Transcript Agriculture in Thailand

Agriculture in Thailand
Part B
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IV. Markets
1. Factor Markets:
Land Rights:
 High tenancy rates in central and
north (old rice areas), but small rates
elsewhere
 In 2003, total= 24%, central= 44%,
north= 36%, northeast= 16%,
south= 5%
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IV. Markets
1. Factor Markets:
Land Rights:
 Unclear ownership of farmers’ land
 20% of farmers are “squatters” in
forest land
 Problems of no incentive for land
conservation
 No loan collateral, and low productivity
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IV. Markets
Labor
Seasonal demand and supply
More cash-wage labor VS household
labor exchange
Supply from the Northeast, but no
year-round surplus
More labor shortage in recent years
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IV. Markets
Labor
 More farmers become “professionals”
rather than “casual”
– “professionals”: new generation, new
technology coping with market changes
and labor shortage; households obtaining
>60% of income from agri., and heads of
families have no second jobs
– number of “professionals” rising from
0.94 million HH in 1986 to 1.36 million
HH in 2004 (20% of total farm HH)
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IV. Markets
Credit
 Traditional (informal) sources VS
formal sources (Bank of Agriculture
and Agricultural Cooperatives or
BAAC)
 Debt problem for small farmers
 60% of farming households are
indebted
 Not enough long-term credit
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IV. Markets
2. Output Markets:
 Not much government intervention,
except in rice
 Arm’s length markets through
middlemen: efficiently organized, except
product quality
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IV. Markets
2. Output Markets:
 Contract farming: firms contract farmers
in advance to produce and sell products at
fixed prices e.g. poultry, pigs, tobacco,
pineapples, vegetables
 Contract farming: lower price risk for
farmers, quality control, technology
promotion
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IV. Markets
2. Output Markets:
 Sugar cane: pre-arranged 70:30 price split
between growers and sugar millers, with
negotiated basic farm price
 A case of bilateral monopoly, with
political power to get subsidy from govt.
and domestic sugar consumers
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V. Policies
Land
 Not clear in granting land rights for
agriculture: natural forests VS economic
forests
 Clashes between officials and farmers over
unclear “forest land”
 Slow land titling for farmers
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V. Policies
Irrigation
 20% of agri. Land is irrigated (VS rainfed)
 Fail to increase efficiency of existing systems,
wasteful use of water, and conflict among
different users
 Present system based on “unlimited supply”
 “Pricing of water” still politically
unacceptable
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V. Policies
Credit
 3 modes:
– In the past, commercial banks required to
lend x% of deposits to agri.; but not so
successful
– BAAC, most successful with large impact,
reaching 90% of farm households
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V. Policies
Credit
 3 modes:
– mortgage scheme, paddy-pledging scheme:
farmers pledge their paddy with BAAC at
guaranteed price, and get loans at subsidized
rate; problems of small price impact,
corruption, and expensive subsidy
– Recent change to “price gaurantee” at
minimum levels for rice, corn and cassava by
the Apisit government
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V. Policies
Credit
 3 modes:
– Past debt deferment program, allowing farmers
to postpone debt repayment for 3 years;
problems of financial discipline and benefit to
the not-so-poor farmers
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V. Policies
Pricing
 Border measures on exports & imports
 Heavily-taxed agriculture in the past; a
controversial “rice premium”
 Agricultural taxes reduced after 1982
 Some protection from import for sugar,
soybean, cotton, oil palm
 Ineffective direct price intervention
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VI. Future Directions
 Three causes of agri. decline since 1980s:
– Natural decline: agri. share naturally
declines with economic growth; but not
clear why this is always true analytically
– End of land frontier: land surplus ended in
1980s
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VI. Future Directions
 Three causes of agri. decline since 1980s:
– Dutch disease: industrial export boom
causes baht appreciation, adversely
affecting agri. exports (But the baht
depreciation after the crisis has invalidated
this argument? What about the recent baht
appreciation?)
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VI. Future Directions
 Thai agriculture at a crossroads with no land
surplus and good export market
 Absolute decline of agricultural labor, and
labor become more scarce
 Not enough water during dry season
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VI. Future Directions
 Towards land-intensive, capital-intensive, and
less water-intensive horticulture (fruits,
vegetables, flowers) and livestock
 Towards safe and organic food crops
(alternative agriculture)
 Different government role is required: away
from price intervention, towards R&D
promotion and extension
 Role of genetically modified organism
(GMO)?
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VII. Recent Issues: Agriculture and
the Economic Crisis in 1997
 Thai agriculture was less affected than other
sectors
 Agriculture (rural economy) absorbed some
laid-off workers
 Reduced government spending in rural areas
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VII. Recent Issues: Agriculture and
the Economic Crisis in 1997
 Rural community development efforts
strengthened
 The King’s “sufficiency economy”: produce
for own consumption and sell the surplus to
reduce risk in world market
– Household, community, and national levels
– Farm land use: 30/30/30/10  water irrigation +
poultry & aquaculture/ rice/ other cash crops/
housing & backyard production
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VII. Recent Issues: Agriculture and
Thaksin’s Policy
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Kitchen of the world
Debt postponement/deferment
Asset capitalization
One Tambon One Product
Free Trade Agreement with China, Australia,
NZ and impact on temperate-zone fruits,
vegetables, and dairy products
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VII. Recent Issues: Agriculture and
High Oil Prices
 High oil prices since 2004  biofuels become
a more competitive substitute
 Ethanol from sugar (molasses), maize, and
cassava
 Biodiesel from oil palm, coconut, jathropa,
and algae
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VII. Recent Issues: Agriculture
and High Oil Prices
 Agricultural wastes can be used as fuels in
producing electricity, e.g. sugar cane waste,
paddy husk, cassava roots, wood waste, as
well as bio-gas from animal waste
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