Low commodity prices to hit farm incomes

In a research note, TMB Analytics said that income from five economic crops – rice, rubber, sugar cane, tapioca and palm oil – could fall by 6 per cent or Bt45.2 billion this year. “2016 will be a lacklustre year for the farmers,” it said.
At its peak, rice generated Bt350 billion income for farmers. However, this year the drought is expected to take a toll on the crop, as many provinces were barred from a second harvest. Also, rice prices could not be raised due to the huge government stockpile, which was as high as 13 million tonnes. Meanwhile, demand is under pressure due to the economic slowdown in importing countries like China and Africa.
China is also a big importer of rubber and tapioca from Thailand.
Meanwhile, sugar prices are falling in line with other commodities due to the decline in oil prices. Palm oil price is also expected to fall due to huge stockpiles.
TMB Analytics’ data showed that each year, the five crops generated more than Bt750 billion for farmers. Of the total, farmers in the Northeast commanded 34 per cent or Bt254 billion. Trailing behind are the South and the North, by 27 per cent or Bt201 billion and 19 per cent or Bt142 billion, respectively.
Low prices will hurt farmers in the Northeast the most. Their combined income could be slashed by Bt16 billion, due to low rice and tapioca prices, the data showed. Meanwhile, farmers in the South would see their incomes slashed by Bt11 billion due to lower palm oil and rubber prices.
“There are concerns that the disappearing income could further dent farmers’ purchasing power. This would reduce spending in the areas and could negatively affect small and medium-sized enterprises,” the bank said.
First to be hit are distributors of fertilisers, agricultural machines and durable goods like trucks, motorcycles, electrical appliances, construction materials, furniture and clothes.