THAILAND: Crop GDP up 4.2 % in Q1 as rubber jumps

Thailand's agricultural economy in the first quarter is expected to expand by 4.2%, driven largely by skyrocketing rubber and oil palm prices, according to the Agricultural Economics Office.

Favourable climate conditions and the continued strong market were factors that promoted farm production in all sectors over the period, said Apichart Jongskul, the secretary-general of the office.

The improvements ensure the country's farm economy is on course to meet its growth projection of between 1.4% and 2.4% this year, after natural disasters and plant diseases resulted in a contraction of 0.9% in 2010.

Prices of para rubber rose a record high in February to 180 baht a kilogramme, compared with an average 109 baht/kg in 2010, and 62 baht in 2009, thanks to the increased imports from China to feed its robust automobile tyre industry.

Although rubber prices have cooled in recent weeks following a slower market in China and adequate stockpiles held by manufacturers, they remain at a high level of 160 baht, well above last year's level, Mr Apichart said.

The weather patterns in 2010, mainly drought and floods, have decreased oil palm output by about 30%, driving up the prices of palm nuts to reach a historic high of 7.80 baht a kilogramme.

These two products pushed the growth of the crop segment to rise significantly by 6.9% year-on-year. Mr Apichart, however, warned that rapid climate change around the globe would be the main condition disrupting the expansion of the agricultural economy this year.

"There are signs of dry weather in some parts and it tends to cover more areas, while the amount of water in major dams might not be enough to irrigate cultivation in the coming summer," he said.(Syed Rashid Ali, Karachi, Pakistan)