Food industry hits alarm button over baht appreciation
Food industry representatives are urging the Bank of Thailand (BOT) and the Finance Ministry to address worries that the baht will appreciate this year, dampening exports and reducing the income of local farmers.
The Board of Trade of Thailand, the National Food Institute (NFI) and the Federation of Thai Industries’ Food Processing Industry division have jointly set a Bt1.12 trillion target for export of food products. That would be an 8 per cent growth over last year’s Bt1.031 trillion in food exports.
“The strength of the Thai baht in the coming months of this year will be a key factor influencing whether this target is reached,” Poj Aramwattananont, vice chairman of Thailand’s Board of Trade told a press conference yesterday.
The baht’s appreciation had damaged exports of food products in 2018, he said, especially in the first two quarters, and lowered incomes for those in the agricultural sector.
“Although the total exports of food products for 2018 stood at Bt1.031 trillion, growing only by 1.6 per cent year on year when calculated in US dollars, the total value of food exports stood at $32.19 billion, growing by up to 7.3 per cent year on year,” he said. The appreciation of the baht resulted in the differing values and growth rates behind the two calculations, he explained to reporters.
Poj urged the BOT and Finance Ministry to work together to address the issue of the baht appreciating against other currencies, which hurts the income of farmers throughout the Kingdom.
“We are deeply concerned about the trend of the Thai currency as we saw in 2018 how damaging the appreciation can be to the food exports industry. Furthermore, both the BOT and the Finance Ministry have yet to show signs of concern on this issue,” he said.
“We urge the two institutions to come together, along with representatives of the private sector to discuss solutions to this risk factor.”
Last year, the Asean region was Thailand’s largest food export destination, followed by Japan, China and the US respectively. Poj warned that the baht has appreciated against all the currencies of the Kingdom’s top food export markets.
The baht stood at Bt31.30 per dollar yesterday, appreciating from Bt33.27 at the end of October last year.
In 2018, rice took up the largest portion of total food exports, valued at Bt180.116 billion and growing by 17.5 per cent year on year. The outlook for the country’s lead food export is dimmer this year, with rice exports forecast to reach only Bt165 billion, an 8.4 per cent year on year contraction.