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11 Nov 2005


Thailand's Seed Industry: Gearing up to become Regional Hub


Seeds are a key production factor influencing quality and quantity of output. In developed countries like the European Union, the US and Japan, the seed industry is thus regarded as an important one, and emphasis has been placed on research and development to improve the quality of seeds. Still, hindrances to the seed business in developed countries lie in their high wages and land space for seed cultivation. Under these circumstances, the relocation of production bases for the seed industry to developing countries has recently been seen. As a matter of fact, Thailand has the potential to become the center of the seed industry for Southeast Asia. Our country is home to seed specialists ? particularly for vegetables, crops and flowers ? who have steadily conducted research and development on plant varieties. We have a favorable climate and sophisticated production-related technology. Additionally, Thailand's seed examination and certification processes are of international standards, while our transportation systems are fast and convenient.

Thai producers in the seed business have been successful in research and development on numerous types of crop seeds including rice, corn, soybeans, groundnuts, mung beans, cotton, sesame, etc. Even so, most vegetable seeds in Thailand are imported, because the country is still unable to produce F-1 hybrid seeds, commonly known as 'foundation seeds', for vegetables. The originating countries keep these to protect proprietary cultivation of strains. In order to earn income for the country from this business, Thailand has thus imported F-1 hybrid seeds from seed producing countries in order to breed stock seeds domestically. Experts should be sent to the originating countries to study methods in breeding, maintaining and cross-breeding seeds. The seeds obtained from these processes could then be distributed to farmers for cultivation using experts' advice. Once they yield harvestable product, the seeds could be purchased and returned to the breed proprietors for sale as certified seeds onto the world market.

Thailand's import value of seeds is around THB500 million per annum, while the average export value has been around THB1 billion, which means that Thailand gains a trade surplus on seeds averages around THB500 million per annum. The trade surplus can be attributed to the fact that prices of exported stock seeds are higher than those of imported foundation seeds. However, the seed market in Thailand is considered small compared to the global market whose annual trade turnover is as high as THB120 billion (around USD3 billion).

The government and seed business entrepreneurs have cooperated to define a development direction for continuing research on commercial seed business, creating trust toward Thai seed trademarks, and enhancing the efficiency of networks to farmers who produce the seeds. A target has been set for the development of the seed business over the next 5 years, and it is expected that the export value will be increased from an average of THB1 billion per annum to THB4-5 billion per annum, also cutting seed imports to only THB200 million per annum. However, an important risk factor that could impede Thailand from becoming the center of seed production and distribution for this region is investor confidence in the Thai seed business. At present, there are problems with seed theft, causing entrepreneurs in the seed business to relocate their investments to other countries, which will become Thailand's important rivals, i.e., India, Indonesia, Vietnam and Burma.

Thailand's Trade Balance in Seed Business
: MB
Jan-Sep 2004
Jan-Sep 2005
Imports407.97 312.12404.08582.72 425.14305.00
Exports 979.97 845.921,005.861,070.59 911.46999.19
Trade Balance 571.99 533.81601.77487.88 426.32697.19

Source: The Customs Department, compiled by KResearch