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  • The structure and characteristic of the Thai cotton market: a macro view

    Chapter 6 - Market profiles - Thailand 

     
     

    Importance of cotton in Thailand

    Cotton is an essential basic raw material for the Thai textile industry. Presently, the Thai textile industry requires more than 500,000 tons of cotton fibre as a basic raw material each year, while domestic production of cotton is around 10,000 tons. In 2005, domestic production represented only 2% of domestic demand. Consequently, Thailand imports cotton worth at least 24,000 million baht, roughly $648 million, from the rest of the world. Thailand exported final cotton-made commodities for 200,000 million baht or approximately $5,400 million in 2005.

    Domestic cotton production

    In 2005, the cotton plantation area in Thailand was 8,087 hectares, producing 10,200 tons of cotton. The cotton plantation area has gradually declined since 1981 when it peaked at 160,000 hectares. The cotton plantation and productivity can be divided regionally as follows: north, 4,189 hectares with a yield of 5,400 tons; north-east, 443 hectares with a yield of 438 tons; central 3,454 hectares with a yield of 4,449 tons.

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    Figure 6.20 provides more information of production and consumption of cotton in Thailand.

    Government encouragement

    Nowadays, the Ministry of Agriculture and Cooperatives provides less support for cotton cultivation than it needs to provide. However, the Department of Agriculture still promotes the development of cotton through research.


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    Source: Office of Agricultural Economics, Ministry of Agriculture and Cooperatives.

    The Thai Government master plan indicates that growing cotton serves as a means to reduce imports of cotton. In 2002–2006 the Department of Agriculture developed a new species of long staple cotton. In 2006, a new species of short staple cotton was also developed. The total budget for improvement of cotton was approximately $100,000– $150,000. The developments of the planted area and production of cotton are shown in figure 6.21.


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    Source: Office of Agricultural Economics, Ministry of Agriculture and Cooperatives.

    Domestic pricing structure

    During the last couple of years, the price of cotton ranged from 35 US cents to 38 US cents per kilogram. In the past 10 years, the average price of cotton was approximately 37 cents per kilogram (direct purchase from farm) as shown in figure 6.22. The domestic price has mainly depended on the world market price.

    Import structure

    In 2006, Thailand imported 428,070 tons of cotton, amounting to approximately US$ 574.2 million. As table 6.7 shows, since 2002, there has been no clear trend in imports of cotton.
     

     

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    Source: Office of Agricultural Economics in cooperation with the Customs Department.

    In 2006, Thailand imported 114,460 tons of cotton (HS. 5201) from the United States, amounting to $161.5 million. From Australia came 94,176 tons, worth approximately $134.8 million. Imports from the United States and Australia were 27% and 22% of total imports respectively. Thailand also imported cotton from India, Mali and Zimbabwe, accounting for 8%, 6% and 5% of total imports respectively.
     

     

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    Source: Office of Agricultural Economics in cooperation with the Customs Department.

    While in 2006 the two main providers were the United States and Australia, it is important to note that India had increased its exports of raw cotton to Thailand by more than 100% since 2005. Before 1998, India did not supply cotton to Thailand at all. In 2005 Thai imports of cotton from India were worth $17.7 million; rising to $37.6 million in 2006 (see table 6.8 and figures 6.23 and 6.24).

     

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    Source: Thailand Custom’s Department.


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    Source: Thailand Custom’s Department.

    Export structure

    Cotton waste is a major item of cotton export, accounting for 65% of total cotton exports. In 2006, Thailand exported 8,048 tons of cotton, amounting to roughly $5.3 million, which was an increase over 2000 exports by 112% (weight) and 93% (value) as shown in table 6.9.
     

     

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    Source: Office of Agricultural Economics in cooperation with the Customs Department (HS 5201, 5202, 5203).

    In 2005, the production of cotton yarn was 400,000 tons out of which the Thai textile industry exported only 54,217.9 tons, amounting to approximately $149.41 million as shown in table 6.10 and figure 6.25. The remainder was used for fabric production.


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    Source: Information and Communication Technology Centre in cooperation with the Customs Department.

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