Strong baht a double-edged sword to farm sector

[webfact]

Strong baht a double-edged sword to farm sector

By THE NATION

 

 

The strengthening baht is a double-edged sword to the Thai agriculture industry , said Rapibhat Chandarasrivongs, secretary general of the Office of Agricultural Economics (OAE).

 

In 2019, the Thai currency gained 5 per cent in value against the US dollar, from Bt31.81/dollar in January to Bt30.22 in December.

 

The stronger baht lowered the import prices of chemical fertilisers, herbicides and pesticides last year. It also cut the costs of agricultural produce imported as industrial materials.

 

“Besides, shipping costs declined as the baht rose, providing an opportunity for the imports of agricultural technology and machinery ” he added.

However, if it reached Bt29 per dollar, the export value of agricultural produce and food will decrease by 6.57 per cent.

 

Also, if the baht rose beyond that level, it will reduce Gross Domestic Product (GDP) growth of the sector by 2 to 3 per cent, according to the OAE. 

 

“It will erode the competitiveness of the sector, given Thai produce will be priced higher than its rivals',” the secretary general said. 

 

“Moreover, domestic prices of agricultural items would drop, especially produce relying on the export markets”.

 

Source: https://www.nationthailand.com/news/30380544

 

-- © Copyright The Nation Thailand 2020-01-15

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[RichardColeman]

4 hours ago, webfact said:

The stronger baht lowered the import prices of chemical fertilisers, herbicides and pesticides last year.

And yet cheese, wine, Alpen, sausages, pies and gravy continue to skyrocket

[hotchilli]

2 hours ago, RichardColeman said:

And yet cheese, wine, Alpen, sausages, pies and gravy continue to skyrocket

Because they're classed as luxury goods, therefore taxed to protect the local market.

No such thing as free trade in Thailand, it's a one way street.

[lamyai3]

11 hours ago, webfact said:

Strong baht a double-edged sword to farm sector

Or a double-edged scythe, as it's known in the field. 

[Srikcir]

On 1/15/2020 at 2:48 AM, webfact said:

Strong baht a double-edged sword to farm sector

No, it has been a guillotine to BOTH the domestic and export sectors.

When exports decline, the products accumulate for sale in the domestic market, essentially increasing  the volume available for the domestic market. Unsold exports in effect are dumped into the domestic market. That surplus pressures the domestic price downward no matter the reduced cost for domestic production - which itself results in part from government subsidies and artificial government demand.