Wage hike means changes in farms

Farmers may need to make adjustments to how they operate in the latter half of this year after a likely impact of 6-10 per cent on the cost of labour-intensive agricultural production due to the nationwide rise in the minimum wage early this year.

Charuk Singhapreecha, director of the Kasetsart University Office of Agricultural Economics Foresight Centre (KOFC), said that based on a study, "farm income is expected to rise at a rate higher than rises in product prices. That could cause higher inflation in four to six months. It's the initial period for adjustment."

The government raised the minimum wage to Bt300 per day across the nation at the beginning of the year, to match the rate it set in key provinces last April.

Household income is forecast to increase by 24.82 per cent, a higher rate than inflation, which could prompt an increase of 0.64-1.29 per cent in the nation's real gross domestic product.

Charuk said the agricultural sector needed to improve its labour efficiency and increase product quantity and quality through agricultural technology to lower costs.

Clustering of farmers may be needed to lower production costs and for mutual assistance, he said. The government may have to control the prices of some consumer products, while applying the King's sufficiency-economy principles by encouraging farmers to depend on their own households for labour to cope with rising costs.

Charuk said corn for animal feed, tapioca, sugar cane, rice and other crops were forecast to suffer a rise in production costs of about 6-10 per cent after the wage rise as they are highly labour-intensive.

Rubber, milk and dairy products, cattle, fishery, coconut and oil palm are expected to see a milder impact of 3-5 per cent. An impact of 3 per cent is expected in less labour-intensive sectors such as vegetables and fruits, swine and poultry.

Based on the KOFC study, agricultural products for which labour accounts for about 30-50 per cent of total costs would see an increase of 6-10 per cent in production costs.

Prices of agricultural products are estimated to rise in a range of 12-19 per cent, with the upper range for sugar cane and sugar.

Farm income is projected to increase by 18-22 per cent, with the highest in cattle and oil crops.