Rice production in Thailand

Rice plantation in Thailand

Rice production in Thailand represents a significant portion of the Thai economy and labor force.^[1] Forty percent of Thais work in agriculture, 16 million of them as rice farmers by one estimate.^[2][3]

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 second largest exporter of rice.^[4] Thailand has plans to further increase the land available for rice production, with a goal of adding 500,000 hectares to its already 9.2 million hectares of rice-growing areas.^[5][6]

The Thai Ministry of Agriculture expects rice production to yield around 25 million tonnes of paddy rice in the 2016-2017 crop year, down from 27.06 million tonnes in 2015-2016.^[7] Jasmine rice (Thai: ข้าวหอมมะลิ; rtgs: Khao hom mali, a higher quality type of rice, is the rice strain most produced in Thailand although in Thailand is thought that only Surin, Buriram, and Sisaket Provinces can produce high quality hom mali.^[8] Jasmine has a significantly lower yield rate than other types of rice, but it normally fetches more than double the price of other strains on the global market.^[5]

Due to an ongoing drought, the USDA has forecast output will drop by more than a fifth to 15.8 million tonnes in 2016. Thailand harvests three rice crops a year, but due to the drought, the government is urging a move to less water-dependent crops.^[9]

History

Until the 1960s, rice planting in Thailand consisted mainly of peasants farming small areas and producing modest amounts of rice. The Chao Phraya River delta was the hub of rice production.^[10] Agriculture constituted a large portion of the total production of Thailand and most Thais worked on farms. The extreme focus on agriculture arose for two main reasons: the vast amount of land available for farming and the government's policies of clearing land and protecting peasants' rights. The government helped peasants gain access to land and protected them from aristocratic landlords.^[10]

Due to the government's stance, urban merchants were unable to gain much control over the Thai rice industry. The government concerned itself with protecting farmers and not with overall production. As a result, Thailand was relatively self-sufficient, resistant to government intervention, and egalitarian. Most rice farmers owned their own land and exchanged labor between farmers was common. Rice production normally was not much more than the farmers needed to survive on.^[10]

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 merchants more. The government started worrying about increasing production and extracting more surplus from the rice industry.^[10] Thailand turned to the merchants to put on this pressure and it worked very well.^[10]

Rice harvest in Wang Nuea District, Lampang Province

Importance of rice

Rice farmers transplanting rice, Chaiyaphum Province

Rice is central to Thai society.^[11] Rice uses over half of the arable land and labor force in Thailand. It is one of the main foods and sources of nutrition for most Thai citizens: yearly per capita consumption in 2013 was 114.57 kg.^[12] Rice is also a major Thai export. Despite its importance to the nation, the industry is under threat. 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 challenges."^[11]

As the world becomes economically "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 to hire inexpensive manual labor. Third, intensive cultivation of land used for rice culture may have long-term adverse effects on crop yields.

Governmental policy

Rice straw is gathered after the harvest in Mae Wang District, Chiang Mai Province

The government sought to promote urban growth. One of the ways it accomplished this was by taxing the rice industry and using the money in big cities.^[10] In 1953, tax on rice accounted for 32 percent of governmental revenue. The government set a monopoly price on exports, which increased tax revenues and kept domestic prices low in Thailand. The overall effect was 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.^[10] 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.^[10]

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 financing for dams, canals, locks, ditches, and other infrastructure in the Greater Chao Phraya Project. Pro-small farm mechanization policies protected agro-machinery manufacturers from outside competition. They also stimulated small machinery research and development that resulted by the late-1990s in nearly two million locally produced two-wheel tractors, as well as one million axial flow pumps for irrigation, hundreds of thousands of small horsepower rice threshers, and 10,000 small horsepower caterpillar track-propelled combines that are able to harvest in small, fragmented, and still wet fields ^[13]

With the combination of improved access to water and machinery, these policies prompted rice farms to increase from 35 million to 59 million rai from the 1950s to the 1980s.^[10] Rice production has about tripled in terms of total paddy rice produced. While Thailand's rice production has not increased every year, the trend line shows significant increases since the 1960s.

Impact on farmers

While all of these advances helped improve overall production of rice in Thailand, many low-income farmers in Thailand were left worse off. Many peasants were unable to hold onto to their land and became tenants.^[10] The government demanded tax revenues, even during bad years, and this pushed many low-income farmers even closer to the margin. New technologies also pushed up the entry cost of rice farming and made it harder for farmers to own their land and produce rice.^[10]

Farmers who already had large scale operations or could afford all the new chemicals, rice strains, and tractors benefited greatly while the average peasant was turned from a land-owning rice producer to a manual laborer on the farms of others.^[10]

Yingluck government's rice scheme

Campaigning for the office of prime minister in 2011, Yingluck Shinawatra pledged to support rice farmers with a plan to purchase rice at above market prices. In June 2011 rice prices were at record highs and Thailand was the world's leading exporter. The Yingluck promise was to buy unmilled paddy rice at 15,000 baht per tonne and premium Hom Mali rice at 20,000 baht per tonne, prices 50 percent or more above the market. The rice would be stored.^[14][2] This, it was thought, would cause world prices to spike. The Thai government would then sell the stockpiled rice at record prices for a profit. Yingluck was elected in September 2011. One week later India lifted its ban on rice exports. Ten million tons of Indian rice flooded the market. Vietnam then lowered its prices. Global prices plummeted. A year later Thailand was no longer the leading rice exporter, dropping to number three after India and Vietnam. Thailand had stockpiled 17-18 million tons of rice that could not be sold at prices covering the purchase price, administration, and storage. Somporn Isvilanonda, a researcher at the Knowledge Network Institute of Thailand, estimated that the government had to sell its rice for at least US$800 (25,000 baht) a tonne to recoup a pledge price of 15,000 baht a tonne. But white rice in 2012 was selling for just US$575 a tonne, and Vietnam sold its rice at only US$450 a tonne.^[15] In June 2013, the international credit rating firm, Moody's, brought the scheme's results to the world's attention, reporting that the program would cost up to eight percent of Thailand's national budget and thus force Moody's to reassess the government's credit rating. In its first year, the cost to the Thai government was US$12.5 billion and was expected to rise to US15 billion in 2014.^[2] Meanwhile, the rice in storage was deteriorating and suspicions grew that it was being adulterated for profit with the addition of low quality rice from neighbouring countries by criminal gangs and corrupt officials.^[2]

The scheme foundered. Costing over US$19 billion, the program left Thailand with millions of tonnes of rotting rice in warehouses and a government engulfed by allegations of corruption. In its final year, government financing for the scheme dried up, leaving hundreds of thousands of farmers unpaid. A military government took power on 22 May 2014. In early May, prior to the military coup, the National Anti-Corruption Commission (NACC) found Yingluck at least partially responsible for corruption related to the scheme. In June 2014, the military government put an end to the price-support program.^[16]

In 2016, a state-appointed committee ordered that Yingluck be fined 35.7 billion baht (US$1.03 billion) as a penalty for the 178 billion baht losses reportedly racked up by the rice subsidy scheme between 2012 and 2014.^[17]

According to Pavin Chachavalpongpun, a Thai politics expert at Kyoto University, "The trial [serves] to pin Yingluck down—not to be set free but not to be punished at the same time". By holding Yingluck responsible, the military junta can snuff out the political influence of the Shinawatra family.^[18]

Prayut government's rice scheme

In November 2016, Prime Minister Prayut Chan-o-cha pledged to improve the well-being of farmers over the following five years. He did so in the face of declining rice prices, the lowest in ten years. He said the improvements would result from "smart farmer projects" initiated by the government, part of its 20-year national strategy. Following up on Prayut's remarks, Agriculture and Cooperatives Minister General Chatchai said that the government's strategy would increase farmer income to 390,000 baht per person per year within 20 years. This, he said, would be achieved by increasing the number of large farms to 5,000 nationwide and by switching 500,000 rai from rice cultivation to other crops. In the central region, the average size of a rice field is only about 16 rai.^[19] The government allocated eight billion baht for the provision of soft loans to farmers in 35 provinces to switch to growing maize on two million rai.^[20]

In 2016 rice subsidies were approved for hom mali, white paddy, Pathum Thani fragrant paddy, and glutinous rice. The government will pay up to 13,000 baht per tonne to growers who store their rice until rice prices gradually recover.^[21]

Production and exports

A large portion of this rapid expansion was due to increased production of rice in northeast Thailand^[22] While in the past, central Thailand was the main producer of rice, northeast Thailand quickly caught up. This was in part due to new road systems connecting northeast Thailand to ports on the coastline. Villages that produced significant rice crops were also changing as farmers evolved from more subsistence practices to mostly wage labor. Exchange labor also virtually disappeared.^[22]

Cows were being replaced by farm tractors and irrigation technology was updated in most villages. The green revolution was just starting to bloom in the world's farm fields. Rice farmers and merchants took advantage of new rice varieties, strains, fertilizers, and other advances.^[22] The International Rice Research Institute (IRRI) disseminated knowledge, technology, new rice strains, and other information to rice producers in Thailand. From the 1950s to 1970s, rice production per unit of land increased by almost 50 percent.^[10]

Thailand exported 10.8 million tons of milled rice valued at US$5.37 billion in 2014, the highest figures in its history. 2014 rice exports represented an increase of 64 percent in volume and 22 percent value in compared to 6.6 million tonnes worth US$4.42 billion exported in 2013.^[23] Exports declined in 2015, to 9.8 million tonnes, worth US$4.61 billion. Exports in 2016 are expected to amount to nine million tonnes, worth US$4.3 billion.

In 2015, Thailand was the world's second leading exporter of rice, 9.8 million tonnes, behind India, at 10.2 million tonnes. Vietnam was third, exporting 6.61 million tonnes.^[24]

Drought impact

In 2008, drought in Southeast Asia attributed to El Niño drove benchmark Thai rice prices to US$1,000 per tonne. In that year, lower Thai rice output, coupled with lower output from India and Vietnam, prompted India to ban exports, sending global prices skyrocketing and causing food riots in Haiti and panic measures in big importers such as the Philippines.^[9]

Starting in late-2014, Thailand's rice industry was hit with a drought that has extended to 2016. The drought is accompanied by decreasing worldwide demand for rice.^[24] The drought is expected to cost the economy about 84 billion baht (US$2.4 billion) in 2016 and sap demand for durable goods. Farmers are suffering: farm output has declined seven to eight percent in each of the past two years and farmers' debt to agricultural income is around 100 percent. The military government approved 11.2 billion baht of measures in 2015 to help farmers, including encouraging them to plant crops that need less water. Rice is the primary target of the water use reduction campaign because it requires up to two and a half times more water than wheat or maize. The major dams in the central region, the Bhumibol and Sirikit Dams, the main water sources for the country's central plain, are at their lowest levels since 1994. The government wants to cut rice production to 27 million tons in the planting season starting May 2016, 25 percent less than the five-year average.^[25]

Land ownership issues

Many farmers are in debt to local businessmen for their mortgages. The percentage of farmers owning land in Thailand has dropped—from 44 percent in 2004 to 15 percent in 2011. Land rights problems have been exacerbated by political turmoil over the past 15 years. Often new governments fail to honour the land rights commitments made to farmers by past regimes.^[26]

Commodity pricing

In 2011, farmers in Thailand could sell a kilogram of rice for 16 baht (US$0.50). In 2016, to make 16 baht, a farmer has to sell three kilograms as the worldwide price of rice has declined. The fall in price has prompted the military government to introduce rice farmer subsidies of 38 billion baht (US$1.1 billion; £860 million).^[27]

A bright spot on the price front is organic rice. At a time when rice millers pay farmers only 7,000 baht per tonne for paddy, organic rice producers can command up to 45,000 baht per tonne. According to Greennet, a non-profit, sales of organic rice have increased by 28 percent in 2016.^[28]

Traditions

Rice harvest on farm in Ban Sam Ruen, Phitsanulok

Rain-making ceremonies are common for rice farmers in Thailand. One such ceremony happens in Bangkok and involves the lord of the Royal Plowing Ceremony throwing rice kernels as he walks around the Grand Palace as the crown prince of Thailand watches.^[22] Another tradition that is common to central Thailand is a "cat procession". This involves villagers parading a cat around and throwing water at it, in the belief that a "crying" cat brings a fertile rice crop.^[22]

Proposed organisations

Thailand has at times considered creating a rice cartel with Vietnam, Burma, Laos, and Cambodia. Similar to the OPEC cartel that controls production of oil, the purpose would be to control production and set prices. Thailand submitted a proposal for such an organization to the other countries, but retracted it in 2008. Analysts believe that such an organization would not be effective, due to the lack of cooperation between the countries and their lack of control over farmers' production. Thailand is now investigating a possible, more forum-based international organization to discuss supplies and yields of rice.^[29]

Noppadon Pattama, the foreign minister of Thailand, wanted 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 to join. Pattama has also said the new international forum would not replicate any of the work done by the International Rice Research Institute,^[29] an institute formed in 1960 to "reduce poverty and hunger, improve the health of rice farmers and consumers, and ensure environmental sustainability of rice farming."^[30]

See also

• Agriculture in Thailand

References

Wikimedia Commons has media related to Rice farming in Thailand.

World rice production
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