Minimum wage hike which will become effective from April 1 will most affect the country’s farming sector, according to a study by the Office of the Agricultural Economics (OAE).
One reason that the farming sector will be most affected because the sector relies intensively on labour.
The OAE’s study has found that farm crops would be hit the most as labor costs contributes to 17.8% of overheads.
Sugar cane, rubber, and fruit plantations are to be hard hit as its operations are labor intensive, beginning from soil preparations all the way up to harvesting.
The next group that will be affected is the agricultural service sector which rent out farm machinery.
The study found that this sector has a labor contribution factor of 12.1% of overheads.
At the same time, the fisheries sector will not escape the effects of the wage hikes as its labor contribution factor is approximately 8.4% of overheads.
Offshore fishing operations will be more affected than freshwater fisheries operations, according to the OAE’s projection.
The livestock sector will suffer the least as it labor contribution factor is only 8 % of overheads.
The new minimum wage to be effective on April 1 will see the wages increase by 5-22 baht to 308-330 baht in 77 provinces throughout the country.
The OAE, however, said that with regards to the general outlook for the agricultural sector this year, it estimates that growth of between 3 -4% can still be achieved, attributing the main supporting factors to this year’s abundant supply of water resources and favorable weather conditions.
Taken alongside the improving global economic conditions, it is very likely that demand for agricultural products will rise strongly.
But it warns that some factors may derail this and need to be monitored such as variable weather conditions, natural calamities and disease.
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