Department of Agricultural, Food, and Resource Economics Innovation Lab for Food Security Policy, Research, Capacity and Influence

EXECUTIVE SUMMARY

The spread of COVID-19 has caused uncertainty in Thailand agricultural trade flows. This study makes a preliminary analysis to explore the impact of COVID-19 on Thailand’s agri-food export flows.

• Over the past few decades, Thailand’s exports have been shifting away from agricultural to manufacturing products. However, the agricultural and food product exports remain vital to Thailand’s economy, and Thailand continues to be a net exporter of agri-food products.

• Approximately 40 percent of Thailand’s agri-food products were exported to the country’s major trading partners including China, Japan, and the United States of America. Agri-food exports to intra-Association of Southeast Asian Nation (ASEAN) countries’ have also grown rapidly, while agricultural exports to other developed countries have been relatively stagnant in recent years.

• The composition of Thailand’s top ten agri-food exports has barely changed in the past two decades. Most of the top ten agri-food products exported in the period of 1998-2008 are

  also among top ten products between 2009-2018. While Thailand increasingly exports many high-value processed agri-food products, natural rubber and rice continue to play a dominant role, and account for one-third of total agri-food exports in value.

• COVID-19 caused a disruption of the supply chain in the rubber industry in 2020. The lockdown measures in many countries led to a decline in world demand for natural rubber and both the value and volume of natural rubber exports from Thailand fell. Exports started to recover by the end of 2020 partly due to a surge in demand for medical gloves and relaxation of lockdown measures.

• COVID-19 temporarily boosted the world demand for Thai rice exports in the early stages of the outbreak, as Thailand briefly benefited from the temporally export restrictions imposed by other exporting countries. However, overall, Thai rice exports declined in 2020 mainly due to a strong Baht and high production costs that weakened Thailand’s competitiveness in the world market.

• A drought in 2020 lowered sugar yields causing production to fall significantly while COVID-19 reduced demand because of the lockdown measures. Combined the supply and demand shocks led to the decline in Thailand sugar exports, from a modest growth of 2 percent in 2019 to the decline of 19 percent in 2020.

• The spread of COVID-19 caused a surge in demand for canned tuna, providing increased export opportunities for Thailand, which is an important exporter. However, this surge in the world market was caused by panic buying and it did not last long.

• Thailand is also an important exporter of processed chicken. Exports of processed chicken were negatively affected by COVID-19 due to the disruption of transport and logistic systems resulting in higher cost for trade.

• The contraction of crustaceans’ exports can be attributed both to the lockdown and strong competition in world markets. In 2020, processed crustacean exports performed better than exports of fresh and frozen crustacean due to consumer preferences. However, crustacean industries were badly affected overall due to the detection of a COVID-19 cluster in the fish market which led to strict regulation and closure of the market and distribution centers.

• Overall, processed fruit and vegetables export values increased in 2020 but export volume

  dropped with all major trading partners. People bought large quantities of shelf stable products such as rice and canned fish but reduced the purchase of processed fruit and vegetables.

• In conclusion, the impacts of COVID-19 on most important Thai agri-food export flows seem to be temporary as many factors leading to the surge or fall are short-lived. However, there is the possibility of increases in COVID-19-related non-tariff barriers (NTB) that originated because of food safety concerns and production standards. Small and medium exporters are likely to be most affected due to limited resources. Food safety concerns and production standards also affect upstream suppliers, small farmers, and fishers. Such NTBs can have longer term impacts on the prospects of post-COVID Thailand agri-food exports.

• The changing world demand for agri-food products and potential new TBs could possibly have profound impact on Thai agri-food export flows in the future. Exporters, governments, and international organization need to work together to keep a balance between public health concerns and business operation efficiency. Promoting trade facilitation while ensuring food safety measures to safeguard public health would help Thailand gain more from exports.