Thailand's Wheat, Maize Outlook
September 01, 1998
by Teresa Acklin
The changing eating habits of the Thai population is driving demand for wheat-based foods while the burgeoning animal feed industry gobbles up maize production.
Rapid economic expansion in Thailand and the growing middle class have increased the levels of disposable income and stimulated the growth of imports, especially agri-food products, but agricultural exports are declining rapidly, said Yodsaporn Chantachume of Thail-and's Department of Agriculture.
Dr. Chantachume, a senior maize breeder at the Nakhon Sawan Field Crops Research Center, spoke in March at the Wheat and Corn Outlook Conference '98 in Manila, the Philippines. In his presentation, “Thailand: Outlook for Corn and Wheat Industry,” Dr. Chanta-chume said the market for imported agricultural and food products in Thailand was estimated at U.S.$3 billion to $4 billion annually. Demand for these products is growing about 10% each year, he said.
“Consumers in Thailand now look for food products characterized by greater convenience in preparation, better quality and improved nutritional value,” he said. “Constantly increasing exposure to foreign foods also has generated demand for a more diverse range of products.” Thailand, in line with its international obligations, has begun reducing tariffs on agri-food products, he said. Customs duties for most products were reduced to 20% in 1997 from 60% just a few years ago, he said.
While the Thai economy has grown steadily over the past three decades and its gross domestic product (GDP) is among the highest of the Southeast Asian countries, the country's economy is shifting slowly away from agriculture, Dr. Chantachume said.
He said the decline of Thailand's agricultural sector in the GDP and the increasing share of the industry and services sectors was a result of scarce arable land, unfavorable weather conditions and limited availability of irrigated areas, which account for less than 20% of agricultural land. Moreover, Dr. Chantachume said, agricultural exports are facing a decline in prices and intensified global competition. This trend is likely to continue in the near future, he added.
Until the 1990s, Thailand had consistently been one of the world's top six exporters of agricultural products. Although its share of total exports has remained fairly constant, there has been a substantial change in composition, Dr. Chantachume noted. Exports of food and processed food, including rice and maize, has declined while exports of manufactured goods has increased dramatically.
From the mid-1960s until the early 1980s, Thailand's growth in agricultural production came from expanding planted areas and improving yields, he said. Today, however, land planted to major crops is shrinking because of the rapid growth of residential and industrial areas.
However, as a result of the Asian economic crisis, Thailand's agricultural sector is expected to become more important in the next few years, according to Dr. Chantachume.
Domestic demand for wheat is expected to continue to increase as the eating habits of the Thai people are changing. Wheat-based products, including pies, cakes, bread dough, hamburger buns, Chinese dim sum and fresh noodles, are growing in popularity in Thailand and people are eating an increasing amount of fast food for breakfast and lunch, he said.
However, Thailand's wheat production is not sufficient to meet this increasing demand, Dr. Chantachume said, and wheat imports are expected to increase at least 10% a year despite the recent economic slowdown.
Maize production in Thailand in the next few years is expected to be stable or slightly increase, he said, as farmers adopt more modern technology, even as the areas planted to maize are declining. Domestic demand, which accounts for more than two-thirds of total maize production, is expected to increase about 17% annually.
The quality of Thai maize also should improve as farmers become aware that higher quality grain will bring a higher price, Dr. Chantachume said. “If the quality problem of maize can be overcome, there will be more competition between domestic and export markets, which will mean more favorable prices to maize farmers,” he said.
MAIZE PRODUCTION GROWING. Maize has been one of Thailand's leading economic crops over the past four decades, both as an export product and as an animal foodstuff, Dr. Chantachume said.
Areas sown to maize averaged about 1,749 million tonnes in the 1980s, up dramatically from an average of 78 million tonnes in the 1950s, but have declined in the 1990s. Although maize planting areas have dwindled in recent years, production and yields have increased.
Today, some maize planting areas in Thailand are being used for other crops, Dr. Chantachume said, such as sugar cane and cassava. The production of maize in the central, north and northeast parts of Thailand varies from year to year, he said, depending on the change in maize prices, the amount of rainfall and time of planting.
“There is an urgent need for research and development on high-yielding varieties, especially hybrids with resistance to pests; tolerance to environmental stress, such as drought and low nitrogen; and broad adaptability,” he added.
One possibility for such varieties is planting them in paddy fields where irrigation is available, Dr. Chantachume said. “The breeder must identify tolerant germplasm sources that may be combined with high-yielding sources to produce high-yielding varieties with good agronomic characteristics and adaptability in different environments,” he said.
Most farmers in Thailand still use low technology in maize production, Dr. Chantachume said. Farmers have not used the recommended types and levels of fertilizer because of the increasing price of fertilizer, he said. A lack of up-to-date farm machinery and a decline in agricultural land also have limited Thai maize production, he added.
It is expected that areas sown to maize will be stable or only slightly increase in the next three years since other crops, such as sugar cane, sesame and cassava, may be more profitable for farmers. However, the areas sown to maize as a second crop after rice are expected to increase, Dr. Chantachume said, since Thailand's Ministry of Agriculture has recommended that farmers plant other crops that require less water than rice.
Maize production in Thailand also is expected to benefit from the use of high-quality seed, good hybrid varieties and chemical fertilizer, he said.
MAIZE EXPORTS DECLINING. Before 1990, Thailand was a leading exporter of maize, with more than 80% of all production exported, Dr. Chantachume said. Maize exports averaged about 75 million tonnes in the 1950s and reached a high of 2,446 million tonnes in the 1980s but have declined dramatically in the 1990s. In 1997, maize exports totaled only 28,000 tonnes, which accounted for only about 2% of total production.
Increasing demand from Thailand's rapidly growing livestock and feed industry have reduced maize exports, Dr. Chantachume said. There are currently about 48 feed mills located in 18 provinces in the northern, central and southern regions of Thailand that manufacture for domestic consumption and export, he said.
Demand for good quality grain by the feed industry increased to 4.7 million tonnes in 1996 from 800,000 tonnes in 1983. Because domestic demand has exceeded supply, Thailand had to import nearly 500,000 tonnes of maize from China in 1992, 1995 and 1996.
Another factor restricting exports is the quality of Thai maize, especially aflatoxin contamination, Dr. Chantachume said. Before 1990, the major importing countries of Thai maize were Japan, which exported about 40% of the total; Taiwan; Singapore; and Hong Kong. Today, Thailand's maize import market consists primarily of neighboring countries, such as Malaysia and Singapore, he said.
While maize imports and declining planting areas have combined to lower the price of maize in Thailand, Dr. Chantachume said he expected prices to increase in the next few years as world maize production drops because of the effect of El Nino. Also, the devaluation of the baht, Thailand's currency, “will play an important role in encouraging the amount of maize exports,” he said, and competition between exporters and the feed industry will increase demand.
“In order to meet domestic demand while maintaining a certain export earning, government policy should be geared toward the increase in maize production through the promotion of yield-increasing technologies, expansion of agricultural credit programs and the support of post-harvest technologies for better quality products,” Dr. Chantachume said.
A shortage of farm laborers in Thailand in recent years should be resolved, Dr. Chantachume said, as workers begin to move back to farms from industrial sectors as a result of the Asian economic crisis. However, farm income may not change, he added.
WHEAT USE ON THE RISE. Bread consumption and demand for other wheat-based food products has greatly increased in Thailand over the past decade as eating habits have changed, Dr. Chantachume said.
In 1993, Thailand domestic demand for wheat and barley (which is used mainly in the production of beer) totaled 537,176 tonnes and 109,483 tonnes, respectively, he said. Use of these commodities by Thailand's food industry increased 15% and 27% per year, respectively, during 1988 to 1994, he added.
During this period, wheat and barley imports increased at least 17% per year and 28% per year, Dr. Chantachume said. In 1993, Thailand imported approximately 613,667 tonnes of wheat and 108,385 tonnes of barley, with a value of U.S.$119.3 million and U.S.$45.4 million, respectively. Major importers included the United States, Canada and Australia.
This trend is expected to continue, Dr. Chantachume said, although he added that the rate of imports may slow somewhat in the next few years because of the economic crisis and the decrease in the value of Thailand's currency.
Domestic production of wheat and barley also is on the rise in Thailand, Dr. Chantachume said.
Wheat was introduced to Thai farmers by the government in 1988. During the period of 1988 to 1993, wheat and barley production grew 26% and 17%, respectively. In 1993, wheat production in Thailand totaled 830 tonnes and barley production totaled 1,098 tonnes, he said.
The government has a policy to increase production of these two temperate cereal crops in the Chiangmai, Chian-grai, Lumpune, Lumpang, Payaoa, Nane and Maehongaorn provinces in the north of Thailand, Dr. Chantachume said. By 2001, areas planted to wheat and barley is expected to reach 4,320 hectares and 10,400 hectares, respectively, and production is expected to reach 5,670 tonnes and 13,600 tonnes.
In the highland areas, Dr. Chanta-chume said, the net benefit income to the farmer who planted wheat is U.S.$31 per hectare (U.S.$45 per tonne), while the input cost is U.S.$73 per ha (U.S.$106 per tonne). For farmers in the irrigated lowland areas, the net benefit income is about 51% higher than that of the highlands, he said, at U.S.$63 per ha (U.S.$63 per tonne), while the input cost is 17% higher than the highlands, at U.S.$88 per ha (U.S.$87 per tonne).
For highland barley, the net benefit income to the farmer is U.S.$27 per ha (U.S.$39 per tonne), while the input cost is U.S.$101 per ha (U.S.$147 per tonne). In the irrigated lowlands, the net benefit income is U.S.$120 per ha (U.S.$96 per ton), while the input cost is U.S.$113 per ha (U.S.$90 per tonne).
Although domestic production of wheat has increased in Thailand since 1988, the grain is of low quality and is not uniform, he said.
“To solve this problem, the government is now aiming to transfer new technology involved with the production of the two crops, including new high-yielding varieties, cultural practice, plant protection, post-harvesting and food processing to the farmers,” Dr. Chanta-chume said. “Credit is also provided for farmers, especially for wheat and barley growers.”
Imports of wheat and barley,
Year Wheat Barley
1990 270,455 9,475
1991 394,598 7,028
1992 443,074 8,057
1993 613,667 10,838
1994 670,509 9,147
1996 610,899 11,221
Source: Agricultural Statistics of Thailand
Estimated planting areas and production
of wheat and barley through 2001
(in 1,000 tonnes)
Year Wheat Barley
Area Production Area Production
(ha) (tonnes) (ha) (tonnes)
1998 2,880 3,240 8,000 9,000
1999 3,360 3,990 8,800 10,400
2000 3,840 4,800 9,600 12,000
2001 4,320 5,670 10,400 13,600
Source: Thailand Department of Agriculture, 1997
Maize planted areas, production, export and imports, 1950-1997
Area Production Yield Exports Imports
Year (1,000 ha) (1,000 tonnes) (kg/ha) (1,000 tonnes) (1,000 tonnes)
1950-1959 78.2 104.9 1,206 74.57
1960-1969 514.6 1,026.8 1,981 948.98
1970-1979 1,194.4 2,326.1 1,950 1,889.55
1980-1989 1,748.8 3,832.0 2,350 2,446.24
1990 1,665.6 3,720.0 2,406 1,235.13 0.72
1991 1,475.0 3,790.0 2,712 1,232.13 0.90
1992 1,351.4 3,670.0 2,969 145.74 445.25
1993 1,339.2 3,330.0 2,731 212.92 9.26
1994 1,412.6 3,960.0 2,937 144.46 10.26
1995 1,336.0 4,150.0 3,112 42.58 450.00
1996 1,387.2 4,390.0 3,169 45.00 400.00
1997 1,393.6 4,120.0 2,975 28.00 269.06
Source: The Office of Agricultural Economics,Kritpon. Maize planted areas, production, export and imports, 1950-1997