Due to the coronavirus outbreak, exports of Thai produce to China, the second-biggest importer from Thailand, have been negatively impacted. Exports of Thai agricultural products have declined by 21-24% of total export volume. While demand for various kinds of tropical fruits and root vegetables dropped, durian sales received one of the hardest hits as wholesalers to China have asked farmers to reduce their price range from USD 4.80-5.75 per kg to USD 3.84-4.25 per kg despite good production this season. Exports for rice, on the other hand, increased significantly as demand in Hong Kong increased rapidly due to food hoarding.
During the last decade, China had significantly increased imports of fresh produce from its neighboring countries, such as Thailand, Vietnam, and Myanmar. Thailand currently exports over a fourth of its agricultural products to China.
However, due to the novel coronavirus COVID-19 outbreak, China temporarily stopped importing fruits from Thailand such as durians, longans, mangos, mangosteens, lychees, and coconuts in February. While the borders have reopened since then, exports of Thai fruits to China dropped by 80% as orders of worth agricultural products worth USD 300K were delayed by Chinese importers.
As a result, prices of longan fell by 7.1% in early to mid-February compared to a week before, as mangosteen prices decreased by 3% during the same period. Lychee and coconut prices declined by 7% and 8.5% respectively during early February, and have been decreasing continuously since then. Mango exports decreased by 50%, causing prices to drop from USD 2.22-2.54 per kg to USD 1.27-1.60 per kg.
Durian exports were hit hardest as the harvest season commenced. Durians are the most exported Thai fruit to China with an export value of USD 572.5K in 2018. Production for this season is expected to be at 956K tons this year, up by approximately 27% from 2019, due to growing demand from China over the recent years. Rather than profiting from the increase in production, however, suppliers are facing difficulties as lockdowns in China have made border inspections more rigorous, causing the fruits to go bad before they can enter the market.
Furthermore, Chinese shoppers have become more reluctant to buy exotic, “luxury” goods such as durians, longan, and coconuts as they are opting to stock daily necessities. Prices of durians are estimated to fall to THB 130 (USD 4.14) per kg, down from THB 180 (USD 5.73) per kg during last year’s peak season. Durian and Mangosteen farmers, in particular, are expected to be the most affected if the situation is not resolved until mid-2020, as respectively 53% and 24% of these Thai products are exported to China.
Prices of certain root vegetables were also affected as exports of cassava and taro decreased. Cassava is one of the most exported Thai vegetables to China, accounting for USD 884.7K in terms of export value in 2018.
As a result of the export decline, prices of cassavas decreased by 0.51-3.06% in February at THB 1,900-1,950 (USD 60-62) per metric ton. The price of taro, cassava starch, also dropped by 11.2% in early to mid-February compared to the previous week and dropped by an additional 2.6% the following week.
Amidst these declines in demand, one product that has seen soaring demand is rice. Due to a decrease in agricultural product imports from China as shipments have become irregular with the virus, an increasing number of daily necessities including rice are going out of stock in Hong Kong. As a result, Thai jasmine rice exports to Hong Kong jumped dramatically due to scarcity in retail stores.
According to the Thai Department of International Trade Promotion (DITP) Director-General Somdet Susomboon, the onset of the coronavirus in Hong Kong has caused consumers to hoard products adding fuel to already decreased imports from China and causing a massive shortage. According to Somdet, the trade promotion office in Hong Kong has discussed the surge in demand with Hong Kong rice importers and Thai rice exporters, and orders for Thai imports are expected to continue rising during the near future.
Due to the impact of the coronavirus on exports, Thai exports this year are expected to be lower as much as 1.5% compared to 2019. In light of the decreased exports to China, the Thai Ministry of Commerce is preparing to encourage sales of its fruits.
This will be done by focusing on increasing domestic sales and coordinating with airlines to have Thai fruit served during flights as well as have fruit fairs be set up by retailers to be opened in the country’s Northern region in March.
Due to the decrease in exports to China this season, Thailand is incentivized to consider increasing exports to other top buyers. However, as the virus becomes more widespread, Thailand is still expected to encounter difficulties in increasing its exports elsewhere, especially in other Asian regions where the virus is currently the most severe.
Nevertheless, the Thai government has started to become interested in increasing exports to India, where the export market size is similar to that of China. Furthermore, it is also considering promoting sales to its existing markets such as Hong Kong, the US, Malaysia, Japan, South Korea, and the European Union.