Located in the heart of mainland Southeast Asia, Thailand is the second largest economy in the Association of Southeast Asian Nation (ASEAN) after Indonesia. With a well-developed infrastructure, a free-enterprise economy, and generally pro-investment policies, Thailand historically has had a strong economy. Its gross domestic product (GDP) in 2021 was $513 billion, growing 1.6 percent from the previous year. The Thai economy is projected to expand between 2.5 and 3.5 percent in 2022, mainly supported by improved domestic demand, a partial recovery of the tourism sector, and continued strength in exports.

Agriculture accounts for only six percent of GDP in Thailand but the sector employs around one-third of the country’s labor force. The country is the largest producer of natural rubber in the world and one of the leading producers and exporters of rice; it also possesses sugar, corn, jute, cotton and tobacco among its major crops. Fishing constitutes an important activity as Thailand is a major exporter of farmed shrimp. However, agriculture’s contribution to the GDP is declining, while the exports of goods and services have increased.

Over half of Thailand’s agricultural land was under rice cultivation, followed by field crops such as maize, cassava and sugarcane; rubber; long-term permanent crops and forest, such as oil palm; pastureland and vegetable and flower production.

Agriculture has historically been the backbone of the Thai economy, employing the majority of the national working-age population. While the sector has seen a decline in the number of workers in recent years, some 12.7 million workers, approximately 30 percent of Thailand’s total labour force, work in agriculture today. Increasingly, the sector is depending on migrant workers from Cambodia, the Lao People’s Democratic Republic, and Myanmar to fill the growing labour shortages in the sector.

Over the past few decades, Thailand’s exports have been shifting away from agricultural to manufacturing products. However, agricultural and food product exports remain vital to Thailand’s economy, and Thailand continues to be a net exporter of agri-food products. Approximately 40 percent of Thailand’s agri-food products were exported to the country’s major trading partners including China, Japan, and the United States of America. Agri-food exports to intra-Association of Southeast Asian Nation (ASEAN) countries’ have also grown rapidly, while agricultural exports to other developed countries have been relatively stagnant in recent years.

RICE PRODUCTION

While Thailand increasingly exports many high-value processed agri-food products, natural rubber and rice continue to play a dominant role and account for one-third of total agri-food exports in value. Thailand is the 13th largest food exporter in the world, with over 10,000 food and beverage processing factories. The Ministry of Industry reported that the food industry performed impressively in 2021, both in food exports and food manufacturing. The food manufacturing industry achieved an overall growth of 4.5 percent.

In its latest report released on 31st August, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Bangkok forecasts Thailand’s 2022/2023 season rice production at 20 million tons. Abundant water supplies and favorable weather conditions will push rice production slightly higher than precious season. As of August 10, 2022, the planting acreage totaled 12.3 million hectares, covering areas of the northern region and the central plains, which accounts for roughly 57 percent of total rice acreage in irrigated areas.

USDA revised down Thai rice exports to 7.5 million tons in 2022. Larger exportable supplies and a recovering global economy helped Thai exports recover from 2020 and 2021, increasing by 21 percent from 2021. The depreciation of the Thai baht against the U.S. dollar made Thai rice export prices more competitive. In July 2022, the Thai baht hit a 16-year low against the U.S. dollar at 36.17 baht/$1.00. In addition, many countries began to secure staple foods and supplies since Russia’s invasion of Ukraine, which boosted global demands for rice. However, the container shortage and high fuel prices will likely leave freight costs high throughout 2022.

The Thai Customs Department reported that rice exports totaled 3.5 million tons in the first half of 2022, up 57 percent from the same period last year. Iraq became the primary market for Thai rice exports, totaling 660 thousand metric tons, followed by the United States and South Africa. Exports of white rice rose the most to 1.6 million tons, up significantly from the same period last year. Demand for Thai white rice grew the most in the Middle East, mainly Iraq and United Arab Emirates. Fragrant rice exports increased to 1.1 million tons, up 41 percent from the same period last year due to strong demand from the United States, Canada, and the EU countries. In June 2022, Thai rice exports totaled 760 thousand metric tons, valued at $377 million. The volume and value of rice exports in June 2022 were 69 and 57 percent higher, respectively than June 2021. The president of the Thai Rice Export Association expects that Thai rice exports will average 600-700 thousand metric tons per month for the rest of 2022. 

USDA revised rice consumption in the 2022/23 season up to 13.5 million tons. Increased economic activities from a growing number of foreign tourists will increase rice consumption by 4 percent from the last season. In addition, the easing of COVID-19 restrictions encouraged restaurants and hotels to reopen their in-restaurant services. The government also encouraged feed mills to blend in broken rice and residuals with feed corn and other imported feed ingredient to relieve high feed costs and tight import supplies.

CORN PRODUCTION

Corn is one of five major crops grown in the uplands of Thailand, along with rice, cassava, sugar cane, and rubber trees. However, Thailand’s domestic corn supply is currently not sufficient to meet the needs of its in-country demands, and small quantities have to be imported. Rapid economic growth and accelerated urbanization are expected to create an even higher demand for corn in Thailand.

USDA revised its previous forecast for 2022/23 corn production down to 5.2 million tons in anticipation of reduced off-season corn acreage. Expected abundant water supplies and favorable weather conditions could persuade farmers to switch to crops with lower maintenance costs and higher returns, such as off-season rice and cassava. In addition, farmers are likely to apply less chemical fertilizer due to current high prices, which could lower crop yield in the 2022/23 season from the previous year.

Corn imports totaled 1.5 million tons in the 2021/22 season, down 21 percent from 2020/21 due to shrinking feed demand and tight global suppliers. Around 99 percent of the imported corn came from Burma as ASEAN countries benefit from duty-free with unlimited quota between February 1 and August 31 under the ASEAN Free Trade Agreement.

USDA revised corn imports for the 2022/23 season up to 1.6 million tons, up 5 percent from the 2021/22 season in line with growing livestock production. A gradual recovery in domestic consumption and growing export demand drove the increase in poultry production, which accounts for roughly 43 percent total feed demand.

WHEAT IMPORTS

In 2020, Thailand imported $678M in wheat, becoming the 22nd largest importer of wheat in the world. It imports wheat primarily from the United States, Ukraine, Argentina, Australia and Canada. USDA forecasts 2022/23 wheat imports higher to 2.9 million tons, up 23 percent from 2021/22 due to growing livestock production, especially for poultry production.

Traders are expecting strong demand for poultry and poultry-based products in the second half of 2022. In July 2022, Chinese authorities allowed Thai poultry factories that have complied and operated in accordance with Chinese regulations aimed at preventing contamination of COVID-19 in livestock products. As a result, there are currently 20 factories processing frozen poultry meat and poultry-based products in Thailand with licenses to export to China.

Wheat imports in the 2021/22 season totaled 2.3 million tons, down 29 percent from 2020/21 due to a reduction in milling wheat and feed wheat demand. Milling wheat imports totaled 1.35 million tons, down 7 percent from the same period last year, while feed wheat imports totaled 730 thousand metric tons, down 54 percent.

Imports of Indian wheat significantly rose to 140 thousand metric tons of which 120 thousand metric tons were feed wheat imports. Romanian feed wheat also showed an increase in imports totaling 130 thousand metric tons, up 76 percent from the same period last year. In the meantime, Australian wheat imports declined to 760 thousand metric tons, down 81 percent from the same period last year. Australian feed wheat was the top source for Thai feed wheat imports, while the main sources of milling wheat in 2021/22 were the United States and Australia with 43 and 41 percent market share, respectively. Feed mills reportedly used more locally produced corn and soybean meal and duty-free imported corn in their poultry and swine feed rations due to high import prices of feed wheat. Wheat flour imports totaled 270 thousand metric tons, up 2 percent from the same period last year in line with a gradual recovery in domestic demand.

The Office of Industrial Economics (OIE) reported that instant noodle production in the 2021/22 season increased 4 percent from the same period last year. Domestic and export demand for instant noodle production increased by 4 percent and 2 percent, respectively. Despite the increase in production costs of instant noodles, the government froze the retail price of instant noodles at 6 baht per package ($0.17). Five manufacturers of instant noodles requested that the Department of Internal Trade, Ministry of Commerce raise the retail price to 8 baht per package ($0.23) due to higher production costs and inflation. The industry claims that it will be the first price increase in more than 14 years. Bakery production shrunk to 3 percent due to a slow recovery in domestic and export demand. Instant noodle and bakery production account for around 35 and 25 percent, respectively, of total milling wheat consumption. Livestock feed production, mainly the poultry sector, shows a promising recovery in the first half of 2022, despite higher domestic feed ingredients and fuel prices, which account more than 30- 40 percent of the cost of production.