Production Factors

• Loss of competitive advantage :
Emerging competitors, such as Vietnam, China, and India, pose a threat to Thailand's rice export potentials. The labor and production costs in these rival countries are lower than that of Thailand's. As a result, the selling price of Thai rice is higher than that of its competitors. In this case, Thai rice is about US$50 - 100 higher than Vietnam.

• Labor shortage :
As Thailand goes through its rapid industrial expansion. Rural labor forces migrate to the cities for better job opportunities. Comparing to farming in rural areas, jobs in the cities promise a much higher pay and more chances for a life-long security, which rural farm works do not have. As a result, rapid urbanization creates labor shortages in the farming and agricultural sectors.

• Declining production :
Partly affected by the labor shartage and the loss in competitive advantage, among other factors, rice production in Thailand has witnessed a decline. For a certain level of output, farmers use a certain quantity of inputs in order to maximize their profit margin. However, with emerging competitors and decreasing returns on yield, rice production becomes less attractive as a carreer choice. Therefore, rice production in Thailand continues to spiral downward.

• Weather and soil conditions :
Rice production relies on such environmental factors as climate and an irrigated ecosystem. Intensive cultivation in an irrigated ecosystem causes nutrient deficiency problems. In addition, Thailand's extreme weather conditions, such as flash-floods and draughts, have created negative impacts on the total rice yield.