How to Operate a Thailand Agriculture Business

Thinking about starting an agriculture business in Thailand? With government incentives and a booming export market, the country provides a structured environment for foreign investment. In this guide, we’ll break down the key incentives, land regulations, and ownership rules – giving you everything you need to set up your agriculture business with confidence.

Thailand’s Expansion Incentives for Operating in the Agriculture Industry

Agriculture Export Incentives in Thailand

These export incentives in Thailand are designed to strengthen the agricultural sector by promoting international trade, increasing competitiveness, and supporting farmers and producers:

• Export-Import Bank of Thailand: Provides financing schemes like the Packing Credit Scheme. This scheme provides short-term loans to exporters through commercial banks to improve cash flow and competitiveness.
• Free Trade Agreements (FTAs): Numerous FTAs reduce export taxes on agricultural goods, enhancing global market access for Thai agribusinesses.

The purpose of the export incentives is to provide easier access to global markets and reduce export costs. This enables you to scale your business more efficiently and maximize profit.

Government Support Programs: 

In an effort to provide funding, technical assistance, and resources to enhance agricultural productivity and sustainability, the Thai government has introduced the following support programs:

• Green Climate Fund Support: Thailand has secured $17.5 million from the Green Climate Fund to bolster agricultural resilience against climate change. This funding will support projects that integrate technology and nature-based approaches to enhance the livelihoods of farmers in vulnerable regions.
• Technical Assistance Grants:
  • Asian Development Bank (ADB): Offers a $2 million grant for climate-smart agriculture in northern Thailand, enhancing productivity, food security, and climate resilience.
  • USDA RAIN Program: Offers grants from THB 500,000 to THB 1.3 million for scaling climate-smart innovations, improving farmer incomes, and reducing environmental impacts.

Tariff Rate Quotas (TRQs)

Tariff Rate Quotas (TRQs) are a trade policy that allows a specific quantity of agricultural products to be imported at lower tariff rates. Higher tariffs will apply to imports exceeding the quota. This system helps businesses manage costs, comply with trade regulations, and optimize market access for imports and exports.

Currently, Thailand has opened TRQs for 23 agricultural products. The in-quota tariff rates for these products range from 20% to 65%, depending on the specific product. This includes sensitive items such as sugar, tobacco, and coffee, which have relatively high in-quota tariffs.

In terms of compliance, foreign entities must apply for quota allocations through the appropriate Thai government agencies. The agencies are the Ministry of Commerce or the Customs Department. These allocations determine how much of the product can be imported at the lower tariff rate for their businesses.

Board of Investment (BOI) Incentives

Thailand’s Board of Investment provides tax exemptions on income and import duties for agricultural businesses, along with exemptions from land ownership restrictions in certain agricultural sectors. They also provide investment support for modern farming technologies and agro-processing.

However, to access these benefits, you must apply for a BOI promotion. This requires setting up a legal entity, meeting eligibility criteria, and submitting a project feasibility analysis, amongst other things. The process is extensive and the incentives will only apply upon approval. For more in-depth information on this topic, read our article on everything you need to know about a BOI company in Thailand.

Ownership and Land Use Restrictions for Foreigners in Thailand

Per current regulations, foreigners are restricted from owning land in Thailand. Nevertheless, there are alternatives commonly used by foreigners to allow them to set up a business in the agriculture industry. These include:

1. Obtaining A Leasehold: Foreigners can lease land for 30 years, which is renewable for an additional 30-year period upon agreement with the landowner. For agricultural land, you can lease the land for a maximum period of 50 years but this requires special permissions or involvement with government projects.
2. Acquiring Land By Establishing A Thai-Majority Company: You can obtain land by registering a Thai-majority company where Thai ownership is at least 51%. Remember, you must operate a business that generates revenue and profit as proof of legality. Using nominee shareholders to circumvent land ownership laws is illegal and strictly monitored by Thai authorities.
3. Acquiring Land Through BOI: You can acquire land by obtaining special permission from the Board of Investment or Industrial Estate Authorities if your business and projects align with national development and economic goals. 

Key Considerations for Setting Up A Thailand Agriculture Business

Mandatory Licenses and Permits for Operating A Thailand Agriculture Business

Depending on your intended business structure, you may need several licenses to operate within the agriculture industry. Remember that operating without the right licenses can result in heavy penalties and operational suspension. These licenses and permits include:

• Foreign Business License: Required for foreign-owned businesses operating in restricted sectors, including certain agricultural activities. The FBL allows foreign entities to engage in activities that are otherwise prohibited under the Foreign Business Act.
• Pesticide Registration: Mandatory for any pesticides used in agricultural practices. Registration ensures compliance with safety standards set by the Department of Agriculture.
• Production Permits: Necessary for large-scale agricultural production facilities, especially those involving processing or manufacturing of products.
• Factory License: Required for any facility involved in manufacturing processes related to agriculture (ex: food processing plants).
• Import/Export License: Essential for importing raw materials or exporting finished products from Thailand.
• Food and Beverage License: Mandatory if your agricultural business involves selling food products directly to consumers or other businesses.

Emerhub’s licensing experts can help you identify and secure the necessary licenses tailored to your agricultural activities.

Environmental Regulations for Agriculture Businesses in Thailand

Agricultural businesses must comply with the Enhancement and Conservation of National Environmental Quality Act, regulating land use, waste management, chemical use, and sustainability to reduce environmental impact.

This includes staying compliant with the following assessments and regulations:

• Environmental Impact Assessment (EIA): Foreign businesses must conduct an Environmental Impact Assessment (EIA) for projects that may significantly affect the environment. This assessment evaluates potential impacts on local ecosystems, water resources, and air quality.
• Pesticide and Fertilizer Regulations: Any pesticides or fertilizers used must be registered with the Department of Agriculture (DOA). This ensures that only approved substances are used in agricultural practices.
• Waste Management Regulations: Regulation of proper disposal of agricultural waste to prevent pollution. Foreign businesses must comply with guidelines for managing organic waste, plastics, and hazardous materials.

Emerhub can help you seamlessly set up your agriculture business in Thailand by handling everything from securing licenses and permits to ensuring full regulatory compliance. We’ll assist you in navigating the land regulations, market entry requirements, and investment incentives based on your planned agricultural business activities.

Interested in setting up a business in Thailand’s agriculture industry? Fill out the contact form below and our local business experts will get in touch with you.