Thai rice exporting farmers, standing on the straw of illusion

When people think about Thai farmers, they think about rice farmers.  Thailand is the no. 1 rice exporting country of the world. People around the world know that Thai rice is one of the best quality rice in the world. Thailand keeps that reputation for more than 20 years. Related to this reputation, Thai rice farmers should have a better livelihood, no poverty, no debt, and no hunger. Unfortunately, it is only ideal and part of the theory that macroeconomic growth of trickles down. In reality it is the opposite.

In Thailand, we have 320 million rai total land area, 130 million rai is cultivation area, and 67 million rai (in 2004) is devoted to rice cultivation. That means that over half of the cultivated land is planted with rice. In each year, Thailand has rice production at 27 Million tons of paddy, 60 percent of this is used to export. Most of the export rice is cultivated in Central Thailand. This rice is of medium and low quality. Jasmine rice which is one of Thailand’s best quality rice is grown in the Northeast region.

In former times Thai farmers were self-sufficient. Their livelihood is very much depended on natural resources, land, river, forest, mountain, and seeds. Thai farmers were not rich, but not poor, and had food enough to survive. When the green revolution started Thai farmers started to grow rice for export intensively. That was when all things changed.

People assume that Thai farmers must have more income and a better life. This is supposed to be because Thailand is a food exporting country. Within the framework of the WTO Agreement on Agriculture AoA), Thailand is supposed to get more access to the world market. This is true as the statistic of the Office of Agricultural Economics shows. The agricultural Export Value rose from 1955 to 2003, at 412,490 Million Thai baht (10,310 Million USD)  to 804,188 Million Thai baht (20,105 Million USD).  While the rice exports rose from 1995 to 2003 by 2,331,176 metric tons.

Thus it is assumed that Thai farmers can profit from this increased income of agricultural export and rice exports.

Table 1 Value of  Agriculture Export

Source: Office of Agricultural Economics

How far Thai farmer could profit from the export value

It will be more interesting if we can find out that how much these figure of agricultural export and rice export value development affected to the livelihood of the Thai farmers. The question is in how far the farmers could profit from the export value increase during the last ten years.

We found out the interesting figures from the same institute on the agriculture income for Thai farmers, the debt of Thai farmers and the number Thai farmers indebted for the latest ten years. These figures show out different images from the figures above.

The statistic from the Office of Agricultural Economics during the period of time, 1995 to 1999 show that the average incomes from agriculture for Thai farmer had been decreased from time to time. It is decreased from 29,811 Thai bath per family in 1995 to 26,882 Thai bath per family in 1999. Moreover it was found out that during that period, the debt of farmers per family  all across the country has been increased from 24,672 Thai bath in 1995 to 43,415 Thai bath in 2001. So, even the agriculture export value was going up, but agricultural income of farmers was going down. The amount of debt per family is going up respectively. 

Asides, the number of indebted households also increased from 2.8 million families in 1995 to 4.07 million families in 2001. These statistics told us that the livelihood and living standard of the Thai farmers are getting worse and were never in a good situation as assumed.  

Table 3. Income of Farm Households

Source: Office of Agricultural Economics

Table 4. Farm Households in Debt

Source: Office of Agricultural Economics

Table 5  Amount of Debt/Household (baht)

Source: Office of Agricultural Economics

When we assume that the rice export value was going up for the last ten years, the income of rice farmers should be grown up too. However, there was a big gap between the rice export price and the farm gate price that farmers get from the middle man. Table 6 shows that farmers receive on average proportion from exports which is nut in correlation with the increase of export earnings as shown in table2. Thus the income generated by rice exports is not in favor of rice farmers.  We can see from the table that in some years, the farmers even get less than half of the export price. For instance ,in 1998, the FOB price is 9,336 baht (233 US $) per ton, while the farm gate price is 4058 bath (101 US $)per ton. While the FOB price in 2001 is 6046 baht (151 US $) per ton and the farm gate price the same year is 3120 baht (78 US $) per ton only.

Table 6. Farmers shares of export earning.

Source: Calculation from Focus on the Global South

 Life story of rice farmer

.Let us have a look on this short case study. Once when we interviewed a rice farmer in Pichit province, central part of Thailand where rice farmers grow rice three times a year a farmer told us the tragedy of rice farmer in the central region: The rice grown in the field do no longer belong to farmers. Before the planting season starts, farmers have to borrow money from local money lenders to finance their agricultural inputs. They also need cash for their children’s education, for their food and other household’s needs, for their clothes, and significantly for repaying back their debt from last season. The rice farmers can only borrow money from the local money lenders when they promise to sell their rice harvest to them. Some years, loans and interests are very high. The farmers know that their paddy will be all go to the local money lenders and nothing will be left for their own family consumption. Thus the rice farmer stole the paddy from his own paddy field before the lenders came and hid this paddy at the back of his house. This stolen paddy was that entire he had for his family consumption.

Why can something like this happen? What are the main reasons behind the tragedy? The rice farmers are having no possibilities to define the farm gate price. The one who influent the farm gate price are the rice exporting company and the rice millers.

The Trick of Exporting company and Millers

When there is a small quantity of rice at the world market and also at the Thai domestic market, export prices are supposed to rise. Thai exporting companies will skim the market by just selling rice from their stocks that they are keeping. Thus they profit from the price increase while the farmers who were forced to sell their rice just after harvesting loose in this situation.

When there is a big quantity of rice at the world market and also at the Thai domestic market, exporting companies furthermore will pass the low price on to the rice millers and middlemen who than pass it further to the farmers by reducing the farm gate price. Rice farmers can not control the structure of marketing system, they had to take the burden of world market price the fluctuations.  

The Production Cost is growing up but the Rice Price is fluctuated

 1993,1994,until 2002

This picture shows, that, rice production costs  have continuously increased over the 10 years. In the past 5 years the rice price has decreased following the world market price. In 2002, the Office of Agricultural Economic stated that rice production costs are higher than the rice price.  The costs of production are 4,942.43 Baht per 1,000 kilogram while farmers sell rice at the price of 4,840 Baht per kilogram.  This means farmer face a deficit of 102.43 Baht per 1000 kilogram.  So farmers do not only loose but they  also becomes indebted. This situation occurred not only in 2002 but also happened in some other years when the price of rice was low but the costs of production were high.

How far rice farmers has sovereignty on their food and life

The situation of rice farmers in Thailand is getting worse. In each year, there are many rice farmers who could not pay back their debts and they need to sell their land. Nowadays the land of small farmers has been taken away by banks, local lenders, agribusiness, and national and local speculators. The main reason is that the economy of small farmers are collapsed. They could not earn anymore from their agricultural produce. The numbers of the landless and the farmers who have not enough land for cultivation have been growing up to 1.5 million families from the whole 5.6 farmer families across the country.

For small farmers, land is the most important productive resource that they need for their food security. Unfortunately, land and other productive resources are taken away from small farmers. And used for the industrial sector and dam construction for electricity power plants. The control over seeds, forest and coastal resources seem to be exploited by big agribusiness and transnational corporations. As mentioned above, the marketing system at national and international levels are completely controlled by exporting companies and big agribusinesses.

Lastly, the freedom to choose what farmers want to grow either for food or for trade is being forced  by many national laws and international trade agreement. One example for a national regulation that will influence the freedom of farmers very much is the Act on Rice. Within this framework, rice for export is supposed to be produced in special rice exporting zones.

What is left for small rice farmers to survive in this world of competition of resources? Thai farmers want to define their own future and reclaiming back their food sovereignty. They want to take back their lands through genuine land reform, not by a market-led land reform. They want to take back their rights on the use, control and conservation of river, forest, coastal resources and seed as they have their customary rights on.

They want their self-reliant life and dignity back and not being controlled by export-led market, trade and big agribusiness. Lastly, they don’t want a trade agreement on agriculture. The WTO agreement does not help Thai rice farmers, rather destroying their livelihood and trade away their land and life. 

Article by Pongtip Samranjit / Local Action Links / 23 /5/2010