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22 Dec 2020

Econ Digest

The impact of the southern floods in early December 2020 will continue until March 2021, dragging down the production of rubber and palm oil, causing income loss of more than THB6.6 billion.

          KResearch assesses that southern rubber and palm oil growers may lose approximately THB6.6 billion in income due to the impact of flooding from December 2020 to March 2021. 

          A shortfall of around 0.58 million tons in both rubber and palm oil outputs is expected after floods have wreaked havoc on rubber and palm oil trees, which is divided into a loss of about 80,000 tons of rubber production and a loss of about 500,000 tons of palm oil production, which will cause a loss of about THB 4.075 billion in income for rubber farmers and a loss of about THB 2.524 billion in income for palm oil farmers.

The above figures may not affect the overall Thai economic performance because those losses account for only 0.04% of GDP. However, flooding will inevitably hurt southern households that are already experiencing hardship quite substantially in terms of income. Their income could be threatened further by an expected decline in rubber and palm oil prices as supplies will gradually return to normalcy after flooding has eased. In addition, bleak rubber and palm oil export prospects due to the ongoing COVID-19 pandemic will likely cause prices to trend lower. Therefore, it is the right time for the government to implement phase 2 of the income guarantee scheme for rubber and palm oil growers as this program can help sustain farmers’ income in Southern Thailand. 

                                                                                                                                Image(s) used under license from Shutterstock.com.

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Econ Digest