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24 Feb 2020

Agriculture

2020 Thai Fruit Exports May Shrink on COVID-19 while NTMs Present Long-Term Challenge (Current Issue No.3087)

             The novel coronavirus (COVID-19) epidemic has forced China to close its key border checkpoints and extend the Lunar New Year holidays to February. In addition, cross-border land transportation routes from Vietnam to China have contemporarily been suspended to monitor the COVID-19 outbreak, prompting fruit importers to cancel or postpone fruit purchase orders because Thai fruit exports are typically restricted by transportation and storage time. Given this, the value of Thai fruit shipments in Baht plunged by more than 46.1 percent (YoY) in January 2020. We at KResearch expect that such impact may cause Thai fruit exports to China to contract in a range of 30-25 percent YoY to THB45.5-48.1 billion in 2020, based on an assumption that the COVID-19 outbreak can be contained within 3-4 months from the start of the epidemic. As a result, 2020 Thai fruit exports overall may shrink 24-21 percent YoY to THB86.3-88.9 billion. To brace for the contraction, Thailand may need to consider appropriate marketing plans to facilitate fruit supplies that will gradually enter the market. These include fruit processing or finding alternative export markets to mitigate such risk over the short term.

                Aside from the short-term risk stemming from the COVID-19 epidemic, Thai fruit exports will likely experience a challenge from China's non-tariff measures (NTMs). NTMs have largely been implemented by developed countries or those with large markets rather than developing countries or emerging economies.

                Taking into account factors supporting Thai fruit exports versus an average growth in fruit export volume and value of Thailand's key fruit export markets between 2016 and 2019, plus the number of NTMs implemented by each country, it can be summarized that Thailand is required to make adjustments in order to maintain its competitiveness in four aspects: 1) Adopting a proactive marketing plan; 2) diversifying risk from having to be heavily dependent on large markets; 3) adding value to fruit products; and, 4) expanding fruit exports to emerging markets that have bright prospects.  




Agriculture