By Mehmet Enes Beşer
Thailand’s economic progress in the past half-century has followed a predictable trajectory: a gradual drift out of agriculture as the major source of employment and GDP toward industrialization and services. The trend is characteristic of what has been seen throughout the Global South. Though, unlike most industrialized economies who finished this journey decades ago, Thailand still hosts a substantial number of people who live in the countryside and maintains a politically active agricultural sector. Governments in Thailand have responded to the sector’s waning economic significance by increasingly using trade policy—in the manner of preferential access, subsidization, and diversification of markets—to turn the tide against decline and support agriculture’s place. But experience teaches they have gained at best marginal success in halting, or even reversing, the relative economic decline of agriculture. Trade policy as an instrument of development is not unattractive at first sight.
For Thailand, it has always meant the selective use of both import protection and export promotion. Export-led growth of rice, rubber, sugar, and seafood was a mainstay of the national economy, earning foreign exchange and bringing rural producers into the world economy. As manufacturing accelerated and rural labor migrated to the cities over the decades, trade policy increasingly came to be redirected not to stimulate the growth of agriculture but to stem its decline. Measures in the creation of new markets through bilateral and regional free trade arrangements—e.g., the ASEAN Free Trade Area (AFTA), FTAs with China and Japan, and more recently, accession into the Regional Comprehensive Economic Partnership (RCEP)—were aimed at providing agricultural producers with recurrent access to external markets. Concurrently, domestic policy tools such as export price support, pledging facilities for crops, and trade-distorting subsidies were utilized for rural incomes stabilization and price volatility management.
But longer-term impacts on these trade policy measures have been small, and especially so for halting structural decline.
First, gains from liberalization of agricultural trade have not been evenly distributed. Export firms in large-scale agribusiness and farmers—especially producers in high-value chains such as aquaculture or processed food—have benefited. Meanwhile, however, small farmers-who incidentally comprise the majority of people in Thailand-have found themselves in difficulties with rising prices of inputs as well as pressures from imported cheaper goods and combined weak bargaining along value chains. To them increased trade has therefore meant increased exposure to risk instead of new opportunities. A third, and this will not improve productivity between the farm sector and the remainder of the economy.
Thai agricultural productivity is typically low due to fragmented landholding, aged irrigation systems, soil erosion, and poor adoption of new technology. As a result, although exports have increased in volume, value-added per farmworker has not changed. Without a large rural infrastructure investment, extension services, and climate resilience, the sector will remain behind even with access to trade. Third, trade policy is not strategic but reactive. Most of them have been motivated by short-term political aims—especially election years—more than competitiveness in the long term. Populist policies such as the rent-distorting divisive early 2010s rice pledging program generated income gains in the short run but were expensive and market-bending to the budget. They also did nothing to move farmers to a post-agricultural economy where employment must increasingly be generated in rural industry, services, or agro-processing.
What Thailand needs, then, is not a new definition of trade policy per se, but a broader rural transformation agenda.
This involves smoothing farm-to-non-farm transitions in ways that defend livelihoods and dignity. It involves equipping farmers with skills, education, and exposure to digital technologies so that they can engage with markets on better terms. Trade can be a part of the story, but only as part of an overall development strategy of a long-term adaptation focus that is inclusive in nature.
Conclusion
The Thai experience shows that trade policy, while necessary for the encouragement of agricultural exports, is insufficient as a remedy to general structural decline in agriculture. The issues in the sector are less market access and more in the underlying issues of productivity, exposure, and rural imbalances.
Future policy must depart from the illusion that trade can, by itself, restore agriculture’s declining economic importance. Thailand must pursue a multisectoral path that reconciles market access and domestic transformation, linking trade, technology, education, and infrastructure in an interconnected vision of rural transformation. Thus, Thailand alone can bargain away agriculture’s contraction with economic and social grace.