Rising farm product prices, expected to boost farm incomes 30 per cent this year, will help stem the slide in domestic consumption, the Finance Ministry announced on Tuesday.

Commodity prices jumped 27 per cent year on year in the first two months of this year, much higher than the 15.4 per cent in the same period last year, said Naris Chaiyasoot, director-general of the Fiscal Policy Office.

Rising prices contributed to a 35.9-per-cent rise in farm incomes in the first two months and the full-year income of farmers will rise 30 per cent, he said.

The prices of commodities such as rubber, sugarcane and rice have all gone up, he said.

However, rising expenses, like fuel costs, will eat into their incomes.

Naris said rising farm prices would sustain the private consumption growth rate of 4 to 5 per cent.

Were it not for agricultural products, consumption would be much more decelerated. Consumption as a whole has fallen this year due to higher oil prices and political tensions.

Rubber prices jumped 66.5

per cent in the first two months of the year from the same period in 2005, while the price of second-crop rice rose 20 per cent.

Sugarcane increased by 20.9 per cent and chicken prices 8.6 per cent.

Export demand for commodities will continue growing throughout the year, he predicted. Farm products account for 9.5 per cent of Thailand's exports.

Commodity prices also rose in January and February -5.6 per cent year on year.

The ministry also forecasted that the agricultural sector's gross domestic product (GDP) would expand 7 per cent in the first quarter of the year.

The full-year expansion is expected at 4 to 5 per cent compared to a 2-per-cent contraction last year, he said.

Farming accounts for 10 per cent of the nation's GDP, even though 49 per cent of the working population is employed by the sector.

Production of rice between January to February expanded 5.5 per cent due to the easing drought, while rubber production increased 5 per cent.

Sugar yields expanded 5.8 per cent and tapioca 44.8 per cent over the same period.

 "Both production and prices increased in the first two monthsof the year and the trend is expected to continue for the full year," said Naris,

However, world market price increases of farm products may slightly decelerate during the rest of the year, he said.

Rice and rubber production accounts for 50 per cent of the farm sector.

Growing farm product exports may also help ease the widening current-account deficit, Naris said. 

Wichit Chaitrong

The Nation