Walk by Each Step and Eat by Each Chew The Stages of Economic Development for Thai Farmers

Transcription

1 Walk by Each Step and Eat by Each Chew The Stages of Economic Development for Thai Farmers Mr. Decharut Sukkumnoed Faculty of Economics Kasetsart University

2 Economic Development must be done step by step. It should begin with the strengthening of our economic foundation, by assuring that majority of our population has enough to live on..once reasonable progress has been achieved, we should then embark on the next steps, by pursuing more advanced levels of economic development. Here, if one focuses only on rapid economic expansion without making sure that such plan is appropriate for our people and the condition of our country, it will inevitably result in various imbalances and eventually end up as failure or crisis as found in other countries. Royal Speech, 1974.

3 Agriculture as a business fails to meet the expectations raised by textbook economics Slow Trade Sound Farming Page 29.

4 Thai Farmers Suffering Please watch the VDO presentation

5 Driving Force of FTA: Trade Balance between Thailand and China Export-Fruit Export-Vegetable Import-Fruit Import-Vegetable Trade deficit 2,220 m THB

6 Sharp Reduction in Farm Value due to Import Competition Farm Value Reduce 1,500 million THB onion garlic

7 Higher Export Value but Lower Farm Price Million THB THB/kg Export Value Farm price Hypotheses 5 - Oversupply? - Poor management? 0 - Unbalanced market power?

8 Thailand Food Security Status

9 Share of Thai Farmers with marketing contract < 2 rai 2-5 rai 6-9 rai rai rai rai rai rai > 500 rai

10 Share of Thai Farmers participating in farmer organizations < 2 rai 2-5 rai 6-9 rai rai rai rai rai > 140 rai

11 Share of Thai Farmers by Main Sources of Household Income Mainly from non-farm Both from farm and nonfarm Mainly from farm worker Mainly from farm income only from farm income 0 > 2 rai 2-5 rai 6-9 rai rai rai rai rai >140 rai

12 Concentration Ratio of Farm Business in Thailand % of farm hold 60% of buffalo 20% of firm hold 90% of chicken

13 Higher Concentration Ratio in Various Agri-businesses Item Rice Field Rubber Fruits & Trees Aquaculture Pig Duck Chicken Very High concentration

14 Farming not only produces tons of maize or meet, but also livelihoods and landscapes and meaning as well. Slow Trade Sound Farming Page 20.

15 Poverty Incidence (%) of Farm Households In Thailand 1998 Irrigation Rain-fed Total < 10 rais rais rais > 60 rais Total

16 Causes of Thai Farmers Suffering

17

18 The Way Out

19 no matter what others say whether they will accuse Thailand of being old fashioned or obscurantist. So long as we have enough to live on and to live for- and this should be the wish and determination of all of us without aiming for the apex of prosperity, we shall already be considered as the top in comparison with other countries in the present world Royal Speech, 1974.

20 to be a tiger is not important. The important thing for us is to have a self-supporting supporting economy. A self- supporting economy means to have enough to survive. Royal Speech, 1997.

21 sufficiency economy is a philosophy that stress the middle path as an overriding principle for appropriate conduct by the populace at all levels. This applies to conduct starting from the levels of families, communities, as well as the level of nation in development and administration so as to modernize in line with the force of globalization.

22 Factors affecting the Poverty of Rural Households No. of school Access to credit Sellers at farm Direct marketing to factory Good road condition Access to food with permission Always access to nature food Odd ratio (or opportunity) of being non-poor (time) Source: Kanchanachitra et al, 2004

23 Action Plan The New Theory Agriculture

24 Three Stages of Development First Stage: Sufficiency at the farm level or the development from dependence to the state of self-reliance at household level. Second Stage: Sufficiency at the community level or strengthening cooperation among farmers within the community. Third Stage: Sufficiency at the national level through the balanced cooperation among communities and large organizations.

25 The New Theory Agriculture A model is suitable for a small farmer who holds land of less than 15 rais (2.4 hectares) A model is suitable for the rain-fed areas. The soil texture in the model is suitable for water storage. The average number of household members is about 5 to 6 The primary objective is self-reliance and self- sufficiency, not mainly for commercial purpose. The application requires the unity and willingness of the farmers to work together and to help one another.

26 The First Stage to Self-Reliance Water Storage Area 30% or 4.5 rais Rice Cultivation Area 30% or 4.5 rais 320 kg/rai * 4.5 rais > 200 kg/year * 6 persons Other Farming Area - 30% or 4.5 rais Multiple cropping for food, daily income, fuel wood, herbal foods and medicines Residential Area 10% or 1.5 rai Residential area, home garden, raising animals, farm processing plant, and farm building

27 The Emphasize of the New Theory Agriculture Importance of Water Management Importance of Food Security Other Household Consumption Importance of Balancing between household income and expenditure The Sustainability of Farming System

28 Other Applications of Sustainable Agriculture Integrated Farming Agro-forestry Integrated Pest Management Organic Farming

29 One Example of New Theory Farm

30 The Comparison between Before and After Implementing the New Theory Agriculture Item Before 1998/99 After 2000/2001 Difference t-stat Number of Farm Species ** HH. w/o resource recycle Rice yield (kg./rai rai) ns Net Farm Income (THB/yr) 49,649 43,358-6, ns HH with all food products (rice+veg.+chicken+fish) Farm diversity (activities) ** Farm working man-days * Month of labor migration ns

31 The Economic Advantage of the New Theory Agriculture Higher Cropping Intensity Higher Productivity Higher Value-added added Products Higher Demand Lower Costs Lower Risks Higher Capital Accumulations Higher Bargaining power

32 The Economic Outcomes of The New Theory Agriculture Cases Region Incremental Benefit THB/rai/ yr Net Present Value (THB) Internal rate of return (%) Mr. Kasem Monojai North 2, , Mr. Intuan Krueboon North ,723 > 50 Mr. Anong Bokamkerd North-east , Mr. Somboon Kongkaden North-east , Mrs. Boonme Sitthi North-east 13,005 2,340, Mr. Noy Chaksuphan Central 30 7, Mr. Bamrung Srisuk Central ,007 >50 Mrs. Vijit Puicharoen South 7,579 1,152,070 >50 Mr. Thanatorn Orarak South ,781 >50

33 Figure 2 Comaprison of Net Farm Income between Conventional Agriculture and New Theory Agriculture: A Case of Mr. Anong Bokamkerd, Kalasin Province Conventional New Theory

34 Farmers Coping Strategies Applying for Long-term Investment Credit Selling the Non-productive Assets Step-by by-step Investment Start with the Short-life Crops Using their own Labors Organizing some Buddhist ceremonies

35 The Second Stage to Community Cooperation Community saving groups Community welfare fund Community health care center Community forest, community fishing ground, community water resource management Community Learning groups Community enterprises

36 Income Security Welfare and Social Security Community enterprises Food Security Agro-forestry Resource Management Inpang Learning Center Health Care Center Social Welfare Fund Health Security Resource Security

37 One example of the Second Stage 80% of goods and services that local community buy, in fact, can be produced in the community itself. The problem is that local people never realize their community as their concrete market. They like to buy and sell from the outside world, which normally cause them huge economic burdens, especially for marketing costs and profits.

38 Organic rice 100 households Paddy field 3,000 rais Paddy Rice 1,000 tons Pilled Bio-fertilizer Factory Husk Rice Miller Rice barn/ broken rice Animal Feed Factory 3 ton/day Buying White rice 8 Million THB White rice 600 tons Fish head Maize 200 rai 20 households Buying pork 7.5 million THB Slaughter house 55pigs/day Pig Farm 30 Households 30x20 = 600 pigs Source: Seri Pongpis, 2003

39 The Third Stage of Development The community is encouraged to expand their activities through reaching out to co- operative firms, banks, and other outside organizations, including government and NGOs. At this stage, various institution will join hands in a collaborative way to create sufficiency at the national level.

40 Of course, agriculture is much more than a business. Still we need to emphasize the business aspect, since farmers today leave their land because they can no longer earn a living form agriculture. If people abandon their farm work, they as well abandon the multiple functions, which agriculture provides to human communities and the natural world Bruce Ross (Belgium) Slow Trade Sound Farming, page 28

41 The Benefits of The New Theory Market Mon-market Economic Environmental Social

42 The Benefits of The New Theory 100% 80% 60% 40% Mon-market Market 20% 0% Economic Environmental Social

43 Big Questions How can they pass through the first three years of difficulties? How can market realize and pay for the benefits or public goods generating from their sustainable farming? If not, who will take care of these benefits, possibly Thai government? How well can we support Thai farmers to maintain these societal benefits? Certainly, free (and fast) cannot solve these question. Hopefully, slow trade can provide answers, at least some of them.

44 The Examples of The Third Stage Kud Chum Ruk Thamachat Rice Miller Group Chumporn Cabana Resort

45 Thank you for your attention