Climate change hits Thai economy, calls for smart agriculture surge

Photo courtesy of FG Trade Latin (iStock).

The economy has been negatively impacted due to the challenges presented by climate change, leading to a decrease in farmers’ income because of reduced production, and affecting foreign investment. This has subsequently resulted in higher inflation and cost of living and impacted the export of agricultural products and food. This insight is according to a recent study conducted by the Trade Policy and Strategy Office of the Commerce Ministry.

The government and private sector are now being called to action to expedite their efforts to mitigate these challenges. The proposed solutions include the promotion of smart agriculture, adoption of technology, encouragement of high-yield, drought-resistant crops, acceleration of organic farming, and the establishment of growing zones. These initiatives are aimed at boosting competitiveness and resilience, with a strong focus on environment-friendly production practices.

Poonpong Naiyanapakorn, the director-general of the Trade Policy and Strategy Office, reported that the study found that while global climate change is a slow process, its effects are far-reaching.

“The office has recently conducted a study on the impact of climate change on the economy and it was found that global climate change, though occurring slowly, has wide-ranging effects. Climate change has led to rising global temperatures, increased sea levels, frequent disasters, flooding and droughts. These trends are likely to exacerbate economic disparities in Thailand, particularly affecting low-income groups that heavily rely on agriculture for their livelihood.”

The altering global climate has directly hit the income of farmers, with many seeing losses from crop damage and decreased yields due to unpredictable weather patterns and natural disasters. Some farmers, in hopes of future profits from the sale of their produce, have had to resort to loans to finance their planting in the new season. Others have had to sell their assets, leading to a decrease in their overall wealth. This resulted in a significant debt burden on farmers and a difficult escape from the debt cycle, creating a pressing issue of inequality that needs government intervention to mitigate the damage.

Poonpong also revealed that climate-related challenges have swayed the decisions of foreign investors.

In 2011, the industrial production sector was severely affected by a major flood disaster in Thailand, leading to a 21.8% contraction in the fourth quarter compared to the previous year due to production and logistics disruptions. Certain industries, such as electronics manufacturing, which are susceptible to natural disasters, decided to relocate or expand their production bases to neighbouring countries to minimise risks.

Recurring droughts in Thailand have deterred semiconductor manufacturers from considering the country as a production hub, given the industry’s heavy reliance on water. The risk diversification by foreign investors during this period led to a decline in labour demand in Thailand and a loss of potential investment opportunities, resulting in income loss and further inequality.

Poonpong stressed that to address these climate change-related challenges, preparedness and collaboration among government agencies, entities in the private sector and the public is necessary. Encouraging farmers to embrace technology, such as smart farming and precision farming, is crucial to optimise water use and reduce water consumption in agriculture.

To ensure effective water usage in agriculture, the government has a significant role in providing financial support to farmers and educating them about technology adoption in farming.

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Alex Morgan

Alex is a 42-year-old former corporate executive and business consultant with a degree in business administration. Boasting over 15 years of experience working in various industries, including technology, finance, and marketing, Alex has acquired in-depth knowledge about business strategies, management principles, and market trends. In recent years, Alex has transitioned into writing business articles and providing expert commentary on business-related issues. Fluent in English and proficient in data analysis, Alex strives to deliver well-researched and insightful content to readers, combining practical experience with a keen analytical eye to offer valuable perspectives on the ever-evolving business landscape.

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