Despite the prevailing volatilities in the farm goods market, KASIKORN RESEARCH CENTER (KResearch) forecasts that a healthy trend in farm product prices may continue throughout the remainder of this year and over the next few years. This is due to many supportive factors, e.g., the global warming, shifts in some cultivation areas for growing energy plants, plus strong demand in fast-growing economies, e.g., China and India.
With the windfalls from the upbeat trend in farm produce prices, Thai farmers may opt to expand their plantation areas and increase productivity to ensure higher output. KResearch, therefore, views that agriculture will become a more significant component of Thailand's GDP and there will be a shift of labor back toward the agricultural sector. If the steep farm prices persist over the next 1-3 years, an inverse labor migration to farm sector may take place, i.e., there would be a reverse trend of mass exodus of labor from rural farmlands to urban areas in search of work in other sectors. This may possibly lead to labor crunch in non-farm sectors, in particular, if the average income parity between the farm and non-farm sectors is not significantly different. Under those circumstances, wage hikes in industrial sectors may be inevitable as a way to prevent the problem of labor drains. Therefore, KResearch is of the opinion that the government should place greater emphasis on enhanced productivity of labor both in the farm and non-farm sectors to ensure higher per capita output. This may help offset higher labor costs caused by labor shortages, due to shifts of workforce back to the agricultural sector, as well as the falling number of working population amid a declining birth rate.
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