- By Pooky, Thai Intel’s economics journalist
- According to a local press, TNN, the insurance will have a pay-out rate of about 4,000 baht a Rai, if farmers rice production is hurt by floods, pests or disease. The local press, reports, that the cost of growing a Rai of rice, is about 4,000 baht.
- That means, with insurance, which a government fund will help rice farmers pay for the insurance, if flooding, pests or disease hits, Thai rice farmers will recuperate their investment.
The insurance scheme, comes on top of the highly controversial Yingluck’s rice price support scheme, which sees Thai rice, moderately higher than global price, resulting in a high stock of rice in Thailand-as buyers turns to cheaper rice from other countries.
However, Yingluck says the price support scheme is benefitting Thai rice growers, which is her priority, and that Thailand is willing to sell rice to the global market at a loss, than what it paid to Thai farmers, to reduce the stock of rice in Thailand.
- Global and local news outfits, mostly reports on the attitude of Thai rice exporters and foreign buyers, seldom, focusing on the Thai rice farmers.
Bloomberg, for example, last year reported that Yingluck’s rice subsidy, will cause, quote: “Food Riots in Asia” while Bangkok Post have focused about 80% to 90% of its coverage on Yingluck’s rice subsidy on Thai rice exporters reaction.
- They are called the “backbone” of Thailand’s economy, the rice farmers, that for decades was Thailand’s biggest export, earning the country foreign currency to developed.
But today, their numbers have dwindled to a few million Thais involved in growing rice, and the iconic picture of Thai rice farmers and their water buffalos, have been replaced with “Kubotar” tractors, a Thai Japan joint venture with the Thai King, Bhumibol, a major share holder.
- The Thai King, having been ill and weak for many years, recently, took his first trip outside of Bangkok in recent memory, and visited a rice farming community, that is historic, in that the Thai King visited the community before when he was healthy, and engaged in “Actual traditional Rice Farming” activity.
Yingluck bought a piece of land in that community, where the Thai King conducted rice farming activity, and donated the area to the Thai King, where it is now a very famous “Agricultural Tourism” spot in Thailand.
- Trough mostly the Thai King lead, Thailand have been attempting to switch away from “Chemical farming” to “Natural Farming” including rice growing.
However, when naturally grown products became popular in Thailand, the prices went sky-rocketing, but have since dropped.
The Thai King, Bhumibol, have also devised a system for small rural Thai farms to develop themselves along the “Sufficiency Theory” by partitioning a farmer’s land into sections, that grows food and animal for self-sustainability, with some excess, that could be sold to the market for extra income.
The following is from Wokipedia:
Thailand has a strong tradition of rice production. It has the fifth-largest amount of land under rice cultivation in the world and is the world’s largest exporter of rice. Thailand has plans to further increase its land available for rice production, with a goal of adding 500,000 hectares to its already 9.2 million hectares of rice-growing areas. The Thai Ministry of Agriculture expects rice production to yield around 30 million tons of rice for 2008. The most produced strain of rice in Thailand is jasmine rice, which is a higher quality type of rice. However, jasmine has a significantly lower yield rate than other types of rice, but it also normally fetches more than double the price of other strains in a global market.
Pre-World War II history
Up until around the 1960s, rice production in Thailand comprised many peasants farming small areas and producing modest amounts of rice (subsistence agriculture). The Chao Phraya River delta was the hub of rice production at the time. Agriculture was a large portion of the total production of Thailand and most Thai citizens were peasants who worked on the farm. The extreme focus on agriculture arose for two main reasons: The vast amount of land available for farming and the specific policies of the government to clear more land and protect peasant rights. The government would help peasants gain access to land and also protect them from aristocratic landlords. Due to the government’s stance the urban merchants were unable to gain much control over the rice industry in Thailand. The government was concerned with protecting individual farmers and not as much with overall production. This resulted in Thailand being relatively self-sufficient, resistance to government invention, mobile, and egalitarian. Most rice farmers owned their own land and exchange labor between farmers was common. Rice production was normally not much more than the peasants needed to survive on.
Post-World War II history
As Europe was starting to come together on many issues including agricultural policy (including price supports), Thailand was starting to protect its rice farmers less and work with the merchants more. The government started worrying about increasing production and exploiting more surplus from the rice industry. Thailand turned to the merchants to put on this pressure and it worked very well.
The government wanted to promote urban growth and one of the ways it accomplished this was by taxing the rice industry and using the money in big cities. In fact, during 1953, tax on rice accounted for 32 percent of government revenue. The government set a monopoly price on exports, which increased tax revenue and keep domestic prices low for Thailand. The overall effect was a type of income transfer from farmers to the government and to urban consumers (who purchased rice). These policies on rice were called the “rice premium,” which was used until 1985 when the government finally gave into political pressure. The shift away from protecting the peasant rice farmers by the government moved the rice industry away from the egalitarian values that were enjoyed by farmers to more of a modern-day, commercial, profit-maximizing industry.
The Thai government had strong incentives to increase rice production and they were successful in most of their plans. The government invested in irrigation, infrastructure, and other pro-rice projects. The World Bank also provided finance for dams, canals, locks, ditches, and other infrastructure in the Greater Chaophraya Project. These policies helped lead rice land to increase from 35 million to 59 million rai from 1950s to 1980s. The graph on the next page, Figure 2, shows the increased paddy rice production in Thailand from 1961 to 2007. The rice production has about tripled in terms of total paddy rice produced. While Thailand’s rice production has not increased every year, which is not to be expected, one can see a trend line for steady significant increases since the 1960s.
A large portion of this rapid expansion was due to increased production of rice in northeast Thailand While in the past, central Thailand was the main producer of rice, northeast Thailand quickly caught up to a comparable amount of production. This was in part due to the new road systems between northeast Thailand and the shipping focused cities on the coastline. The villages that had a significant portion of rice production were also changing as farmers went from more subsistence practices to mostly wage labor (exchange labor also virtually disappeared). Cows were being replaced for tractors to work on the farm and irrigation technology was updated in most villages. The green revolution was just starting to spread among the world’s agricultural industries. Rice farmers and merchants took advantage of new rice varieties, strains, fertilizers, and other technological advances. The International Rice Research Institute (IRRI) was also disseminating knowledge, technology, new rice strains, and other information to rice producers in Thailand. From the 1950s to 1970’s rice production per unit of land increased by almost 50 percent.
Effects on peasants
While all of these advances helped improve overall production of rice in Thailand, many peasants were left worse off. Many peasants were unable to hold onto to their land that they used to harvest rice on and had to become tenants to survive. The government would always expect tax revenue, even during a bad year, and this pushed many peasants even closer to the margin. New technologies also pushed up the entrance cost of rice farming and made it harder for peasants to own their land and produce rice. Farmers that already had somewhat large scale operations or could afford all the new chemicals, rice strains, and tractors benefited greatly while the normal peasant was turned from a land owning rice producer to a manual laborer on others land. To examine the efficiency of rice fields the graph shown in Figure 4 displays the increased productivity of the land. The yield of paddy rice in Thailand is clearly rising since 1961 in the graph. The yield is measured by dividing tons of rice produced by hectares of rice land.
Importance of Rice
Rice has many important roles in Thai society from food to work. Rice uses over half of the farmable land area and labor force in Thailand . It is one of the main foods and sources of nutrition for most Thai citizens. Rice is also of the main components of Thai exports. The Thai rice industry also faces a few big threats. According to Setboonsarng the top three threats are, “(i) increase in competition in the international market; (ii) growing competition with other economic activities that increases the cost of production, especially the labour cost; and (iii) degradation of ecological conditions. Rice research has to address these challeneges.” As the world becomes “flatter,” and the rice production around the world become more competitive, it becomes harder for Thailand to keep its competitive advantage and the margins Thai rice producers have been used to. For the second threat, the modernization of Thailand has led to an increase in wealth and the cost of labor, making it more expensive for rice farmers that use cheap manual labor. Third, the massive amount of land used for rice can have long term adverse effects on the yields of the land.
Rain-making ceremonies are common for rice farmers in Thailand. One such ceremony happens in Bangkok involves the lord of the Royal Plowing Ceremony throwing rice seeds as he walks around the Grand Palace as the Crown Prince of Thailand watches. Another tradition that is common to central Thailand is a Cat Procession. This involves villagers carrying a cat around and throwing water at it, due to the belief that a “crying” cat brings a fertile rice crop.
Thailand has at times considered creating a rice cartel with Vietnam, Burma, Laos, and Cambodia. The purpose would be to control production and set prices similar to the OPEC cartel that controls production of oil. Thailand had even submitted a proposal to the other countries for the organization but it was retracted in 2008. Many analysts believe that such a price setting organization will not work due to the inability of cooperation between all of the countries and their lack of control over farmer’s production. Thailand is now looking at creating a more forum based international organization to discuss supplies and yields of rice. Noppadon Pattama, the foreign minister of Thailand, wants to call the forum the Council on Rice Trade Cooperation and was planning, as of May 2008, to invite; China, India, Pakistan, Cambodia, Burma, and Vietnam. Pattama has also said the potential new international forum will not replicate any of the work done by the International Rice Research Institute. The Institute was formed in 1960 to, “…improve the health of rice farmers and consumers, and ensure that rice production is environmentally sustainable” in the Southeast Asian region.
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