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1. Introduction


Up until the mid-1990s, the Thai economy had experienced rapid growth for at least the previous 10 years. In 1995[1], for example, growth was about 8.6 percent, much the same level as has prevailed through the 1990s, but below the 10.3 percent averaged between 1985 and 1990[2] (Thailand Development Research Institute 1997). In light of its growth performance, Thailand was considered to be one of the “tiger economies” of Asia. The period of rapid growth was brought to a halt in 1997 by the sudden depreciation of the Thai Baht (Bt). Its depreciation has been generally viewed as the catalyst for the Asian financial crisis, the effects of which are still be felt through the region.

Thailand’s population in 1999 was approximately 61.66 million and average income measured as Gross Domestic Product (GDP) per person was Bt74 152 per person, or about US$1 853.8 at the exchange rate prevailing in 1999 - approximately Bt40 per US dollar. In 1985, Thailand’s population was 51.6 million and per person income was less than one third its 1999 level at Bt20 484 (US$754). The growth in average income has been accompanied by an increased disparity in income distribution. In 1981, the ratio of the income share held by the top 20 percent of income earners compared to the bottom 20 percent was 9.51. In 1992, the same measure had a value of 14.35 while in 1999 it was 14.16 (Thailand Development Research Institute 1997 and 2000). Nonetheless, by some measures poverty levels have been falling. Warr (2000) presents data based upon government estimates that show rural poverty in 1962 to have been 61 percent, 27.3 percent in 1981 and 11.15 percent in 1999. Comparable estimates for urban poverty are 38 percent, 7.5 percent and 1.82 percent. The overall incidence of poverty was 57 percent, 22.98 percent and 8.58 percent for each of 1962, 1981 and 1999, respectively. A number of development programmes, pitched at the sub-district (tambon) or village level, have been introduced to alleviate rural poverty. One such programme in 1999 allocated Bt300 million to 1 000 villages. These programmes have included a number of different agricultural industries, including rice, maize tapioca and ducks. In the cropping industries, an increase in productivity has usually been the objective of the programme while the production of eggs for sale has been the main focus of the poultry programme (The Nation 1998).

Phongpaichit and Baker (1996) argue that Japanese investment - geared towards export oriented manufacturing industries - was the key to Thailand’s high growth rate through the 1980s and 1990s. They also argue that most of the growth in the economy occurred free of government intervention. As an indication of the extent to which foreign investment in Thailand increased during the high growth period, data from the Thailand Development Research Institute (1997) show that foreign investment in 1988 was Bt27 983 million, or over three times its level the previous year in nominal terms. By 1990, foreign investment had expanded to Bt64 695 million, only to retreat to just under Bt50 000 million in 1995. In 1999, it had grown to over four times its 1990 level to Bt209 888.3 million (Thailand Development Research Institute 1997 and 2000). Besides Japan, Hong Kong and the USA have been the other major sources of foreign investment. It is unclear what the short-term future holds for the Thai economy. High levels of non-performing loans, a slowing of growth in the US economy and the depressed state of the Japanese economy are the main factors behind the concern that many observers have expressed about the economy's prospects. Over the last couple of years, the Thai government has been relaxing regulations affecting what assets can be owned by foreign firms. Under the amended Alien Business Law, there are now thirteen parts of the economy open to foreign investors. These include food and beverage selling and the sale of food and beverages through the tourism industry. Foreign investors are permitted to own up to one rai of land for commercial use and 10 rai for industrial use (Srivalo 1997). Foreign investors have in general not been permitted to own agricultural land although this regulation (in early 2002) is in the process of being modified.

The contribution of the agricultural sector to the economy has been declining. Agriculture’s share of GDP in the early 1990s was around 12 percent to 13 percent and by 1995 it had fallen to 10.9 percent (Thailand Development Research Institute 1997). This compares with 36 percent in the early 1960s (Sector Economics Program 1995). Between 1972 and 1990, agriculture grew at about 4 percent per year, while the manufacturing industry and the service industries each grew at between 8 percent and 9 percent per year. At the same time as agriculture’s share of output has been declining, the relative contribution to agricultural output of cropping and livestock industries has also been falling, as Table 1.1 shows.

Table 1.1 Gross Domestic Product (GDP) of Thailand at 1988 prices by kind of agricultural activities, 1989-98

Gross domestic product in agriculture

Year

Crops

Livestock

Fisheries

Forestry

Agricultural services

Simple agricultural processing products

Total

GDP

(%)

(%)

(%)

(%)

(%)

(%)

(%)

(mill. Bt)

1989

10.00

1.62

1.60

0.48

0.57

1.53

15.80

1 749 952

1990

8.23

1.50

1.54

0.35

0.49

1.43

13.55

1 945 372

1991

8.06

1.39

1.77

0.28

0.45

1.44

13.39

2 111 862

1992

7.76

1.33

1.76

0.25

0.41

1.47

12.98

2 282 572

1993

6.76

1.28

1.84

0.21

0.36

1.37

11.82

2 473 937

1994

6.52

1.17

1.85

0.17

0.34

1.39

11.43

2 695 413

1995

6.29

1.18

1.73

0.14

0.29

1.26

10.80

2 935 341

1996

6.30

1.04

1.60

0.13

0.28

1.22

10.56

3 109 320

1997

6.57

1.04

1.56

0.12

0.27

1.22

10.78

3 057 009

1998

5.24

0.80

1.36

0.08

0.22

0.97

8.67

3 746 128

Source: Office of Agricultural Economics and www.oae.go.th

The agricultural sector in Thailand has been undergoing a substantial transformation. Agriculture has been shifting towards high valued products and non-traditional crops and away from rice, cassava and maize. Frozen chicken, sugar and canned pineapples have become important, particularly for export markets. For example, frozen chicken exports expanded in nominal terms from approximately Bt7 million (or 0.02 percent of agricultural exports) to Bt8 886 million (2.65 percent of agricultural exports) between 1975 and 1993 (Sector Economics Program 1995). Growth in the nominal value of frozen poultry exports has continued so that by 1999, frozen poultry exports were worth Bt15 450 million. The restructuring of agriculture has come about through a series of government initiatives, some of which are outlined in Siamwalla (1996) and Sector Economics Program (1995).

The livestock sector is only a relatively small part of the overall agricultural sector. Livestock industries such as the dairy and the beef industries are almost insignificant parts of the Thai economy in terms of aggregate output. The data in Table 1.1 show livestock has contributed only 0.8 percent to 1.62 percent over the period 1989 to 1998. Moreover, the share has been declining. Within the livestock sector, development has been uneven. On the one hand, rapid growth has occurred in dairy cattle numbers. Between 1986 and 1999, dairy cattle numbers increased more than fourfold. On the other hand, the number of beef cattle increased by less than 10 percent. Chicken, pig and duck numbers also increased while buffalo numbers declined (Table 1.2).

Table 1.2 Livestock numbers in Thailand

Year

Beef cattle

Dairy cattle

Buffalo

Pigs

Ducks

Chickens

(000)

(000)

(000)

(000)

(000)

(000)

1985

na

na

5 252

5 919

19 398

70 021

1986

4 288

64

4 981

5 873

19 966

87 324

1987

4 331

68

4 684

5 867

19831

92 134

1988

4 501

95

4 620

5 740

15 934

89 812

1989

4 987

133

4 612

6 015

16 683

96 594

1990

5 510

158

4 694

7 350

17 902

107 559

1991

6 436

191

4 805

8 202

19 124

130 837

1992

6 899

222

4 728

8 333

19 345

135 176

1993

7 235

237

4 804

8 569

21 779

138 832

1994

7 406

232

4 225

8 479

21 812

129 997

1995

7 322

287

3 710

8 562

18 897

111 649

1996

5 854

276

2 720

8 708

21 925

144 579

1997

5 292

303

2 294

10 139

21 830

164 686

1998

4 568

295

1 951

8 772

19 748

155 325

1999

4 636

283

1 800

7 423

22 330

169 633

Source: Department of Livestock Development (1996) and www.dld.go.th

Thailand is a diverse country agriculturally, and so some of the data in this report will be on a regional basis. The regions defined by the Thai authorities follow and Table 1.3 provides the following classification:

Table 1.3 shows that more than half (51.5 percent) of Thailand’s GDP in 1994 was generated in Bangkok. The Central region contributed 19 percent, the North-eastern region 11.3 percent, the Northern region 9.5 percent and the Southern region 8.6 percent. The North-eastern region was home to about 34 percent of Thais in the mid-1990s. It is generally regarded as the poorest of the regions, and this is borne out by the estimates of per person GDP. Table 1.3 shows that in 1994, per person GDP in the North-east region was Bt20 235, while in the Central region it was more than three times this. It is apparent from the information in Table 1.3 that vegetables and fruit growing have become more important industries over the last two decades since the area given over to these two industries in all of the regions has increased. Finally, less than 50 percent of Thai farmers in each of the four regions are solely dependent upon agriculture for their income.

Table 1.3 Characteristics of regions in Thailand, 1994

Item

Unit

North east

North

South

Central

Bangkok

GDP

mill. Bt

405 960

343 478

308 085

687 490

1 855 894

Contribution of agriculture

%

20.94

16.81

30.06

21.10

11.08

Population

mill.

20.10

11.1

7.7

9.9

10.0

Per person GDP

Bt

20 235

31 064

39 789

69 598

186 167

Land area

000 ha

16 685

16 954

7 072

10 390

-

Farm sizea (1975)

ha

4.33

(4.54)

3.82

(3.63)

3.72

(3.76)

5.26

(5.33)

-

Paddy landa (1975)

000 ha

6 327

(5 454)

2 507

(2 533)

562

(719)

2 060

(2 692)

-

Field crops (1975)

000 ha

2 211

(1 204)

1 714

(970)

19

(17)

1 522

(1 001)

-

Fruit treesa (1975)

000 ha

320

(75)

322

(99)

2 091

(1 151)

741

(341)

-

Vegetables and ornamentalsa (1975)

000 ha

33

(13)

49

(11)

12

(5)

55

(29)

-

Grasslanda (1975)

000 ha

75

(49)

18

(6)

6

(15)

25

(8)

-

No. of agricultural holdings


· 1978

000

1 660

1 004

564

789

-

· 1993

000

2 506

1 408

799

934

-

Size distribution of holdings in 1993 (1978)


· under 6 raib

%

13.2

(10.2)

29.1

(24.3)

21.2

(17.6)

22.0

(15.9)

-

· 6 to 9 rai

%

12.4

(10.6)

15.6

(15.2)

15.2

(15.5)

9.9

(8.6)

-

· 10 to 39 rai

%

61.7

(62.4)

44.7

(46.7)

52.5

(56.9)

50.4

(53.0)

-

· 40 rai and over

%

12.7

(16.8)

10.6

(13.8)

11.1

(10.0)

17.7

(22.5)

-

Source of household income 1993


· Agriculture only

%

45.64

47.00

44.77

46.48

-

· Mainly agriculture

%

30.91

29.53

21.81

29.3

-

· Mainly from agricultural work

%

1.87

2.19

5.28

3.09

-

· Mainly from other sources

%

14.36

15.71

22.42

15.28

-

· Equally from agriculture and other sources

%

7.12

5.57

5.72

5.85

-

Notes: a Data for 1992: b 1 rai is 0.16 ha.

Source: Thailand Development Research Institute (1997); National Statistics Office (nd); Chandhanamutta (1991)

Besides these broad differences, there are other features of the regions that need also to be recognized as they might influence economic activity. As an example, it seems that the location of farmer’s houses varies between regions. The Sectoral Economics Program (1995) points out that farmers in the Central region, the lower part of the Northern region and most of the North-eastern region build their houses in a cluster or in a strip village, usually at some distance from their farms. This means that for these farmers the raising of expensive livestock is risky because of the increased possibility of theft. Thai farmers have been found to be risk averse according to research by Binswanger and others, cited by the Sectoral Economics Program (1995). With the exception of the Northern region, the average size of farms in Thailand has decreased. This reflects the fact that land availability for agricultural purposes is very limited due to increased population pressure and government policies that have reclassified some land into national parks and other regions quarantined from further agricultural development.


[1] Thai government statistics are reported according to western calendar and also according to Buddhist years. The western year 2001 is 2544 in Buddhist years.
[2] These growth rates are for GDP at 1988 prices.

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