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24 Apr 2008


World’s Food Crisis: Impacts…Opportunities for Thailand (Current Issue No.2064)

Dramatic increases in global food prices have become an overriding concern for international organizations. All concerned have agreed that collaborative and proper actions are needed to tackle this alarming problem. So far its impact has been wide-ranging, as evidenced from the unrest in many poor countries where civil protests and riots have occurred in the wake of food shortages and runaway prices. With the warning signs of a global food crisis now evident, Thailand, as an agricultural country and one of the world's top food producers should turn this crisis into opportunity. Blueprints for developing Thailand into a ;world's food hub” should be mapped out to cope with the future - where food will become a more valuable resource.
The United Nations forecasts that the world will be plagued with widespread famine/food scarcity and severe long-term spikes in food prices. The effects of this are likely to be more startling than what was seen during the Forex Crisis in the 1970s that led to global unrest after the International Monetary Fund (IMF) demanded that poor countries implement cuts on farm subsidies. Grain prices, as a result, skyrocketed sharply and the impact was felt worldwide with uprisings in over 40 countries still remembered as the ;IMF Riots”. Those events led to the downfall of ruling governments in many countries such as Sudan and Peru.
How long the food crisis caused by sudden price hikes will linger is hard to predict. The Economic Research Service (ERS) of the US Department of Agriculture warns that global grain prices could escalate by one percent on average every year until 2016. By the end of 2016, grain prices will possibly have surged by at least 8.3 percent over the 2008 year-end. If this forecast comes true, several global regions – already confronting famine – may even plunge into political and social crises.
The global food crisis, however, is a good opportunity for Thailand. As a world's major food producers, Thailand has ample food to feed their own citizens and to generate income from exports. As we are an agricultural country and one of the world's top food producers, we should turn this crisis into opportunity. Plans for developing Thailand into a ;world's food hub” should be mapped out to cope with the prospect that food will become a more valuable resource. Meanwhile, the national development plans over short-, medium-and long-term should be mapped out in a unified and systematic manner, focusing on our strength as an agricultural country. Emphasis should be placed on the upgrade in farm technology to boost productivity per rai, reservation and expansion of farming areas across the country plus effective water management.
A point of consideration for Thailand is proper proportion of cultivation for food and energy crops. International organizations recently recommended that agricultural countries should give their priority to food crops over energy crops. However, as Thailand is a net importer of energy, cultivation of energy crops for future needs is still vital. Finally, the point will lie in the extent of efforts from OPEC countries on oil price curbs.
Amid the dramatic increase in food prices, the Thai government still insists to let free market mechanism function without export restrictions. This has put heavier burdens on consumers but may benefit farmers. Fortunately, there has yet any sign of supply shortage here. As the prices will continue to surge, farmers should ready themselves through effective resource allocations for cultivation of lucrative crops, investments in advanced farming technology to ensure increased productivity per rai, especially on machinery and for improvement of water supply, i.e., the drilling of artesian wells and installation of underground irrigation systems. Despite high investment, this will result in effective water usage that will eventually boost farmers' income. For food traders, they have made gains considerably amid the surging food prices.
Looking ahead, if grain prices come down, the government's market intervention policy should be reinstated to ease the burdens of farmers and consumers, alike. On the contrary, if cereal prices continue to escalate, the government may be challenged with a major decision on two issues, i.e., competing priorities between food and energy crops and balance between export volume and domestic supply with acceptable prices. These conflicting issues may become flared up with surges in the global food prices. The government's prudent consideration is thus needed to ensure fairness to all concerned, either the winner or the loser.

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