Household income and expenditure of farmers in Lao PDR : Comparison between rubber tree and sugarcane farmers

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1 แก นเกษตร ฉบ บพ เศษ 1 : (2556). KHON KAEN แก นเกษตร AGR. 41 J. ฉบ บพ เศษ 41 SUPPL. 1 : (2556). (2013). Household income and expenditure of farmers in Lao PDR : Comparison between rubber tree and sugarcane farmers Leuangsay Phanthasith 1, PiansakPakdee 1*, and Thanaporn Athipanyakul 1 Abstract: The objective of this study was to compare household income and expenditure between rubber tree and sugarcane farmers. The purposive sampling technique was used for data collection, and a structured questionnaire was used to interview a total of 100 farmers. A descriptive analysis was applied. The results indicated that in , the household income of rubber tree farmers was higher than those sugarcane farmers, especially in long run. The household consumption has increased during The rubber tree farmers expensed their consumption in food item more than rice, but it was contrary for the sugarcane farmers. The net income of the rubber tree farmers was also greater than the sugarcane farmers; even it was negative in This can imply that growing rubber tree may improve economic well-being of farmers in the long run. Keywords: income, expenditure, farm household, sugarcane, rubber tree Introduction Laos is one of the poorest nation with approximately GDP per capita $US330 (ICEM, 2003). The national economy mainly depends on agriculture. The government has been aiming at eradicating poverty and moving the country beyond the category of least developed countries by 2020 (NPEP, 2003). To reduce vulnerability of poor households and to create opportunities for diversifying livelihoods through market orientation, transformation of agricultural pattern from subsistence to commercial farming is a major objective. Sithong et al. (2006) pointed out that the agricultural sector in Lao PDR has changed rapidly, because farmers are making a transition from subsistence to commercial farming. However, intensive agriculture in order to increase farm income can lead a problem of deforestation. Sugarcane and rubber tree productions are two among important commercial crops (NAFRI, 2009). The government therefore aims to reduce their production areas, since growing these crops seems related to deforestation. However, there is no information report which crop should be reduced. This study aims to investigate farm household income and expenditure including the net income, and to compare these values among farmers who have grown rubber tree and sugarcane. The results of this study can be used as information for policy maker. It was hypothesized that if net income of rubber tree farmers is higher than those who have grown sugarcane, the government should take into account in this information. 1 Department of Agriculture Economics, Faculty of Agriculture, Khon Kaen University, Khon Kaen * Corresponding authors: piapak@kku.ac.th, thanaporn_k@hotmail.com

2 KHON KAEN AGR. J. 41 SUPPL. 1 : (2013). 359 Materials and Methods Results The purposive sampling technique was used for data collection. The total of 100 farmers was gathered from two villages, 51 farmers from Oudomsin village and 49 farmers from Phiyer village. The farmers were divided into two groups, rubber tree and sugarcane. The survey was conducted in The structured questionnaire was used to interview farmers about their household income and expenditure in 3 periods: 2000, 2005, and It was noted that the rubber tree production will be planted in 2000, and can be tapped in The household income and expenditure used in this study were defined as the total income (expenditure) received (paid) by all member of the household from all sources including on farm income (expenditure) and off-farm income (expenditure). Descriptive statistic was applied to analyze data by using SPSS program. Income of the two groups The result indicated that the major income of both farmer groups (rubber tree and sugarcane farmers) came from non-glutinous rice. Glutinous rice was grown only for home consumption. It was found that rubber tree farmers not only received income from rubber production, but also from sugarcane. In 2000 and 2005, they received income ($US 159.8) only from sugarcane production, since the rubber tree can be firstly tapped in When two groups are compared, the average income of rubber tree farm household was greater than sugarcane farm household, especially in Taking into consideration off farm income of both groups, its ratio was quite low when compared with on farm income, and it was not much different between rubber tree and sugarcane farmers. However, indeed information was shown that a casual labor was a major source of off farm income of the rubber tree farmers. This implies that rubber tree farmers may have more time and can allocate their time to other activities (Table 1).

3 360 แก นเกษตร 41 ฉบ บพ เศษ 1 : (2556). Table 1 Comparison of household income and expenditure of rubber tree and sugarcane farmers. Rubber tree farmers Sugarcane farmers Source of income On farm income 1, , , , , , Farm field crops 1, , , , , , Non glutinous rice 1, , , glutinous rice Maize Watermelon Rubber tree - - 1, Sugarcane , , , From animals Cow Buffalo Pig Duck Chicken Off-farm income Casual labor Money transfer from family in another country Income from wide products Total $2, $2, $3, $1, $2, $3, Off farm and on farm expenditure The results indicated in 2000 and 2005, the household expenditure of rubber tree farmers was greater than the sugarcane farmers only, since they was investing for rubber plantation. However, its investment cost was low in On the other hand, on farm expenditure of sugarcane farmers was high in 2010, since they must reinvest in sugarcane production. Considering household consumptions, this item can capture the life style of people (Lim et. al., 2010) in their dietary life, clothing, health care, and others. The percentage of food expenditure can be used as an indicator of well-being in view of economics (Perali, 2003). The observation showed that the expenditure of household consumption was increased and changed during the period of The largest component of expenditure of both groups was rice and food. However, different expenditure patterns of both groups were reported. The rubber tree farmers expensed in item of food higher than sugarcane farmers. This figure was contrary in the item of rice consumption. The rubber tree farmers consumed in other items more than the sugarcane farmers. This may imply that they have more well-being than sugarcane farmers (Table 2).

4 KHON KAEN AGR. J. 41 SUPPL. 1 : (2013). 361 Table 2 Comparison of on farm expenditure between rubber tree and sugarcane farmers. Items Rubber tree farmer Sugarcane farmer On farm expenditure , , Rice seed Chemical fertilizer Organic fertilizer Herbicide Insecticide Fungicide Labor for weeding Agriculture equipment Planting cost Caring for animals Feeding animals Fuel cost Land tax Land rental Interest rate Household consumptions 1, , , , , , Rice Gas, charging batteries Food Household items for daily Children schooling Clothing Medical care Traditional events Maintenance of house Fuel Total 2, , , , , , Table 3 Comparison of net income between rubber tree and sugarcane farmers. Details Rubber farmers Sugarcane farmers 1. Total income 2, , , , , , On farm income 1, , , , , , Off-farm income Total expenditure 2, , , , , , On farm , , Household consumption 1,685 2,012 2,441 1, , , Net income $ $ $1, $6.08 $4.46 $11.84

5 362 แก นเกษตร 41 ฉบ บพ เศษ 1 : (2556). Net income The net income of rubber tree farmer were negative in 2005, since they must invest more in rubber tree production (Table 3). Although, the net income of sugarcane farmers were positive, it was less than net income of rubber tree farmers in 2000 and 2010, implying that rubber tree production may increase economic well-being of farmers in Laos in long run. However, this paper did not take into account in this issue. Conclusion The results of this study indicated that income of rubber tree farmers was greater than sugarcane farmers. The patterns of household consumption of both groups have been changed and increased during The rubber tree farmers spent for their consumption in food item more than sugarcane farmers. Although, the net income of rubber tree farmers was negative in 2005, it was greater than net income of sugarcane farmers. It may draw conclusion that growing rubber tree can increase farmers income in long run. However, this study did not use the discount rate when compare the net income between rubber tree and sugarcane farmers. Therefore, a comparison of a cost-benefit analysis between rubber tree and sugarcane productions shall be taken into account for further study. References ICEM (International centre for environment management) Lao PDR national report on protected areas and development. Review of protected areas and development in the lower Mekong river region. Queensland. Lim, J.M. et al Global brands conceptualization: A perspective from the Malaysian consumers. American Journal of Scientific Research Issue 7: NAFRI (National Agriculture and Forestry Research Institute) Impact of maize expansion on landscapes and livelihoods in Lao PDR: case study in Xieng Khor district, Hua Phan Province. News & Events/NAFRI Announcements. NPEP (National Poverty Eradication Programme) Eight round table meeting Vientiane. Lao PDR. Perali, F The behavioral and welfare analysis of consumption: the cost of children, equity and poverty in Colombia. Kluwer Academic Publisher, 379 p. Sithong T, Khamla P, Yayoi F and Jefferson F Agrarian Land-Use Transformation in Northern Laos.