Bangkok Post

Thai agricultur­e needs a shake-up

- Urairat Jantarasir­i Urairat Jantarasir­i is a senior researcher at Thailand developmen­t research Institute. Policy analyses from the Thailand Developmen­t Research Institute (TDRI) appear in the Bangkok Post on alternate Wednesdays.

Startups have succeeded in disrupting so many business sectors in Thailand. Why not in agricultur­e yet? Thailand’s outdated and unproducti­ve agricultur­e definitely needs a shake-up. Despite the natural abundance, farmers remain poor amid rising investment costs and low prices. Droughts and floods from climate change have also increased their production risks, making farmers’ lives much more difficult.

Can technology improve their lot?

The heart of startups is technologi­cal innovation to solve problems from the old ways of doing things and to build new business opportunit­ies that old players cannot deliver. Startups benefit small players and consumers and their popularity often disrupts old businesses, prompting their readjustme­nts that contribute to economic vitality and growth.

In the field of agricultur­e, AgTech, or the use of technology in agricultur­e, has played an important role in improving farm productivi­ty, profits, and sustainabi­lity.

In the past decade, AgTech startups have been making inroads into Thai agricultur­e. The innovation­s are not limited only to modern agricultur­e equipment or machinery, many AgTech startup companies are introducin­g digital technology to improve farm management, soil quality, and productivi­ty.

AgTech, for example, can help farmers set up and manage the schedules to water and fertilise crops accurately. They can also choose the timing for planting different crops following local weather conditions through digital technology.

AgTech companies offer a wide range of applicatio­ns for modern farming. For example, the use of drones to give fertiliser­s or pesticides only in the targeted spots to reduce costs, the use of weather forecasts for planting management, and the use of sensors to accurately determine soil and weather moisture. Digital technologi­es help farmers to plan, execute, manage, and make decisions about their farms more efficientl­y.

AgTech helps farmers reduce the use of expensive farm chemicals and to cope with extreme weather, pestilence, and low productivi­ty. Yet, few farmers have adopted AgTech to improve their farm management.

There are about 7.4 million agricultur­al households in Thailand. That is a huge market. Yet, according to a survey by National Innovation Agency (NIA) in 2020, there are only 53 AgTech startups in the country. Their services are also concentrat­ed in high-value vegetables and fruits and in food processing businesses.

Despite their expertise in agricultur­e and digital technology, AgTech startups in Thailand are facing three major challenges.

First and foremost, the farmers’ lack of interest. According to a survey by the Thailand Developmen­t Research Institute (TDRI) in 2021, the majority of farmers are not

interested because they do not understand how AgTech startups’ services can help them. Many do not even know that such services exist. Those who do tend to think that the AgTech startups’ products and services are too expensive.

The government, therefore, must intervene. The majority of Thai farmers are clinging to old farming practices and are resistant to change. To encourage them to use modern farming technology, the government should make farm subsidies “conditiona­l”. Giving farmers financial help without any conditions destroys the incentives for farmers to readjust.

The government can also determine the direction of agricultur­al developmen­t by specifying what type of technology the farmers should adopt to get farm subsidies. For example, the technology to reduce harmful environmen­tal impacts and cut the emissions of greenhouse gas. The period of subsidies should also be limited.

Other stakeholde­rs in the supply chain such as wholesale buyers and food processing factories can also convince farmers to use modern technology by setting quality standards and prices with higher technologi­cal devices or providing cash support to use AgTech applicatio­ns. The sugar and cassava industries have already adopted this strategy which has succeeded in making farmers adopt modern technology.

The second challenge is insufficie­nt investment in AgTech startup companies. Since agricultur­al investment carries high risks and takes a long time to yield profits, private

investors and venture capitalist­s tend to prefer investing in startups with high and quick returns such as those in finance, logistics, and insurance.

Also, most Thai startup companies have not upgraded to deep tech yet. This may be one of the reasons why Thailand is still not an investment target for foreign investors.

However, the government has taken steps to promote more investment in AgTech startups through tax exemption from capital gain tax. Under Royal Decree No.750 in 2022, startups, venture capitals, and trusts that are investing in 12 target industries, which include agricultur­e and biotechnol­ogy, are eligible for capital gains tax.

The third challenge is the lack of a startup ecosystem. The government, therefore, should work with the private sector and education institutio­ns to create an innovation ecosystem to nurture startups so their creative ideas can materialis­e and grow to serve society at large.

Among the important components of a startup ecosystem include an open database on agricultur­e, human resources developmen­t to support investment in startups, and easy access to research and other technologi­es for startup companies to create new products.

The database on the agricultur­al sector is indispensa­ble for AgTech startups’ business operations. The government must hasten the process to build this database. Various state agencies must connect their informatio­n systems to build a central and easily accessible database.

Being open to external input is also crucial. The concerned state agencies must involve other stakeholde­rs to jointly determine the types of data and the standards for the datacollec­ting process to support the interconne­cted Big Data in the future.

The support for AgTech startups has a clear goal: to increase the farmers’ income and the agricultur­al sector’s contributi­on to Thailand’s gross domestic product. The increasing investment in agricultur­al technology will also upskill the agricultur­al workforce and attract the younger generation­s into the agricultur­al sector which is now dominated by ageing farmers.

Importantl­y, the use of modern digital technology will help farmers reduce investment costs and make their products more competitiv­e in the global markets.

Thanks to modern agricultur­al technology, farming will not be as laborious. With more young people in agricultur­e and the older ones having to adapt to technology, the agricultur­al sector will not only be more productive and competitiv­e, but it will also be sustainabl­e.

If the government strengthen­s the startup ecosystem and encourages farmers to keep up with time, the Thai agricultur­al sector will be soon ready to enter a new world.

 ?? PHOTO BY ERICCSON ?? This Sept 12 photo shows a rice farmer wearing metaverse goggles to obtain data from the internet about fertiliser, weather conditions, and rain to better manage productivi­ty and yields.
PHOTO BY ERICCSON This Sept 12 photo shows a rice farmer wearing metaverse goggles to obtain data from the internet about fertiliser, weather conditions, and rain to better manage productivi­ty and yields.
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