalled in the 2000s
due to slower economic growth (Fig. 7-a)
• After 1997, migration of workers to
industrial employment slowed down,
coinciding with a slowdown in labor supply
stemming from a decline in fertility starting
in 1975. (Fig 7-B).
• Migration slightly reversed in the early
2010s.

11. Figure 7-a: Stall structural
change after 2008
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Millions
15-24 Years old 25-34 Years old
35-44 Years old 45-54 Years old
>54 Years old
Source: LFS, NSO.
>54
45-54
35-44
25-34
15-24
crisis
Slow-down migrants
Fig. 7-B: Migration

12. 3. Narrative History II: winds of change
between 2000-2016
 The economic stagnation following the 1997 crisis led to a
policy shift towards favoring high paddy prices for farmers,
culminating in the great paddy pledging fiasco of 2013-2015
(Fig. 5);
 Such interventions are different from previous
interventions which are mostly at the border: governments
became active traders, holding and then releasing large
stocks of rice, and having impact on movements of
international rice price (Fig. 5).
 Government trading means decline in rice quality and rice
export, huge fiscal loss (USD18.4 billion in 2.5 years) and
corruption (particularly in the government rice sale-
estimated at USD 3 billion) (Nipon and Kamphol 2016).
 After the military coup in May 2014, the price mechanism
has returned to guide agricultural resource allocation.

13. Figure 5: Paddy production and prices 1961-2016
0
5
10
15
20
25
30
35
40
45
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
Millionston
Paddy production - Thailand
Wet season Dry season
Source: OAE.
Paddypledgingscheme
0
100
200
300
400
500
600
700
800
900
1000
1960M01
1962M10
1965M07
1968M04
1971M01
1973M10
1976M07
1979M04
1982M01
1984M10
1987M07
1990M04
1993M01
1995M10
1998M07
2001M04
2004M01
2006M10
2009M07
2012M04
2015M01
Effective price of rice (white
rice 5%)
Pledging price@15000 B./mt, nominal$
Rice, Thailand, 5%, $/mt, nominal$
Paddy pledging

14. 3. Narrative History II (cont.)
 Yet the 2000-2016 period was also a period of
institutional transformation in food value
chain
• The demand for safe food imports by the EU and
USA put pressure on the Thai exporters and government
to jointly introduce new institution of safe food standards
and traceability
• Dietary change and demand for safe food as a result
of rising middle class
• The rise of foreign supermarket in the late 1990s and
the organic farmer groups
 Supermarkets use the central procurement system to
impose food standards and stable supply price
 Farmer groups producing organic products, thanks to
IFOAM, OXFAM’s fair trade practices and NGOs (Figure 9).

15. Fig. 7: A declining share of households’ food
expenditure
Source: NSO, SES.
1400
2782
6350
8502
726.7
1301.72
3041.12
3878.92
51.9%
46.8%
47.9%
45.6%
42%
43%
44%
45%
46%
47%
48%
49%
50%
51%
52%
53%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1990 2000 2011 2015
Household total and food
expenditures (Baht/m)
ค่าใช้จ่ายรวม ค่าใช้จ่ายด้านอาหาร สัดส่วนค่าอาหาร
Total expenses
Food expense
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fig. 7-b: Dietary changes
in Thailand
meals
eaten away
from home
prepared
meals
taken
home
fruits and
vegtables

16. Figure 8-a: Supermarket penetration & share

17. Figure 9-a: Certified organic farm areas
Source: Earth Net Foundation, Green Net 2015.
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Ha
Organic area Share of rice planted area in major crop

18. 4. Evaluation of long-term development and
structural change
 Competitiveness and revealed comparative
advantage
 Sources of competitiveness and trade
theories
18

19. 4.1 Competitiveness and revealed
comparative advantage index
 Thailand moved from 24th largest exporter of
agricultural and food products in the 1960’s to 15th
largest in the mid 2010s (Fig. 12)
 Major exports : rice, rubber products, cassava
products and modified starch, canned pineapple,
sugar, breast chicken and further products,
shrimp, feeds, fruits, etc.
 RCA of 989 products (6 HS digits) (Fig. 13)
• 26 rising stars (RCA > 1 and increasing) : swine
breeders, honey, cereals, duck meal, apple juice, stc
• 156 hot list : rice, tuna, shrimp. Cassava flour, canned
pineapple, animal feed
• 56 drop out : sausage, fresh and chilled fish, melon
seeds
• 750 items with no/negligible trade
19

20. Fig. 13-a: Reveal Comparative Advantage
20
Export (mil baht)
RCA > 1,000 m 100-1,000 < 100
RCA > 1 & + 45 lines 36 12
Thai higher 13-40 lines 2-27 1-8
Thai lesser 1-5 1-8 1-3
RCA > 1 & - 42 lines 36 12
Thai higher 14-40 3-31 1-7
Thai lesser 1-13 2-9 1-6
RCA < 1 & + 8 41 200
Thai higher 1-5 5-27 9-68
Thai lesser 1-7 2-20 10-89
RCA < 1 & - 6 39 238
Thai higher 1-4 9-24 2-70
Thai lesser 1-4 2-14 10-133
Source: UN, Com-Trade

21. 4.2 Sources of competitiveness : trade theory
 Heckscher-Ohlin : resource endowment
 Adam Smith : “Specialization is governed by
the extent of market”
 New trade theory: economies of scale –
external & internal
 Michael Porter’s diamond model : clusters
generate agglomerations economies (part of
external deconomies).
21

22.  A) Resource endowments
• Larger farm per worker than other Asian farmers (Fig. 14-a)
but scarce labor (used to have surplus labor until the mid
1990s) and low interest rate (due to financial liberalization)
 Hence higher labor productivity and capital (than Vietnam) but
lower land productivity (Fig. 14-b and Fig. 15-c)
22
..
Land/worker
0
5
10
15
20
25
-
20
40
60
80
100
120
140
0
1
2
3
4
5
6
7
8
9
196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008
Mil.Rai
Rai /
worker
Planted
Areas
Source: 1. Office of Agricultural Economic, 2. National Statistical Office Labor Force Survey

23. Fig. 14-b: Agricultural Productivity Change
in Southeast Asia, 1961-2010: land & labor
productivity and land/worker
23
Source: Courtesy of Professor Phil Pardey, University of Minnesota.
Cited by Peter Timmer

24.  B) Specialization vs diversification
• At the household level: Farmers have become more
specialized in one single crop as the number of
crops grown by a farm household has declined
over time (Fig. 15)
 Lower average and marginal cost of production
• At the national level, land use has become more
diversified (Fig. 17) as more farmers switch to
perennial crops, particularly fruit trees and rubber :
higher or stable income
24

25. Figure 15: Farm households have become
more specialized
25
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
197819931998200320082013
Share of farm
households
Cultivated single kind of crop
Cultivated more then one kind of
crop Source: NSO, Agr Census.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1978 1993 1998 2003 2008 2013
Share of crops
Multicrop w/o rice
Multicrop with rice
Pasture
(cultivated)
Para rubber
Permanent crop
Vegetables and
other
Field crops
Rice

26.  Diversification at the national level
26
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1961 1970 1980 1990 2000 2010 2011 2012 2013
Crop Diversification Index Modified Entropy Index*
Composite Entropy Index*

27.  C) Internal economies of scale and farm size: no
clear trend
• A trend of declining farm size has stop mainly because
of the lower-than-replacement population growth since
1980s
• Evidence from casual observations : Increasing
number of large farms in the following production:
 Rice farm in the Central Plains
 sugar cane farms, orchard farms, and rubber farms
 broiler farm and shrimp farm
• Yet the change is still so small that cannot yet be
captured by the national farm survey
• Therefore no clear trend of increasing farm size (see
David Dawe 2016) because
 Legal constraints: tenant law and foreclosure law (high
interest rate on loan for land purchase)
 Social factors: land inheritance
 Water shortage and management
27

28.  D) But food processing factories at the mid- and
downstream of the food supply chain have become
larger, thus enjoying larger internal scale economies
• Increasing capacity of rice mills and sugar factories (Fig. 19),
• Larger chicken slaughter and processing plants
• A few large rice exporters dominate the export business, the
top five largest capturing 55-60% of total export
• Small local traders have been replaced by larger suppliers
who have contractual arrangements with supermarkets and
exporters
• Three largest supermarkets dominating the retail business
• Vertical integration in poultry, dairy and seafood business
ensures that most agents – farms as well as input and output
suppliers – have to be larger
• Producers and distributers of farm inputs – machinery, seeds,
fertilizer and pesticides – are larger, thanks to the network of
efficient logistics, communication and digital technology
28

29. 29
0
5
10
15
20
25
30
35
40
0
2000
4000
6000
8000
10000
12000
14000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
tonnespermiller
tonnes
Accumulated and Average Capacity of
small mills (< 60 t/day)
0
50
100
150
200
250
300
350
0
50000
100000
150000
200000
250000
300000
350000
400000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
tonnespermiller
tonnes Accumulated and Average
Capacity of large mills (> 60 t/day)
Accumulated Capacity
Average Capacity per
miller
All rice mills are getting bigger
Large mills
Small mills
Fig. 19-b: Rice mill capacity

30. Fig 19-c: Only 1% of mills are large mills, but
their electricity use is 17%
< 1
Mill.Unit
/Month
100%
1-5
Mill.Unit
/Month
0%
> 6
Mill.Unit
/Month
0%
Num of rice mill
< 1
Mill.Unit
/Month
83%
1-5
Mill.Unit
/Month
8%
> 6
Mill.Unit/Month…
Electricity utilization of mills
Blue: >6 mil units/month=0.05%
Source: DIT, MEA, PEA

31. Fig. 19-d: Average daily production of sugar
mills (tons/day)
0
0.2
0.4
0.6
0.8
1
1990 2000 2010 2016
MillionstonofSugarcane/Day
Production of sugar per day:
average whole kingdom
Province Ton/Day
1Phetchabun 43,791
2Sa Kaeo 28,221
3Uttaradit 27,844
4Nong Bua Lamphu 26,305
5Khon Kaen 25,657
Source: OCSB.

32. E) Clusters and economies of scale : low
input prices & specialized labor
 Thanks to the agronomic & specific conditions,
each geographical area (or cluster of
provinces) is specialized in specific kinds of
crops/products
 Rice cluster in some provinces along the Chao
Phraya river and the Northeast
• Large rice mills (measured by electricity usage) are
heavily concentrated in 6 provinces in the mid-
Central Plains near Bangkok (Fig. 20-a)
• More than 50 private ports that handle small vessels
for export shipments are along the Chao Phraya
river and Pasak River where vessels can off-load
rice to larger ships in the deep seaport on Cholburi
province
32

33. Fig. 20-a: Rice cluster in some provinces in
the mid-Central, lower North and Northeast
Production No. Rice Mill Electric
consumptio
Mill Capacity
Source: Production from OAE, Rice mill data from DIT, Electric bill from PEA

34. Clusters of other major products
 Sugar cane in the upland areas of the Lower North,
Western and Northeastern provinces (Fig. 20-b)
 Rubber and factories are concentrated in the
Southern provinces (Fig. 20-c)
 Chicken in the provinces near Bangkok (main
market) and the sea port in Cholburi. (Fig 20-d)
• The provinces must have adequate source of water and
main area of feed production.
• Lopburi becomes the largest production area
 Shrimp farms are in the eastern seaboard and
provinces with large mangrove areas, while factories
concentrate in a few provinces near sea ports,
Samut Sakorn in the Central Plains and Songkla in
the South (Fig. 20-e)
 Also clusters of suppliers of seeds, fertilizers and
insecticides in provinces with large agricultural
activities (Fig. 20-f)
34

35. Fig. 20-b: Sugar cluster
Planted Area Sugar Plant
Production
Production
Source: OCSB.

36. Fig. 20-c: Natural rubber cluster
Planted Area Rubber PlantProduction
Note: Exclude area that lower then 4,000 Ha
Source: Area and production from OAE, Rubber plant from DOA.

37. Fig. 20-d: Broiler cluster
Feeds Broiler Slaughter Capacity
Source: DLD.

38. Fig. 20-f: Input cluster
Fertilizer shop Pesticide shop Rice seed shop
Note: Fertilizer and Pesticide license Zone 4 and 7 no data
Source: Fertilizer and Pesticide from DOA, Rice seed form RD.

39. Evidence of efficient value chain in Thai
agriculture
 As a result of cluster of farm inputs, output
and food processing factories, farmers have
easy access to competitive supplies of
inputs and market alternatives to sell their
outputs.
 Thus the input prices paid by Thai rice
farmers are lower than that in CLMV
 Thai farmers can also obtain higher “net”
farm-gate price for their output since the
market is highly competitive
39

40. Table 1: Value chain: Input Supply Efficiency
Measure Indicator Cambodi
a
Laos Myanmar Thailand Vietnam
Access to
affordable
fertilizers
Urea price at farm
gate, $/ton
425 450 460 426 357
Urea price to
paddy price (in dry
equivalent)
1.8 1.6 2.3 1.1 1.6
Availability
of seeds
% of demand met
by supply of good
seeds
10 9 0.4 117 100
Depth of
seed
market
% of farmers using
purchased seeds
20-80 10 9 60 53
Depth of
fertilizer
market
% of rice farmers
using NPK
80 20 30 90 100
40
Source: Sergiy Zorya and David Dawe, 2015.

41. V. Future challenges
 The transformation (specialization, clustering &
external economies of scale and structural
change) has enabled Thailand to remains
competitive until recently
 Now the pressure is rising as agricultural
growth and TFP growth has declined, thanks to
• Stalled structural transformation
• The increasing cost of non-traded inputs, esp. labor
• The costs imposed by the policy responses to tackle
the problems of IUU and illegal migrants (which have
adverse impacts on the supplies of seafood, income of
small fishermen, and labor cost in the food processing
industries)
41

42. Growth of real GDP, agriculture & food
processing value added (1961-2016)
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
-15
-10
-5
0
5
10
15
20
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
%
GDP growth
GDP growth (annual %)
AgGDP growth (annual %)
Food processing GDP growth (annual %)
growth
Value
(Bill.USD)
1961-
2016
1961 2016
GDP 6.0% 16.48406.39
AgGDP 3.2% 6.66 37.26
Food processing GDP
(1980) 4.6% 0.03 17.81
Source: NESDB and The World Bank.

43. 4.1 Internal challenges facing
Thailand’s agriculture
 More important, Thailand is facing several
challenges – internal as well as external ones.
• This time the challenges are much more complex, if
not more serious, and may be “different” from the past
malaises
 Four internal problems affecting agriculture
• Too large a share of agricultural workers, causing
low per-capita farm income and large income
disparity
• Rapidly aging farmers
• Increasing costs of non-traded inputs
• Decline in public investment in agric R&D and
quality of research & extension services
43

44. Larger income gap between agricultural and non-agricultural
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Millionsbaht
Real per capita
income
Agriculture Non-agricultural
44ที่มา: NESDB, LFS-NSO. และ World Bank, 2015.
Agri income equal to
11% of non-Agri
income
(2013)
14%
• High income disparity between agriculture and non-
agriculture…a political pressure for price subsidy
3. Thailand’s agricultural challenges : internal and external

45. 45Source: Waleerat, 2009.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
U.S. (Right bar) China India Philippines Thailand
Concentration of Agricultural Research
of Thailand are declining and lower
then neighboring countries.
• (c) Public research in agriculture declined
(% of agricultural research expenses in agricultural GDP)

46. 5 disruptive
forces
Impact
1.Rapid urbanization
emerging courtiers
• Middle class เพิ่ม
2. Aging society
• Ageing population
• Ageing farmers
3. Technological change
• Second green
revolution
5. Globalization : trade,
investment, politics,
social/environmental
concerns
• Demand for food : diet
change
• Meat & processed food
• Safe & healthy
• Better quality
• Supply of food
• Labor shortage
• Abundant land
• New varieties; tolerances to
drought, disease etc.
• Form management water
management etc.
• Market
• Foreign supermarkets:
vertical coordination
• NTBs
• Laws and labels: IUU
(human trafficking, over-
fishing), animal welfare,
carbon–water foot print 46
4. Climate change
• Higher temperature
• Extreme weather
4.2 External factors : 5 disruptive forces
Source :
extension of
McKinsey
Institute’s
concept

47. 4.3 Policy implications
 Policy objective is “productivity
improvement”, particularly the adoption and
adaptation of modern farm technology (e.g.,
precision agriculture)
 3 high priority policies
• 1) Proactive R&D&E policy
 Adoption and adaptation of modern agricultural technology,
including precision agriculture for smallholders
 Reforming its public research system
• 2) Facilitate agricultural transformation through the
following policies
• 3) Reforming the institution of agricultural policy
determination process and implementation, e.g.,
contracting out the extension services, etc.
47

48. ammar@tdri.or.th
nipon@tdri.or.th
48

49. Appendix
49

50. Fig. 1-a: Thai rice production and export
0
5
10
15
20
25
30
35
40
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Millionston
Rice production & export (world largest, except
2012-13 and 2016)
Production (Paddy) Export (Rice mailled)
Source: FAO.

51. Fig. 1-b: Production and export of major
exports
0
200
400
600
800
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Thousandston
Shrimp – world largest until 2013
Shrimp Production Shrimp Export
0
10
20
30
40
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Millionston
Cassava-world largest
Cassava Production Cassava Export
0.0
2.0
4.0
6.0
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Millionston
Natural rubber-world largest
Rubber, natural Production
Rubber, natural Export
Source: OAE, DOF and FAOSTAT.

52. 100
200
300
400
500
600
700
800
900
1000
1100
1995M8
1996M4
1996M12
1997M8
1998M4
1998M12
1999M8
2000M4
2000M12
2001M8
2002M4
2002M12
2003M8
2004M4
2004M12
2005M8
2006M4
2006M12
2007M8
2008M4
2008M12
2009M8
2010M4
2010M12
2011M8
2012M4
2012M12
2013M8
2014M4
2014M12
2015M8
2016M4
2016M12
($/ton)
Rice Price Comparison
Thailand 100% Grade B Vietnam 5% Brokens USA long grain
Source: Rice Outlook, USDA.
Figure 5: Export prices of Thai, USA and Vietnamese rice
Paddy
pledging

53. Figure 7: Average capacity of rice mill,
2001-17 (ton/mill/day)
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Department of Internal Trade

54. Figure 8-b

55. Fig. 9-b: GAP certification for paddy farms
Certified farms
36,529 Farms
Certified area
51,401 Ha
Share of Rice area
0.5%
Source: RD 2014-2015.

56. Global Export Ranking of Food and agricultural products
increased from 19-23 in the 1960s to 12-15 in the 2010s.
But not so impressive as Germany, Spain, China
Source: FAO
1961 1967 1977 1987 1997 2007 2013
United States of
America 1 1 1 1 1 1 1
Netherlands 3 3 2 3 3 2 2
Brazil 7 8 4 7 8 5 3
Germany 21 14 5 4 4 4 4
France 6 4 3 2 2 3 5
China, mainland 33 12 21 10 13 11 6
Spain 22 20 18 13 11 8 7
Canada 5 6 7 11 10 9 8
Belgium #N/A #N/A #N/A #N/A #N/A 6 9
Italy 11 11 11 9 9 7 10
India 15 19 19 23 21 17 11
Argentina 9 7 9 19 12 10 12
Australia 2 2 6 8 7 13 13
Indonesia 16 35 22 21 20 16 14
Thailand 19 23 16 17 15 14 15

57. Fig. 12: Rank and share of Thai agricultural
exports in world agric exports
22 22
24
19
16 16 15 15 15 15 15 15
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0
5
10
15
20
25
30
Rank of agriculture export Share of total agriculture export
Source: FAOSTAT.
1.17
Bil.$
99.3
Bil.$21.5
Bil.$
Growth 1961-2013 = 8.4% , 2000-2013 = 13.1%

58. Fig. 13-b: Relative Comparative Advantage
Rice
RCA 2012 2013 2014 2015
Cambo
dia 18.42 27.96 24.51 23.98
Thailan
d 15.46 14.34 17.32 15.49
Vietna
m 24.6 16.43 14.17 12.46
Myanm
ar
20.02 9.81 5.52 6.77
Lao
PDR.
3.36 2.64 2.15 5.54
Sugar
RCA 2012 2013 2014 2015
Thailan
d 9.18 7.33 8.39 9.08
Lao
PDR. 5.51 5.03 4.08 5.32
Cambo
dia 0.04 4.03 2.86 1.71
Malaysi
a
0.4 0.43 0.42 0.38
Philippi
nes
1.14 2.82 1.23 0.32
Durian Cooked chicken
Vegetable
Shrimp
Source: TDRI, UN comtrade
RCA 2012 2013 2014 2015
Myanm
ar 31.75 23.12 13.46 21.71
Lao
PDR. 3.02 2.45 2.52 4.11
Thailan
d 1.9 1.99 2.23 2.13
Vietna
m 1.93 1.15 1.87 0.88
Cambo
dia 0.44 0.56 0.97 0.65
RCA 2012 2013 2014 2015
Vietna
m 31.07 21.43 18.7 12.49
Indone
sia 11.4 9.21 9.84 9.25
Myanm
ar 23.02 13.47 6.18 7.62
Thailan
d 14.57 5.66 4.11 3.46
Malaysi
a 0 1.78 1.76 1.14
RCA 2012 2013 2014 2015
Thailan
d 46.73 48.29 49.32 40.33
Vietna
m 0.26 0.21 0.39 3.34
Malaysi
a 2.4 2.31 1.26 1.82
Lao
PDR.
0 0 0 0.44
Philippi
nes 0.01 0.04 0.08 0.03
RCA 2012 2013 2014 2015
Thailan
d 23.62 23.14 21.73 22.89
Philippi
nes 0.5 0.14 0.29 0.2
Malaysi
a 0.08 0.07 0.08 0.1
Singap
ore
0.01 0.01 0.02 0.01
Vietna
m 0.02 0.03 0.02 0.01

59. Fig. 14-c: Land productivity in Thailand is
lower than Vietnam (output in tons and value)
0
500
1,000
1,500
2,000
0
5
10
Thailand
Land productivity (Ton/Ha) Land productivity (USD@2010/Ha)
0
1,000
2,000
3,000
4,000
0
5
10
15
Vietnam
Land productivity (Ton/Ha) Land productivity (USD@2010/Ha)
Source: The World Bank and FAOSTAT.

60. Fig. 14-d: Labor productivity in Thailand is higher
than Vietnam (output in tons and value)
0
1,000
2,000
3,000
0
5
10
15
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Thailand
Labor productivity (Ton/worker) Labor productivity (USD@2010/worker)
0
500
1,000
1,500
0.0
0.5
1.0
1.5
2.0
2.5
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Vietnam
Labor productivity (Ton/worker) Labor productivity (USD@2010/worker)
Growth
Thaila
nd
Vietna
m
Land productivity (Ton/Ha) 3.3% 2.9%
Land productivity
(USD@2010/Ha) 2.3% 2.1%
Labor productivity
(Ton/worker) 4.6% 3.9%
Labor productivity
(USD@2010/worker) 4.0% 4.0%Source: The World Bank and FAOSTAT.

61. 194,401.63
9,845.14
249,849.03
13,267.86
175,612.74
45,255.74
Per HH (Baht/Year) Per Unit of land (Baht/Year)
Rice Mono Crop Rice and other crops
Vegetables/Root Crops
Growing rice and other crops
give the highest payoff per
household per year whilst
growing growing vegetables and
root crops give the highest payoff
per unit of land per year.
Fig. 16: Farmers who diversify enjoy higher net
profit per unit of land

62.  Fig. 18: Rice farm in the Central Plains
become marginally larger (Rai/ household)
62
24.1
21.7
23.4
23.8 24
15
16
17
18
19
20
21
22
23
24
25
Central Plains
1993 1998 2003 2008 2013
ที่มา: สามะโนการเกษตร 2536-2556 และการสารวจการเปลี่ยนแปลงทางการเกษตร 2541-2556, สานักงานสถิติแห่งชาติ

63. Fig. 20-e: Shrimp cluster
Area Production Factory
Source: Production from OAE and Factory from DIW.

64.  Sources of value added growth in agriculture: total factor
productivity growth is the second largest
6464
Labou
r
19%
Land
6%
Capita
l
55%
TFP
20%
Agricultural Labour
7%
Land
8%
Capital
64%
TFP
21%
Crop
Labour
77.77%
Land
-0.38%
Capita
l
4.50% TFP
17.36%
Livestock
Source: Waleerat, 2009.
Lab our Land Capital TFP
Agricultural 18.79 6.13 54.73 20.35
Crop 7.6 7.63 63.95 20.82
Livestock 78.35 -0.38 4.53 17.49

65. 65
(a) Thailand has an unusually large share of workers in
agriculture
(second highest share amongst middle income
countries, after Albania)
Source: World Bank, 2015
4.1 Internal challenges

66. 66
Source: World Bank, 2015
Decreasing additional earning outside
agricultural sector
Agricultural structure
not change
• Stalled structural change after 2004, which used to be a major source
of agriculture growth
– Very low growth of private investment in non-agricultural activities

67. Increase in Agriculture Employment since 2004
- What are the Factors behind?
67
Source: World Bank, 2015
• Distorted agricultural support policies may have stalled the structural
change and resulted in an increase in agricultural employment after 2004

68. Share of agricultural income is about 12% (18% in rural and 6% in urban) of total household income in 2013.
Declining trend of primary occupation in agriculture
68Source: World Bank, 2015
 So farm income is very low, accounting for
only 12% of household income
• Smallholders’ farm income is not enough for farmers to
have a decent living, e.g., can’t afford sending children
to college.
• Household members have jobs outside agriculture

69. Larger income gap between agricultural and non-agricultural
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Millionsbaht
Real per capita
income
Agriculture Non-agricultural
69ที่มา: NESDB, LFS-NSO. และ World Bank, 2015.
Agri income equal to
11% of non-Agri
income
(2013)
14%
• High income disparity between agriculture and non-
agriculture…a political pressure for price subsidy
3. Thailand’s agricultural challenges : internal and external

70. b) Aging farmers: Next 10 year there will be 5 million farmers
retiring. Will farming be a promising career for the young
generation?
7.2
6.5
2.3
1.1
4.2
7.6
2.7
1.81.9
6.9
2 2.11.8
6.7
2.5 2.5
0
2
4
6
8
15-29 30-49 50-59 60+
Millionfarmers
Thai farmers by age groups
1986 1996 2006 2009
70ที่มา: LFS-NSO และ World Bank.
4.1. Thailand’s agricultural challenges : internal and external

71.  Increasing share of high value
exports
71
0
1
2
3
4
5
6
7
8
9
10
ล้านตัน
ข้าวขาว 100% ข้าวขาว 5%
ข้าวนึ่ง ข้าวหอมมะลิ
Source: Thailand Customs office
Share 1991 1995 2000 2005 2010 2012
1. Tapioca products
(Million $US)
978.9736.2513.3849.7
2,161
.40
2,825
.80
(1) Manioc
(cassava) pellet,
shredded or sliced
(%)
79.7 56.3 38.1 37.7 37.7 38.7
(2) Manioc
(cassava) flour (%)
13.1 27.3 30.4 27.6 35.9 35.3
(3) Dextrins and
other modified
starches (%)
6.9 15.8 30.8 31.6 23.4 22.1
(4) Other tapioca
products
0.3 0.7 0.7 3.1 3 3.8
2. Poultry (Million
$US)
404389.6614.6 696
1,653
.50
2,195
.80
(1) Chilled or frozen
poultry cuts (%)
100 100 64.2 1.9 3.6 8.8
(2) Prepared poultry
(%)
0 0 35.8 98.1 96.4 91.2
2. Other livestock
(Million $US)
81.6241.1255.8 393628.7871.5

72. Higher area production shares of high value
(Hom Mali) rice ทำเป็นอังกฤษ และ กรำฟ
2550/5
1
2551/5
2
2552/5
3
2553/5
4
2554/5
5
2555/5
6
2556/5
7
2557/5
8
2558/5
9F
2559/6
0F
พื้นที่ (ล้านไร่) ข้าว 70.2 69.8 72.7 80.7 83.4 78.2 77.1 69.3 63.4 64.3
+ ข้าวนาปี 82% 82% 79% 80% 78% 79% 80% 88% 90% 91%
- ข้าวขาว 28% 28% 25% 24% 23% 24% 24% 26% 25% 25%
- ข้าวหอมมะลิ 28% 28% 29% 30% 31% 31% 32% 35% 37% 37%
- ข้าวเหนียว 26% 26% 25% 26% 25% 24% 25% 27% 29% 29%
+ ข้าวนาปรัง 18% 18% 21% 20% 22% 21% 20% 12% 10% 9%
- ข้าวขาว 17% 17% 20% 19% 21% 20% 18% 11% 9% 9%
- ข้าวเหนียว 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
มูลค่า (พันล้านบาท) ข้าว 317.3 321.4 341.7 400.2 461.6 451.1 387.7 317.1 274.9 285.9
ที่มา: สศก.

73. Agricultural GDP shares by 3 sub-sectors 1951-2013 :
(%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
Fisheries
Livestock
Crops
Source: FAOSTAT.

74. Area shares by crops 1961-2014 (%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Other Crops
Maize
Cassava
Rubber, natural
Sugar cane
Rice, paddy
Source: FAOSTAT.

75. Value added shares by crops 1961-2014 (%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Other
Maize
Cassava
Sugar cane
Rubber, natural
Rice, paddy
Source: FAOSTAT.

76. Gross income and cost of farmers with different
cropping patterns
319,016.06
15,668.52
124,401.63
6,183.38
396,763.33
20,864.09
146,914.31
7,596.23
262,100.88
68,079.30
86,488.15
22,823.55
Gross income
(Baht/HH/year)
Gross income per
unit of land (Baht
/Rai)
Total production
cost per HH
(Baht/Year)
Cost per unit of
land (Baht/ Rai)
Rice mono crop Rice and other crops Vegetables/ Roots crops
Income
Cost

77.  Farmers shift towards high value rice (แปลอังกฤษ)
77
 Cropping year 2007/08  Cropping year 2012/13
ข้าวเจ้าหอม
มะลิ
34%
ข้าวเจ้าอื่นๆ
34%
ข้าวเหนียว
32%
Rice planting area
ข้าวเจ้าหอม
มะลิ
41%
ข้าวเจ้าอื่นๆ
27%
ข้าวเหนียว
32%
Rice planting area
ข้าวเจ้าหอม
มะลิ
28%
ข้าวเจ้าอื่นๆ
45%
ข้าวเหนียว
27%
Output (tons)
ข้าวเจ้าหอม
มะลิ
34%
ข้าวเจ้าอื่นๆ
39%
ข้าวเหนียว
27%
Output (tons)
Source: OAE

78. 0
1
2
3
4
5
6
7
8
9
10
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
ล้านล้านบาท
ล้านล้านบาท
Real GDP and growth (ref 2002)
GDP (ขวา) Agriculture GDP (ซ้าย)
Growth
Agriculture
GDP GDP
1960-
1980 7.0% 9.1%
1980-
2000 3.9% 8.3%
2000-
2014 2.0% 4.1%
Source: NESDB.

79. Is there a future on the farm ?
 Yes, Thai agriculture has some strength:
abundant land per worker
79
0.00
1.00
2.00
3.00
4.00
5.00
6.00
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Farm land per worker (ha/worker)
Malaysia (right bar) Cambodia Indonesia
Lao PDR Myanmar Philippines
Thailand Vietnam

80. Transformation to cope with the 5 disruptive force
5 disruptive forces Impact Transformation
1.Rapid urbanization
emerging courtiers
• Middle class เพิ่ม
2. Aging society
• Ageing population
• Ageing farmers
3. Technological change
• Second green revolution
5. Globalization : trade,
investment, politics,
social/environmental
concerns
• Demand for food : diet
change
• Meat & processed food
• Safe & healthy
• Better quality
• Supply of food
• Labor shortage
• Abundant land
• New varieties;
tolerances to drought,
disease etc.
• Farm management
water management etc.
New production
process
New products
• Functional foods
• Large-scale farms
• Effective cooperatives &
producer association
• New organizations for small
holders in some product
e.g., non-market
coordination (contract
farming, partnership
between farmer group and
agri-business /supermarket
, CSO-led farmer groups)
• New private standards/
labels
• Cross-border investment
• Resource conservation
• Re-defining government
role
• New laws 80
4. Climate change
• Higher temperature
• Extreme weather • Market
• Foreign supermarkets:
vertical coordination
• NTBs
• Laws and labels: IUU
(human trafficking,
over-fishing), animal
welfare, carbon–water
foot print

81. Data collection Communication & Decision support
data processing system
Real time data for a site-specific farm
satellite image +
GPS…plot
boundary
Weather
forecast
DronLand leveling:
GPS/ laser
Farming4.0