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8. Government policy


It is difficult to obtain details of government intervention in the livestock sector. A comprehensive study was carried out in 1989 by a team sponsored by the Asian Development Bank, but since then there appears to have been little analysis and/or discussion of livestock policies. According to Burch (1996), the state played only a minor role in agricultural development in Thailand. In the pre-war period, state investment was directed at railways in preference to irrigation. While rice remained the cornerstone of the agricultural sector[8], diversification began in the early 1960s, with farmers starting to cultivate cassava and maize. Burch, citing Krongkaew (1995), points out that the first National Economic and Social Development Plan (produced for 1961-66) shifted the emphasis to some degree with the state providing support for infrastructure development while leaving the major role for investment in productive facilities to the private sector. Farmers received support from the Bank of Agriculture and Agricultural Cooperatives (BAAC) and the agro-processing sector from the Board of Industrial Promotion (superceded by the Board of Investments in 1977). Burch argues that Thailand's agricultural sector was grossly undercapitalised, with 14 percent of the cultivated area being irrigated and only 4 percent of the rice area being double cropped. A second wave of diversification began in the early 1970s, and it was based upon the production of a wide variety of value added and semi-processed foodstuffs. There was also extensive state involvement (Burch 1996).

That there is relatively little information available on intervention in Thailand's livestock industries is not surprising. These industries, with the exception of the poultry industry and the pig meat industry, have been a relatively minor part of Thailand’s agricultural sector. Burch (1996) provides information on government policies and the agro-processing industries. He explains how the Fourth Economic and Social Development Plan (covering 1977 to 1981) indicated the government should encourage industrialisation concurrently with agricultural development and give support to basic industries, supporting industries and agro-industries. Incentives have taken the form of guarantees against nationalization and competition from state enterprises; protection from import competition, and tax exemptions and deductions for exporters. The Board of Investments offered incentives designed to encourage industry to locate in rural areas outside of the Central Plains region.

Table 8.1 Tariff rates on meat products, Thailand

Tariff item

Existing tariff

GATT base tariff

GATT bound tariff

Reduction

Period

(%)

(%)

(%)

(%)

Meat of bovine animal fresh, chilled or frozen


· Bone in

60

60

50

16.6

1995-2004

· Boneless

60

60

50

16.6


· Carcass

60

60

50

16.6


Meat of sheep, lamb or goats, fresh, chilled or frozen


· Lamb

60

50

30

40


· Sheep

60

50

30

40


· Carcass

60

50

30

40


· Bone in

60

50

30

40


· Boneless

60

50

30

40


· Goat

60

50

30

40


Edible offal of bovine animals, sheep or goats, fresh, chilled or frozen


· of bovine animals

60

60

30

50


· of sheep or goats

60

60

30

50


Sausages & similar products, of meat, meat offal or blood; food preparations based on these products


· homogenised preparations

60

60.5 baht/kg

40.34 baht/kg

33.3


· of liver of any animals

60

60.5 baht/kg

40.34 baht/kg

33.3


· of bovine animals

60

60.5 baht/kg

40.34 baht/kg

33.3


· other, including preparations of blood of any animal

60

60.5 baht/kg

50.42 baht/kg

16.6


Whole hides & skins of bovine animals, sheep or goats, fresh wet-salted or otherwise preserved


· of bovine animals

60

30

27

10


· of sheep or goats

60

30

27

10


Live bovine animals


· pure bred breeding animals

free

free

free

na


· for slaughter

60

40

30

25


Live sheep or goats


· pure bred breeding animals

free

free

free

na


· for slaughter

60

40

30

25


Burch (1996) goes on to explain that the Board of Investments sets out rules regarding the capital used in industry, including those industries that are agro-based.

Board of Investment data obtained by Burch are presented in Table 7.2.

Investment applications submitted from 1 August 2000 are subject to revised regulations (Investment 2001). Priority activities are as follows.

Unlike the earlier policy, corporate tax exemption and exemption from import duty on machinery is provided, regardless of location. There are a number of other privileges according to zone. Investments in Zone 1, made up of Bangkok and five provinces, receive the following benefits:

Projects in Zone 2, made up of 12 provinces, have similar (but more generous) benefits and projects in Zone 3 (made up of the remaining 58 provinces) are treated even more generously. For example, Zone 3 projects are exempted from import duty on machinery, and corporate tax exemptions are available for up to eight years, subject to the project satisfying certain conditions laid out in Investment 2001. Regulations on shareholding have been altered. For projects in agriculture, animal husbandry, fishery, mineral exploration and mining and service businesses under Schedule One of the Foreign Business Act B.E. 2542, Thai nationals must hold shares not less than 51 percent of the registered capital. Manufacturing projects in all zones may have majority or complete foreign ownership. The Board of Investment has discretion to fix shareholding at whatever level it deems appropriate.

Table 8.2 Structure of investment in selected agri-food sectors, 1990

Item

Number of companies

Total investment

Investment in 100 percent Thai companies

Investment in joint ventures

Investment in wholly owner subsidiaries

Thai capital in total investment

(mill. Bt)

(mill. Bt)

%

(mill. Bt)

%

(mill. Bt)

%

(mill. Bt)

%

Milk and dairy products

12

631

173

27

358

57

100

16

305

48

Animal feed

84

5 159

1 420

28

369

71

60

1

2548

77

Livestock raising or meat processing











Aquaculture

84

4 490

1 621

36

2 869

64

na

na

3535

79

Other

11

905

na

na

na

na

na

na

na

na

Slaughtering and processing of chickens for export

14

2 055

1 152

56

903

44

na

na

1721

84

Source: Burch (1996), p.328-9


[8] In the 1960s, the two main taxes on rice - the rice premium and the rice export tax - provided 20 percent of government revenue. The rice premium was zero rated in 1986 and the export tax was abolished in 1990 (Burch 1996).

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