As a middle-income country, Thailand has since the 1960s, transformed its economy from largely rural and agrarian to urban industrializing. This has been facilitated by a growing role of manufacturing which increased from 23 per cent of output in 1980 to 35 per cent in 2006. During the same period, the corresponding share of agriculture declined from 20 per cent to 11 per cent. The country successfully increased agricultural output to feed a fast-growing population while exporting rice, cassava and some higher-value tropical products such as pineapples, rubber and

shrimp. Indeed, so competitive are some Thai agricultural exports that they define the lowest cost of production worldwide. Thai agriculture has grown at an average rate of just over 3 per cent annually since the early 1960s. Agriculture employs a disproportionate part of the labour forcealmost 40 per cent in 2006to generate a comparatively low share of GDP at 11 per cent. Poverty is thus largely rural in Thailand with more than 90 percent of the poor living in the countryside as of the mid-1990s. This concentration of poverty in rural areas is a function of the predominance of a large low-skilled workforce in agriculture and tends to be higher in the more isolated parts of the country, particularly the northeast. To some extent rural poverty has been mitigated by the rise of urban manufacturing and migration to the cities. But not all branches of manufacturing have been labour-intensive, and not all those who migrated found jobs. However, some success has been achieved in developing the rural non-farm economy to provide additional livelihoods in the countryside. The rural non-farm economy has now grown to the point where it provides around half of all rural jobs. Many of these are linked to flourishing agricultural firms. For example, in Poapongsakorn in central Thailand, a vibrant agro-processing sector, both upstream and downstream of farms, exists: growing paddy, sugar, and cassava surpluses led to the emergence of thousands of rice and sugar mills, cassava brokers, producers of cassava pellets, construction operations, metal workshops and agricultural equipment manufacturers, as well as that of livestock feed and village retail shops (Haggblade et al. 2007). In the less agriculturally prosperous northeast region, different patterns emerged. Households also diversified, although not because of expanding opportunities but rather due to the inability of agriculture to keep pace with the growing population. In this resource-poor region, rural non- farm diversification centred on labour-intensive export activities such as gemstone cutting, silk weaving and production of artificial flowers for export. Thailand has promoted the rural non-farm sector since the early 1970s through a range of measures. Measures undertaken in support of rural non-farm enterprise promotion include the establishment of one-stop services; networking of SMEs to raise their bargaining capacity; technology transfers, effected through conditions attached to foreign investment; technological support through national technology institutions; marketing support; provision of finance; and tax concessions (development analysis network 2003); as well as microcredit and savings schemes. Among the more popular approaches to rural enterprise promotion is the development of one village one product (The Tambon). Small and medium-sized enterprise (SME) schemes, and the promotion of high potential business (e.g. Tourism and agribusiness) were also used.

REQUIRED: With reference to the case above, outline the activities undertaken by Thailand between 1980 and 2006 to develop their agribusiness sector which conforms with Michael Porters generic value chain? [20 marks]