APRIL has arrived and everyone is looking forward to enjoying Songkran.
Songkran has never failed to deliver joy to tourists and can generate about Bt110 billion in expenditures each year. The benefit spreads to the service sector such as hotels, restaurants and transport.
However, things seem to be different this time.
The water shortage in Thailand is particularly severe. The available water in all reservoirs is only half of the level in normal years. The drought devastates agricultural production, and that reduces farmers’ income.
Since agriculture employs more than 30 per cent of Thailand’s labour force, the government has launched many water-management schemes including a campaign for Songkran celebrators to save water.
Apparently, splashing water during Songkran is now considered wasteful behaviour and a lack of sympathy towards Thai farmers. This immediately triggers my curiosity. What has really been the most wasteful way of using water in Thailand? After doing some simple research, my preliminary conclusion is agricultural activity.
Agriculture accounts for more than 65 per cent of overall water usage, while tourism uses only 0.5 per cent. Yet according to statistical data for 2014, agriculture generates only Bt1.34 trillion in income, while tourism generates about Bt549.63 billion.
In other words, given the same amount of water usage, tourism raises 53.2 times as much income as agriculture does.
The reason is partly the inefficiency of Thai farming. Rice farming is a good example. Last year, Thailand ranked No 8 in Asean in productivity of rice farming. On average, we produced only 481 kilograms of rice per rai (3,000kg per hectare), as compared with Vietnam’s 894kg per rai.
This significant difference can be explained by both the stubbornness of Thai farmers to follow correct farming methods and the undeveloped irrigation system in many agricultural areas.
Decades have passed, but this inefficiency problem has remained unsolved. Perhaps it may not even be worth solving.
In my opinion, Thailand should greatly reduce the size of its agriculture sector. As I mentioned earlier, I think agriculture provides small economic value-added compared with other sectors and is an inefficient sector for us to spend our resources on.
On top of the water-shortage problem, the recent decrease in world energy prices supports my perspective over agriculture. As we know, the development of shale gas and shale oil has pushed the oil price down from about US$110 per barrel during 2011-14 to about $25-$45 per barrel now.
The abundant supply of oil is a structural break that, in my view, changes the long-term trend of oil prices to a low level with gradual growth. As it’s a matter of fact that rubber prices positively correlate with oil prices, this “new normal” of energy prices leads to a permanent decline in the price of rubber.
As a result, the government should again think about how to reduce the number of rubber farmers, since persistent subsidy against the price mechanism is not a wise option.
Ultimately, I want to see Thailand change from an agriculture-based towards a more industry- or service-based country. However, I do not mean to banish agriculture totally from Thailand. Our tropical fruits and jasmine rice have a bright future, as they are highly demanded by the Chinese market.
Thailand should strategically perceive neighbouring countries, which are mostly agriculture-based, as friends that provide us access to goods and labour for us to build a more advanced economy – not foes that we have to compete with.
Whether the Asean Economic Community is an opportunity or a threat depends on our own choice.
Athakrit Thepmongkol is a lecturer at the School of Development Economics of the National Institute of Development Administration.