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Published on July 30, 2007

This is because of their dependence on locally purchased raw materials and a dependence on exports, the centre added.

"These segments do not benefit from cheaper imports and face foreign-exchange losses from exporting," it said in a note released on Friday.

While these commodities can benefit from cheaper imported fertilisers this will not offset foreign-exchange losses, it said.

In the first half of this

year, rice exports in dollar terms reached US$1.429 billion (Bt48.2 billion), up 27 per cent from the same period last year.

However, in baht terms export value of Bt50 billion grew only 14.4 per cent. Rubber exports reached $2.5 billion in value, up 3.9 per cent from the same period last year. However, in baht terms, value dropped 6.2 per cent year on year. Meanwhile, exported agri-industrial goods increased in value by 17.6 per cent in baht terms against 30.2 per cent in dollar terms.

"Interestingly, exporters will absorb some of the burden, and the rest is pushed

onto processing factories

and farmers. Thus the burden on exporters depends on

how much they can push

onto others, as well as profit margins. Mostly, products in this category generate margins of between 15 per cent and 20 per cent," the research note said.

Benefiting from the strong baht are agricultural products that depend on imported raw materials and are sold in the domestic market.

Products in this category are under-supplied and

spark a need for imports. Imports will lead to lower prices. Goods in this category are milk, milk products,

wheat and wheat products. Though prices for overseas milk and wheat products have increased since 2006, the strong baht has partially softened the impact.

In the first half of this year, the value of exported crops and agri-industrial goods was $11.54 billion - up 21.2 per cent from the same period last year.

Kasikorn attributed the sharp increase to rising global demand following natural disasters in many parts of the world. The high demand has softened the impact on Thai products, which could have been hit harder by the strong baht.

However, good prices in 2007 will encourage farmers around the world, including Thailand, to increase output

in 2008. In the absence of natural disasters, output will

be high and that will put pressure on prices, the centre added.

"In this situation, if the baht remains high, exporters will be hard hit. Processing factories and farmers will not be spared."

To mitigate the impact of a strong baht, exporters are advised to quote prices in different currencies. They are recommended to invest overseas to reduce reliance on domestic raw materials. Growing sales at home is recommended.

Exporters can buy products overseas and sell produce to third countries. By doing so, they will not risk foreign-exchange-rate fluctuations if buying and selling are done in a single currency.