Agriculture remains a major source of livelihood for rural households in Thailand, employing about a third of the country’s workforce. However, the underperformance of the sector continues to raise concerns, and incomes remain unstable for smallholder farmers. In addition, the Thai economy relies heavily on micro and small enterprises (MSMEs)—9 in 10 enterprises in the country are MSMEs and, according to the Office of SMEs Promotion, they contribute 35 per cent to the gross domestic product. During the peak of the COVID-19 pandemic, farmer households were negatively impacted as demand fell, production costs increased and total incomes from agricultural and non-agricultural sources dipped. Many Thai MSMEs confirmed being at risk of shutting down operations during the pandemic, due to their inability to adapt using digital channels. While government bailouts were able to provide interim relief for this group, it has become increasingly obvious that a more sustainable approach is required to support Thai micro and small enterprises (MSMEs), including agribusiness, in building resilience, and developing adaptive and efficient value chains especially in the agriculture sector, as the success of MSMEs is fundamental to Thailand’s post-pandemic recovery and future development.
As the role of mobile and frontier technologies, and more broadly digital channels, in improving MSME operations and agricultural productivity keeps on evolving rapidly, it is important to better understand what the current barriers and opportunities are for the digitalisation of rural MSMEs operating in Thailand’s agricultural sector. The Central Insights Unit is currently conducting research to build knowledge on these issues and understand the enabling digital environment required by rural businesses to be able to transform their operations for efficiency and growth. This blog presents some of our high-level insights which we hope to explore further through this research.
The agricultural sector in Thailand is facing low returns
The sector has been plagued by low productivity way before the pandemic, resulting in very minimal contributions to national output. Some of the reasons for suboptimal performance include; small size of farmlands available for smallholder farmers to cultivate, an ageing workforce, limited networks for accessing information and market distribution channels, low digitalisation of operations, among others. A major focus of our study will entail identifying how digital technologies can be used to address these specific issues.
Opportunities exist for digital technologies to transform agri-MSMEs sector in the country
Roughly 7 in 10 Thai agribusinesses do not use ICT related tools in their operations on a regular basis. Those that do mostly use smartphones, primarily for information sharing via social media channels with small groups of farmers. While cost, digital competency and behavioural issues are often common factors affecting adoption of digital tools, our research is exploring how these factors affect Thai agri-MSMEs in particular.
From a supply perspective, digital preparedness at the system level is an important factor that influences the availability of digital tools, including the availability of digital infrastructure or even the level of maturity of agriculture data collection, aggregation, analysis and open access for integrating actors in the value chain, So, understanding what the demand and supply gaps are, and opportunities to make digital tools available will be crucial. That said, although, internet broadband speed can be a bit slow in more remote villages, there might be an untapped opportunity here, as Thailand’s National Statistical Office reported that relatively high numbers of agricultural households have internet connectivity. The high-levels of connectivity suggest that great opportunities exist to make more digital tools available for agri-MSMEs.
Agritech solutions are emerging in Thailand, and many lessons can be drawn from other countries
Thailand’s Digital Economy Promotion Agency has identified quite a number of existing agritech applications for mobile phone usage in the country, for operations and marketing purposes. However, it would be useful to identify where or if there are issues related to scale of usage, affordability and relevance to varied needs of agribusinesses. In addition to solutions developed nationally, there are several agritech examples from other countries that can be used as case studies for Thailand. There are several global examples of agritech innovations such as drones, robots/artificial intelligence (AI) assistants, etc., used to monitor crop seeding, weeding, harvesting, analysing data to understand the precise needs for crop growth, or simple mobile applications for distribution and multi-stakeholder integration. It would be insightful to identify how some of these innovations have been deployed, their relevance to Thailand’s context given the peculiar needs of rural Thai agribusinesses, and necessary enablers for implementation.
The Thai government is eager to drive the digitalisation of the country
The Thai government through its 20 year National Strategy Plan, is committed to leveraging digital technologies in priority sectors, including agriculture. We plan to briefly touch on some of these policies, but more importantly, identify if there is scope for using these policies as tangible enablers to provide a suitable environment for faster uptake of digitalisation by rural agribusinesses.
We hope to share more detailed findings from our project in the coming months. We are also happy to hear from those working in similar areas or just interested in knowing more about the project. If interested, you may reach out to our team at [email protected].
