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30 Jun 2023

Agriculture

Thailand's fruit exports in 2023 have grown, but production costs and volatile weather conditions continue to put pressure on businesses (Current Issue No.3418)

คะแนนเฉลี่ย

        KResearch holds the view that the value of Thailand's fruit shipments in the first five months of 2023 saw promising growth thanks to the main fruit season, the expansion of fresh fruit exports compared to a low base in 2022, and a significant increase in fruit exports to new markets. However, economic slowdown among Thailand’s key trading partners, particularly China and the US, and the impact of volatile weather conditions, may put pressure on the growth of Thailand’s fruit exports during the remainder of the year. As a result, the value of Thai fruit exports for full-year 2023 may reach around USD 7.8 billion, expanding by 2.3 percent YoY. Products with growth potential include fresh, chilled and frozen fruits, driven by demand from the Chinese market. Meanwhile, products likely to see slower growth are canned and processed fruits due to reduced exports to major markets like the US and the EU.

        Going forward, managing production costs, especially from raw materials and labor which collectively account for nearly 80 percent of total costs on average, will remain a challenge for fruit exporters. Extreme weather events, a rapid rise in global temperatures and sea levels, along with the El Niño phenomenon pose risks to production and prices of raw materials worldwide. Meanwhile, labor costs will tend to increase following the formation of a new government, amid labor shortages and competition for workforce in the manufacturing sector. Businesses thus need to adapt by improving workers’ skills and productivity, while investing in production technologies to replace human workers. However, such adjustments would lead to increased costs. Additionally, utility and financial costs are expected to remain high, possibly affecting the competitiveness of exporters and importers. Under these circumstances, the fruit business, especially canned and processed fruits, will become more complex and challenging, particularly for numerous small and micro operators. The majority of such businesses still operate at only a small profit or even a loss. Consequently, the ability to increase sales or generate profits is a challenge for businesses amid intensified competition.

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Agriculture

Fruit