KResearch has assessed that the overall Thai agricultural sector in 2H21 will likely grow at a slower rate compared to 1H21. This slowdown can be attributed to the prices of most agricultural products that are expected to decline due to the accelerated growth of farm output by 1.1-3.0 percent YoY. Higher levels of rainfall are expected to be favorable to farming, especially the large supply of main-season rice set to enter the market in 4Q21, whereas the ongoing COVID-19 outbreak will continue to suppress demand for agricultural products in the country to some extent. As a result, overall farm prices may rise at a slower rate of 4.3-6.4 percent YoY, with farm income projected to increase in the range of 5.4-9.4 percent YoY.
KResearch is of the view that the outlook for Thai agricultural products in 2021 will continue to improve, with farm income poised to grow in the range of 9.4-11.6 percent YoY, reaching the highest level in 10 years. This would then boost money circulation within local communities and potentially benefit related businesses that are primarily dependent on farmers' demand. However, in reality, there are other factors that are weighing on the purchasing power of farm households, contributing to its fragility amid the dire COVID-19 situation. Thus, the Thai government may need to expedite the distribution of financial assistance to operators of each product category throughout the supply chain.
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