ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

The nature factor deepens Thailand's turmoil

A rice farmer who identified himself only as Somyod stands by his paddy near Sing Buri, about 150km north of Bangkok. The 46-year-old said he has not seen a payment from the Thai government's rice subsidy program in about a year. Meanwhile, his farm is desperate for rain.

BANGKOK -- A few kilometers out of Sing Buri, the dusty and nondescript capital of the eponymous province in Thailand's central plains, farmers are burning the remains of the harvest from the second rice crop they planted in late 2013. Beneath the plumes of white smoke, the earth is parched. A large dam just out of town is almost empty, and locals say fish in the creeks are smaller and harder to find than usual.

     "It's always dry at this time of year but we didn't get as much rain in last year's wet season, and the hot weather has come earlier," said Somyod, a wiry, weather-beaten farmer.

     Many rice farmers in Thailand's north and northeast have been forced to abandon the second crop due to drought conditions that, in some provinces, are the worst in decades. Already 30 provinces in Thailand have been declared "drought emergencies" by the country's irrigation department. They range from Satun in the south to Phayao, north of Chiang Mai.

     Thailand's Office of Agricultural Economics projects that this year's off-season rice production will drop from the previous year by approximately 500,000 tons, or 5%.

     Usable water reserves in each of the major dams -- Bhumibol, Sirikit and Kaewnoi -- in the Chao Phraya River basin, the nation's main catchment area, were at barely 20% of total capacity in late March. The Thai Meteorological Department has forecast that rains will start later than usual this year, in mid-May rather than April.

     Crops other than rice, including maize, pineapple, rubber and sugar, have also been affected in an agricultural sector that contributes more than 8% of Thailand's annual gross domestic product -- down from 25% in the 1980s.

"Very severe"

Water in general is emerging as a major issue for the Asia-Pacific region, home to about 4.4 billion people, or roughly 60% of the global population. Yet, as the United Nations Economic and Social Commission for Asia and the Pacific reported in March, the region has only about 38% of the world's fresh water.

     The drought in Thailand is part of a prolonged spell of dry weather that has hit much of Southeast Asia. The Intergovernmental Panel on Climate Change in its latest major report warned of the growing impact of global warming on yields of key crops such as wheat, rice and maize in tropical and temperate regions. The cyclical El Nino effect is expected to take hold later this year, depressing rainfall further, and meteorologists are predicting conditions could be even worse next year if the wet season disappoints. 

     "The preliminary findings point to a very severe drought, about the same magnitude as the one experienced in 1997-1998," said Hiroyuki Konuma, the U.N. Food and Agriculture Organization's regional representative for Asia and the Pacific.

     The 4,350km-long Mekong River -- the lifeblood for millions of rice and fish farmers in Laos, Thailand, Cambodia and Vietnam -- is at its lowest level in 50 years. Rice and coffee sectors in densely populated Vietnam have been badly hit; so, too, have fishermen, who collectively haul about 4.5 million tons of fish and aquatic products from the river each year, according to the Vientiane-based Mekong River Commission.

     Adding to these problems is increased salinity in water-starved rivers across the region. This has affected inland fishing industries in Laos, Thailand and Cambodia. 

     Prapat Panyachartrak, president of Thailand's National Farmers Council, cautioned April 1 that the council expects an "extremely difficult" year for farmers. Compounding problems arising from the drought are the political turmoil and financial constraints on the Thai caretaker government. This, Prapat noted, has resulted in a freeze on payments to farmers under the government's controversial and now-abandoned rice subsidy scheme. 

     Among the program's unintended victims are increasingly desperate rice farmers in Sing Buri, who say the government has not paid them for the last two rice crops. 

     Worse is to come. Droughts in Southeast Asia are now more frequent, more extreme and less predictable. The last big drought came in 2010; the one before that was in 2005. In the last century, these spells would only occur once a decade or even less, according to Fitrian Ardiansyah, climate and sustainability specialist at the Australian National University. 

     "In previous years, farmers have had the capacity to adapt," he said. "But climate anomalies are happening more frequently and farmers have less capacity to" deal with them. 

     The accelerating drought cycle is causing more fires and with them, unseasonal, choking haze. This enveloped such cities as Singapore and Chiang Mai, in Thailand's north, in March.

     The FAO's Konuma said the spreading drought in Southeast Asia threatens to raise food prices and weigh on economic growth. "Higher prices may hurt consumers throughout the region," he said. "Already the price of palm oil has begun to surge."

      In their search for solutions, some farmers and agribusinesses across the region are turning to more drought-resistant hybrid seeds, such as Monsanto's genetically modified corn and DuPont Pioneer's hybrid corn. In Thailand, the government used to distribute hybrid seeds, but in recent years the private sector has seized most of the market.

     Thailand and Southeast Asia more generally are wary of genetically modified, drought-tolerant crops. Thailand's government had a negative experience with GM papaya in the mid-2000s. So far, only the Philippines and Myanmar have widely embraced the trend. Yet research continues: The Rubber Research Institute of India and its Malaysian counterpart have developed genetically modified rubber plants. Thailand-listed Univanich Palm Oil is developing new strains of less-thirsty rubber plants as well.

Managing the problem

Few agriculture and food-related businesses in Thailand will remain unscathed by the sustained drought, Konuma said. In Sing Buri, general retailers and restaurants say they are feeling the pressure, with sales down by as much as 50% from last year due to a combination of the water shortage and growing financial distress among local rice farmers. 

     Major food companies such as Thai conglomerate Charoen Pokphand Group and global player Nestle, which sources coffee from Vietnam, are being hit with higher produce prices. On the flip side, Konuma noted, bottled water suppliers such as Thai Beverage are benefiting from increased demand for their products.

     From a broader perspective, the drought/flood cycle and the increasing amount of land under cultivation are creating new water-management challenges. Last year, Korea Water Resources Corp. and a consortium led by Italian-Thai Development won seven contracts totaling 371 billion baht ($11.5 billion) from the Thai government, which wants to better conserve water supplies and avoid disasters like the floods of 2011. More such tenders are likely in the future, according to experts. 

     Thailand's agriculture sector consumes 70% of the nation's water supply, while household consumption accounts for 4% and the industrial sector uses 2%. The remainder is reserved for the "ecological balance." With the anticipated impact of climate change, better water management is becoming more critical, Konuma stressed. "If it is not put into action, the country could be facing huge problems from floods and droughts."

     In the meantime, a repeat of conditions in 2005 -- when Thailand suffered the most severe drought in a decade -- is a growing possibility. That year, production of sugar cane plunged 24%, cassava fell 24%, corn dropped 6% and rubber decreased 1%, according to a March report by Siam Commercial Bank's Economic Intelligence Center. 

     A sequel would further damage an economy already squeezed by slow export growth and political chaos.

     Research contributed by Paringya Rukluea

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media