Agricultural product prices in the first four months of 2021 were mostly favorable, especially the prices of rubber, cassava, sugar cane and oil palm, reflecting through Agricultural Price Index that rose approximately 10.4%. Supportive factor was the demand both at home and abroad despite facing the outbreak of COVID-19, as agricultural products are considered essential for consumption, thus the impact is limited. However, the price of rice declined due to the intensifying global competition and the increasing output (approximately 1.3%YoY) as a result of mild drought.
KResearch assesses that prices of most Thai agricultural products, including rice, rubber, cassava, oil palm and sugarcane, will decline during the remainder of 2021 due to the double shock from both a supply glut resulting from favorable climate conditions for crop cultivation and weakening domestic demand caused by the impact of COVID-19. Given this, agricultural product prices may increase at a slower rate of 0.3-1.3%YoY and agricultural output will likely grow 1.1-2.1%. Farm income, therefore, is projected to increase 1.9-2.9% during the rest of 2021.
For the full year of 2021, KResearch views that the overall agricultural product prices will continue to increase at 3.5-4.5%, while agricultural product prices may increase at 1.0-2.0%. As a result, farm income is projected to grow 5.0-6.0%, which is higher than the growth rate in 2020. Anticipated increases in rubber, cassava, oil palm and sugarcane prices will help boost income for such farmers. However, rice growers are expected to see a slump in rice prices. They, therefore, may be the first to receive urgent assistance from the government.
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