The outlook of Thai agricultural products in 2020 will continue to be under pressure from drought and the global economic slowdown. Thailand may face severe drought conditions, which will continue from 2019. As of December 25, 2019, the amount of usable water in the dams nationwide stood at 21,197 million cubic meters, close to the level registered late 2014 that caused extensive damage to the agricultural sector in the 2015 crop year. Therefore, it is necessary to keep an eye on the water situation next year in order to handle the risks. It is expected that the farming areas in the northern and northeastern regions are most at risk from drought in the 2020 crop year, which will affect off-season rice and sugarcane plantations. Overall, prices of agricultural produce are projected to increase due to the lower farm output. The prices of major farm products are set to rise across the board, especially rice and palm oil. Nonetheless, the lackluster demand from the global market is likely to curb the rise of the farm prices.
KResearch predicts that the overall farm output for the year 2020 should fall by 2.0 percent YoY due to a significant drop in rice production. Meanwhile, the overall farm prices are set to increase within a limited range of 1.5 - 2.0 percent YoY. Both factors present a grimmer outlook from the previous year. Therefore, the government is expected to continue implementing agricultural policy to help farmers reduce costs and increase their income next year. Farmers' incomes are projected to slightly increase by 0.0 - 0.7 percent YoY, this estimate takes into consideration the farmers' income guarantee program. Without the farmers' income guarantee, the farmers' income growth would be around - 0.5 to 0.0 percent YoY.
Nonetheless, the impact of the short-term measures should be closely monitored and evaluated because it is also necessary to consider other measures in accordance with the market situation. Additionally, the government should attach importance to long-term farm assistance measures to upgrade Thailand's farm produce and production capacity to increase the yield per rai as comparative advantage is an engine to drive the Thai farm sector in the long run.
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