KResearch views that the price trends seen in major agricultural produce are already showing a mixed picture in 2018. Some produce are projected to gain higher prices, e.g., rice and cassava, which should return to price gains after less appealing prices in 2017, increasing 2.0 and 21.4 percent YoY this year, respectively, due to higher demand.
However, rubber and palm oil may suffer weaker prices than during 2017, since they are set to decrease by 20.0 percent and 7.3 percent YoY, respectively. Their slumps are attributed to large unsold stockpiles held domestically and internationally. Sugarcane prices may also fall by as much as 16.2 percent YoY, pressured by higher output as a result of increased water supplies and thus better irrigation.
Regarding the outlook over the rest of the year, it remains to be seen whether the government will introduce additional initiatives to shore up agricultural produce prices on top of current measures, such as a loan program to delay paddy sales, promotion of increased domestic rubber use and other long-term measures, namely agricultural zoning and efforts to encourage farmers to grow other high-value crops such as organic rice. Any policies to be implemented to sustainably manage domestic farm produce prices must take into consideration the impacts of such policies on everyone in the value chain. At the same time, farmers must also re-think their business approaches and perhaps seek the means to earn supplementary income, as well.
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