Publication Code: Y89E
by Ammar Siamwalla, Suthad Setboonsarng, and Direk Patmasiriwat
World agricultural trade over the next decade will continue to be depressed by problems of oversupply, and it is unlikely that the present GATT round of trade negotiations will be successful in making a sizable dent in the oversupply. Although prices re not expected to be as low as they were in 1987, it is expected to be only slightly above that on average.
These developments will not affect the trade orientation of Thai agriculture. The crop subsector is expected to continue to produce a net exportable surplus in the aggregate over and above domestic demand. A study of comparative advantage in the fisheries subsector indicates that Thailand enjoys favorable production conditions for much of that sector (except fishmeal) so that it will probably continue to generate surpluses in this area as well. Our own studies show also that, within the livestock sector, the Thai poultry industry enjoys substantial comparative advantage. The swine industry also does, although the margin of advantage is not as decisive. Thailand however has no comparative advantage in the dairy industry, which can only be sustained by protection.
Despite some exceptions, Thai agriculture is therefore expected to be producing an exportable surplus, despite the expected fall in prices (relative to levels ruling in 1989). Therein lies some of the problems, for it implies that without an increase in productivity, their incomes cannot be expected to rise. Policies designed to shore up their incomes would imply a net outlay from the government, which, given past behavior patterns, is unlikely.
Increases in productivity can be generated only by putting more effort into research on new technology. Unfortunately, such research tends only to help farmers in areas that are already productive, and therefore would enhance inequalities among different regions in the country.
December 1989