Strong baht a double-edged sword to farm sector
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”.