Economic Update

Published 25 Jul 2017

Rising demand for Thai organic goods in both local and export markets has prompted the government to pursue a range of initiatives aimed at encouraging organic farming practices.

New support scheme

The state is launching a new programme to promote organic agriculture by encouraging a reduction in the amount of new rice planting, and a shift from commercial varieties to organic strains, Chutima Bunyapraphasara, deputy minister for agriculture and cooperatives, told media in early May.

One aim of the programme is to reduce the area of standard rice cultivation by 1m rai (160,000 ha) within five years.

Farmers who sign up for the scheme can receive financial support to assist them in buying organic seeds, reducing their dependence on pesticides, and building barriers to prevent contamination from neighbouring farmland.


They will also be entitled to subsidies of BT2000 ($56.30) for every rai (0.16 ha) of land they cultivate for the first year, BT3000 ($84.50) per rai for the second and BT4000 ($112.70) for the third.

The government hopes that up to 400,000 farmers will take part in the scheme over the next four years, and that another 600,000 rai (96,000 ha) of organic crops will be cultivated.

Up to 60% of the harvests from the programme will be exported, Chutima said, while the rest will go to meet rising domestic demand.

Broader sector strategy

The shift to organic and higher-value production aligns with government plans – announced by Prime Minister Prayut Chan-o-cha in early June – that seek to make Thailand a world food “superpower” within two decades.

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, thereby strengthening both agriculture and manufacturing, and promoting food security and innovation.

The reforms will include greater focus on agricultural cooperatives and support for growers to raise product quality, the prime minister told a food trade fair in Chanthaburi Province.

Bouncing back

The agriculture sector is already recovering from a drought that reduced harvests in 2016. Farm output in the first quarter of 2017 was up 7.7% year-on-year, helping drive 3.3% growth in GDP and a 6.6% bump in exports, according to the National Economic and Social Development Board (NESDB).

With the improved outlook for the agricultural sector this year, the government expects exports of food products to reach $26bn, up from $24bn in 2016.

However, a focus on improving productivity in Thailand’s rural industries will be key to harnessing value addition in the industry. At present, productivity levels in the countryside remain below regional averages, despite increased commercialisation and diversification in the past few years, according to a report by the World Bank released in April.

Better land management practices, improved infrastructure, further diversification of crops and greater emphasis on programmes like organic production could help boost yields and decrease rural poverty.

Improved productivity and more specialised crops could have a direct effect on Thailand’s agri-business and food-processing segments, the report noted, further increasing agriculture’s contribution to GDP – currently around 11%.

Healthy move

The shift towards organic production could also have a positive impact on public health, as reduced use of pesticides would curb exposure to chemicals among rural communities and consumers.

Some 1800 people die each year in Thailand due to pesticide exposure, according to the Thai Health Promotion Foundation, with many more falling ill after ingesting or breathing in chemicals.

Although the import of pesticides has declined in recent years, falling from a record high of just under 200,000 tonnes in 2013, Thailand continues to be among the region’s biggest sprayers, measured both by volume used and hectares covered.

Working for it

The government’s plans to boost organic farming also come at time when agriculture’s contribution to employment is falling.

According to the NESDB, agriculture’s share of employment has halved from 80% in 1970 to 40% today as technology has improved and the economy has shifted away from traditional rural occupations.

Drought conditions and greater automation have caused the farming sector to shed a further 1.3m jobs over the past four years, NESDB data show – a decline that has continued despite the recent increase in production, and was a major factor driving the national jobless rate from 1% at the end of 2016 to 1.2% in March 2017.

While agriculture is typically a low-margin business, greater returns on organic produce relative to conventional crops could help enable producers to employ more workers, with the added benefit of fostering greater specialisation in organic farming methods among the rural labour force.