Thai Rice, Rubber Output May Fall on Global Recession

By Rattaphol Onsanit

Jan. 7 (Bloomberg) -- Thailand, the world’s biggest exporter of rice and rubber, may produce fewer commodities this year, as a global recession weakens buyers’ purchasing power.

Rice output may fall 1.6 percent this year from 2008, while rubber production will probably drop 1.3 percent, according to a report by the farm ministry on this year’s crop outlook.

Thailand’s economy, Southeast Asia’s second-biggest, may contract this quarter, extending a possible shrinkage three months earlier, as commodity prices tumbled and the country’s largest markets including the U.S. slipped into a recession.

“We projected the falls because farmers have less incentive from prices,” Apichart Jongskul, secretary general of the ministry’s Office of Agricultural Economics, said in a phone interview today. “It’s all linked to the global economy.”

Exports from Thailand sank 18.6 percent in November. That’s the first contraction since March 2002 and the biggest decline since January 1992 when Bloomberg began tracking the data. Commodity prices tumbled as the U.S., Europe and Japan have slipped into a recession.

“The local rubber industry may shrink as the global economy has stalled,” the farm ministry said in the report.

Rubber production may decline to 3.08 million tons from 3.12 million, with shipments probably falling 1.9 percent to 2.55 million, it said.

Output of unprocessed rice may total 31.6 million tons, down from 32.1 million tons in 2008. Exports of the processed product may decline to 9.5 million tons from an estimate of 10.6 million.

Thailand, also the world’s second biggest sugar exporter, will probably manufacture 7.6 million tons of the sweetener, a 2.6 percent decline from last year. Shipments may fall “slightly” from last year to 5.7 million tons, the ministry said without elaborating.

To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net