Marketing Distance-Decay and Highland Vegetable Production in Northern Thailand

Dr. Richard A. Crooker

Dr. Robert N. Martin

Department of Geography Kutztown University, PA 19530

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ABSTRACT

This paper delineates the potential geographical range of vegetable produc­tion in Thailand's northern highlands and demonstrates the utility of marketing dis­tance-decay analysis in rural studies. Hill tribes grow vegetables in northern Thai­land as replacement cash crops for illegal opium. They produce more vegetables than local markets consume and the sur­plus is transported to a developing mar­ket in Bangkok. The distance-decay rate ofthis new market is treated as a function of transport costs. Isoline maps are used to analyze resulting marketing gradients of important vegetable cash crops. It ap­pears that distance-decay does not inev­itably prohibit marketing surplus vegeta­bles in Bangkok. The findings provide a basis for follow-up spatial studies of high­land vegetable production in the region. They also demonstrate the importance and utility of marketing distance-decay analysis in less developed rural areas.

KEY WORDS: marketing, distance-decay, transportation, agriculture, drugs, Thai­land.

INTRODUCTION

Mountain societies tend to be mar­ginal economically, but increasingly they are influenced by external forces. The hill tribe farmers of northern Thailand (Fig . 1) are no exception . Until recently, much of their economic subsistence was based on growing the opium poppy (Papaver som­niferum) and selling its sap, which is an illegal narcotic and the source of heroin . Today, due to law enforcement, rural as­sistance projects, and unsponsored ar­rangements with private sector entrepre­neurs, farmers are adopting vegetables as important alternate cash crops. These crops have much higher transport cost­to-bulk and cost-to-weight ratios than opium. Since 1973, the Thailand govern­ment has worked with the United Nations and other international organizations to improve the highland road network. This network is presently assisting more than 500 villages to switch from reliance on in­come from opium to legitimate cash

Andaman Sea

NORTH THAILAND o 40 80 , , ,

Kilometers

JLH

THAILAND

NAN o

"'" 380 ! ,

FIGURE 1. Study area. Provinces and their capitals have the same names.

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crops (United Nations Drug Control Pro­gramme, 1994; Office of Narcotics Con­trol Board and Thai-German Highland De­velopment Programme, 1991).

Since the mid-1980s, due partly to bet­ter road access to markets, the supply of vegetables produced by hill tribe farmers has been growing faster than the demand of local towns and cities. The surplus is exported to a growing Bangkok market some 800 kilometers to the south (Fig . 2) . Little is known about the volume and lo­cation of production or the nature of the new market (Bourne, 1989; Rerkasem, 1994; Research and Development Center, 1986; Shinawatra, 1985). The scarcity of information is disturbing, as slight de­pressions in prices or small increases in costs affect profits from vegetables pro­duced by thousands of subsisting hill tribe people.

We were able to gather information on transport costs and the road network of

the main highland vegetable cash crops. This information allowed us to carry out a marketing distance-decay analysis, since marketing distance is largely a func­tion of transport costs. That is, profit mar­gins decline as distance to market in­creases. This effect of transport costs is greater in less developed rural areas than rural areas with more advanced econo­mies, because the former have poorly in­tegrated route structures. Our investiga­tion delineates the distance-decay of the potential for marketing highland vegeta­bles in Bangkok, and thus demonstrates the importance and utility of marketing distance-decay analysis of less devel­oped rural areas. An extensive review by Black (1990) reveals that there has been virtually no recent research on the trans­port constraints of marketing crops pro­duced in underdeveloped rural areas.

This paper begins with a brief descrip­tion of the production and marketing of

FIGURE 2. Cabbages at a roadside collection point approximately 150 kilometers southwest of Chiang Mai.

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northern Thailand's most important veg­etable cash crops. Isoline maps are then used as a basis for analyzing and discuss­ing marketing gradients of these crops. Conclusions are drawn regarding the spa­tial impact of transport costs on market­ing vegetables in Bangkok.

HIGHLAND VEGETABLES

This study focuses on the potential geographical range of cabbages, toma­toes and potatoes for the following rea­sons: (1) these vegetables are integral to the study area's highland cropping sys­tems; (2) they have the best price margins among the region 's high value-to-weight vegetables (Table 1); and (3) these crops' costs are more reliable than those of other high value-to-weight vegetables. The farm gate cost is the farmer's average selling price of a crop, but it is treated here as a cost to the middleman. The geo­graphical ranges of the other high value­to-weight opium replacement crops are probably similar to the crops examined in this investigation, since they all have similar shipping and handling problems. For example, head lettuce is similar to cabbages. By the time these crops reach retail stores, they might experience up to

TABLE 1 Farm Gate Value-to­Weight Ratios and

Wholesale Prices of the Bulkiest Opium

Replacement Cash Crops (Baht* /kg)

Farm Gate Value-to­

Weight Ratio Wholesale

Price

Cabbages 2.1 6.1 Potatoes 3.4 8.1 Tomatoes 4.0 11 .3 Head Lettuce 11 .0 14.0 Carrots 11 .0 13.5 Leeks 12.0 13.5

Source: Authors. *The value of one baht averaged .04 dollars U.S. in 1984-1988.

50 percent post-harvest spoilage due to bruising caused by inadequate packag­ing . Carrots are similar to potatoes; both are bulky and heavy, both can be stored for a period after harvest. and each can withstand a fair amount of rough han­dling during transportation because they do not bruise easily.

Cabbages, potatoes, and tomatoes fa ­vor a relatively cool, moist growing sea­son . In mountainous northern Thailand, commercial production of these crops shifts back and forth between lowlands to highlands in accordance with the mon­soon seasons. Production is primarily in the lowlands during the dry, winter mon­soon period (October-February). Thai farmers who inhabit these areas are able to take advantage of canal irrigation, cooler winter temperatures, and proxim­ity to markets. Vegetable production in the highlands is very much reduced ow­ing to the extensive lowland competition and associated decline in prices. How­ever, higher temperatures in the lowland during the wet summer monsoon (May­September) reduce yields and margins of Thai farmers. Owing to relatively cooler temperatures in the mountains, the ad­vantage shifts to hill tribe and upland Thai farmers. The supply of vegetables through informal economic arrange­ments between the highland villages and lowland markets exceeds the demand of northern Thailand's cities (Shinawatra, 1985). That market consists of Chiang Mai, Chiang Rai and Lamphun; their com­bined population is slightly less than 250,000 inhabitants. The surplus vegeta­bles are transported to the Bangkok mar­ket, which will be described later.

All vegetables produced in the high­lands are moved over roads. A passenger train from Bangkok terminates at Chiang Mai, which is an important collection point for vegetables from surrounding farms. However, the train has a small freight capacity and frequent stops are too restrictive for transporting fresh pro­duce to Bangkok. Typically, hill tribe vil ­lages that produce vegetables are located several kilometers from primary roads; thus, pickup trucks, which have a capacity of 1000 kilograms, are used by villagers

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to move produce over narrow dirt tracks to collection points located at roadsides and in nearby lowland cities (Fig. 2 and Fig. 3) . Horses and human carriers are used where no roads exist (if marketing distances are not prohibitive) or where roads are destroyed by floods or land­slides. Due to the volume of production , multiple trips between villages and col ­lection points may be necessary, thereby increasing total transport costs.

At roadside collection points crops are simply loaded into trucks, or at best, packed into flimsy bamboo baskets. Low­land merchants travel to these central col­lection locations to make purchases for the wholesale market in Bangkok (Shina­watra, 1985; Bourne, 1989). The crops are eventually moved to the capital in three­ton and six-ton trucks.

BANGKOK MARKET

The Bangkok metropolitan area has a population of nine million inhabitants,

but it is located a considerable distance south of the nearest highland vegetable areas. By road, the nearest areas are about 600 kilometers from Bangkok, the farthest are about 900 kilometers. Never­theless, cabbages, potatoes, and toma­toes are significant to the Thai diet, and the cooler highland climate (April-Sep­tember) favors their cultivation. More­over, prices of highland vegetables in Bangkok become more competitive, since the higher temperatures of the lowlands raise cost-to-yield ratios of vegetables grown there. An important tourist indus­try as well as the massive local popula­tion of this area contribute to a demand for these vegetables (Research and De­velopment Center, 1986).

Most highland cabbages, tomatoes and potatoes are sold at fresh markets in Bangkok, but small amounts are exported to neighboring countries. Cabbages (Bressica oleracea var. capitata) are used extensively in traditional Thai cooking .

FIGURE 3. Pickup truck delivering cabbages to the Warorot Market in Chiang Mai, a major central collection location.

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They are eaten with a variety of dishes, raw or fried, steamed or boiled, dried or salted. Small size tomatoes (Lycopersi­con, ssp.) are prepared with other ingre­dients in traditional Thai dishes. Medium and large varieties are used fresh in first­class restaurants and hotels to decorate dishes. There is a growing demand for this vegetable among the Thai middle class who use it in western-style salads. Also the pizza industry, which is rapidly expanding in Thailand, is a new source of demand for processed tomato products. Potatoes (Solanum tuberosum) are also sold on the fresh market, but are used pri ­marily in cooking foreign dishes that have gained popularity in Thailand, such as kaeng mutsamun (Muslim curry) and a western-style stew. Similarly, the market for processed potatoes for French fries and chips is increasing rapidly with the burgeoning growth of foreign fast food outlets in Bangkok and surrounding ur­ban centers (Research and Development Center, 1986). Although these are popular foods for western tourists, a growing Thai middle class accounts for most of the demand.

DATA BASE AND METHODOLOGY

The analysis of marketing distance-de­cay is based on farm gate costs and wholesale prices of crops for 1984-1988. A more recent cursory survey (Royal Project, 1995) and informal follow-up interviews by the authors in January and December 1995 suggest average differ­entials between costs and prices of each crop are virtually the same today. Data for the road network are provided by the Thailand government's Office of Acceler­ated Rural Development. This network links scattered highland and lowland ar­eas. The total highland production area is about 100,000 km 2, about the size of Scot­land and Wales combined. The network's connection to Bangkok is modelled on the basis of its topological structure. Factors involving time-cost and information ac­cess are not included, as a complete ac­counting of the quality and capacity of roads and of the location of hill tribe vil­lages relative to roads is not readily available.

Isolines are used to map transport cost surfaces of marketing highland tomatoes, cabbages and potatoes in Bangkok (Figs. 4, 5,6) . These maps were constructed by subjecting the road network to three au­tomated mapping transformations. First, it was changed into a topological plane consisting of nodes and links; nodes are district capitals (representing origins and destinations) and links represent road segments between nodes. Each node was then assigned its shortest-path distance to Bangkok to create a statistical surface of marketing distances (Fig . 7). The Krig­ing Technique was used to created the grid of data points. Kriging is an interpo­lation procedure for obtaining statistically unbiased estimates of surface elevations from a set of control points. Northern Thailand 's district capitals were used as control points for developing the Bangkok transport cost surface. Rhind (1975) pro­vides a more detailed explanation. The fi ­nal transformation of the network in­volved two steps. Isolines of marketing distances were interpolated from the sta­tistical surface. An isoline map was then generated for each crop by multiplying selected isoline distances by the crop's average transport cost (Table 2) .

The resulting maps are used to delin­eate monthly zero profit margin isolines of each crop's summer harvest period. These break-even isolines represent max­imum allowable transport costs and are equivalent to the difference between a crop's farm gate cost and its wholesale price in Bangkok (Table 3) . Any haulage cost that accrues beyond the break-even isoline should prohibit cultivation. In the discussion section, however, we employ the pragmatic notion that these isolines are temporary boundaries; for example, they may shift closer to Bangkok due to ecological deterioration, higher produc­tion costs, or natural hazards (floods, landslides, drought, disease or pest infes­tation); or they may move farther away due to improvements in transportation, production, management or marketing .

ANALYSIS OF MARKETING DISTANCE DECAY

Assumptions It is assumed that transport costs are

implicit measures of the prevalent quality

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0"" -3 .... b--so ... ' ---,'90 KM

FIGURE 4. Tomato transport costs. Isolines indicate the potential production of tomatoes extends throughout the region from June through July.

of roads even though travel over them in many remote areas is difficult. Further­more, since cabbages, potatoes and to­matoes are perishable and relatively ex­pensive to transport, it is assumed transport costs will be minimized by mov­ing them along the shortest possible routes . The assumption of general unifor­mity of road quality restricts the analysis to the regional, not localized, spatial scale. As a result, locality-specific factors, such as soil fertility, climate and labor supply are not incorporated into the analysis.

Isaline maps

Each isoline map reflects the com­bined influence of northern Thailand's

86

marketing distance to Bangkok and to­pography. Most roads converge toward northern district capitals located in low­land areas. Thus, prominent "depres­sions" in the network occur at Chiang Mai and Phayao. Since the region's shortest routes to Bangkok funnel through these cities (Fig . 7). In the three isoline maps, the general congruity of roads and topog­raphy is apparent in the broadly spaced isolines ofthe southern half ofthe region; they reflect, in part, facile transport along structural valleys that trend south toward Thailand 's central lowlands region. In contrast, steeper cost gradients (i.e., closely spaced isolines) in the northern portion of the region exhibit a less effi­cient road network (e.g., fewer links) due

, \

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i i

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Monetary Unit in Baht

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One Baht equals .04 U.S. Dollars

, t ! ,

o 30 60 90 KM

i i

FIGURE 5. Cabbage transport costs. Changes in the break-even, zero profit margin for cabbages cause spatial shifts from the 450 Bhat to 480 Bhat isolines in August to October.

in part to the higher mountain ranges and summits located near the Thailand-Myan­mar border.

During the highland cabbage harvest (August to October), the average whole­sale price of this crop in Bangkok varies between 550 and 580 baht per 100 kilo­grams, whereas the maximum transport cost required for at least a break-even, zero profit margin is 450 to 480 baht. For the summer tomato harvest (May to July), the average wholesale price in Bangkok ranges from 870 to 1,416 baht per 100 kilograms, while the break-even transport cost varies between 520 and 983 baht. The average Bangkok whole-

sale price for the summer (July to August) highland potato ranges between 640 and 970 baht per 100 kilograms. However, the highest transport cost allowable ranges between 360 and 570 baht.

The highland harvest calendar for these crops runs from May through Oc­tober (Table 4) . The latter month extends into the lowland harvest period, but de­mand in Bangkok for highland cabbages keeps this crop competitive (Bourne, 1989). Tomatoes have the earliest sum­mer harvest, but the 520 baht break-even isoline for May indicates that merchants from Bangkok are not likely to venture far beyond Chiang Mai. During the next two

87

JLH

~ \ i

"

" . '. ,

" "

North

1 \ Monetary Unit in Baht ..... , One Baht equals .04 U.S. Dollars

\ , ...... . , [ill ~~~:~::h~~tive

, , ! ,

o 306090KM

FIGURE 6. Potato transport costs. The break-even isoline for July delineates the northern limit of production . This isoline for August does not even appear in the region.

months, however, they could theoreti ­cally be transporting tomatoes to Bang­kok from anywhere in the region (Fig. 4). The break-even isoline for cabbages re­flects favorable transport costs for all but the most distant portions of the region. In August, it is far enough north so that vir­tually the entire region could be shipping this crop to Bangkok. In September and October, this isoline shifts southward and appears to restrict merchants from parts of the Chiang Rai area (Fig . 5). Among the three crops, the potential for summer po­tatoes in the Bangkok market is most re­strictive, both spatially and temporarily. A profitable harvest could extend into the

88

region in July; although, this harvest would encompass just the lower portion of the region (Fig. 6) .

DISCUSSION

Although this study focuses on the re­lationship between vegetable cash crops and their transport costs to Bangkok, the road network's bias toward northern dis­trict capitals suggests that it would be wise to plan and develop intra-regional marketing arrangements wherever there are intervening opportunities. In regard to the Bangkok market, it is difficult to measure the relationship between actual

>'HAYAO r,'" 10~100 SCALES IN KILO WETER S

CHIANG MAl

FIGURE 7. Isometric view of northern Thailand's road network based on marketing distances to Bangkok.

TABLE 2 Average Transport Costs

of Replacement Cash Crops in Thirteen Hill

Tribe Villages

Cash Crop

Cabbages Potatoes Tomatoes

* One baht equals .04 dollars U.S. Source: Authors.

Baht*/km

0.00534 0.00748 0.00714

production and the ideal patterns of veg­etable production, since no records are kept on the distribution and volume of highland production in northern Thai ­land. Anecdotal reports indicate that veg­etable production is much less developed in villages in the upper north, partly be­cause private sector involvement for local and Bangkok markets is more advanced in the lower north (Shinawatra, 1985).

The spatial patterns of isolines illus­trate in several ways how marketing dis­tance to Bangkok contributes to this up­per north-lower north differential by increasing the risk to farmers and middle­men in the upper north . First, greater dis­tances compound the probability of de­lays due to flooding or landslides (both hazards coincide with the highland sum-

89

TABLE 3 Farm Gate to Wholesale Break-Even Margins (Baht* /100 kg) in Bangkok

Crop Monthly Averages

Cabbages August September October Wholesale price 580 550 560 Farm gate cost - 100 - 100 - 100 Transport cost 480 450 460

Tomatoes May June July Wholesale price 870 1,180 1,416 Farm gate cost - 350 - 425 - 333 Transport cost 520 755 983

Potatoes ~ August Wholesale price 970 640 Farm gate cost - 400 - 280 Transport cost 570 360

* The value of one Baht averaged .04 dollars U.S. 1984-1988. Source: Authors.

TABLE 4 Harvest Calendar for Highland Cabbages, Tomatoes and Potatoes

Crop May June July August September October

Harvest Harvest Harvest Cabbages Tomatoes Potatoes

Harvest Harvest Harvest

Harvest Harvest

mer harvests) . Additionally, the steeper cost gradients of the upper north indicate a greater susceptibility to monthly fluc­tuations in profit margins. Unstable prices have in recent years forced some highland farmers in the upper north to leave their tomatoes and cabbages to rot in fields (Chamnivikaipong, 1995). Finally, the proximal locations of break-even iso­lines in the upper north to Myanmar, which leads the world in opium produc­tion, reinforce economic incentives among farmers there to continue produc­ing opium. This pattern was observed when vegetable crop failure and poor marketing brought about an upsurge of opium production in remote sections of this area during the 1991- 1992 cropping season (Thai-German Highland Develop­ment Programme, 1994).

CONCLUSIONS The locations of the break-even iso­

lines for highland cabbages, potatoes and

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tomatoes demonstrate that these crops can be produced profitably over broad ar­eas of northern Thailand. Therefore, mar­keting distance to Bangkok does not in­evitably prohibit the adoption of even the bulkiest, heaviest and most perishable vegetable cash crops. However, the long distances to Bangkok stress a need for greater efforts to upgrade existing roads, to perfect production systems, to develop intra-regional marketing alternatives, to encourage private sector involvement, and to facilitate arrangements with Bang­kok wholesalers. These efforts appear to be more crucial to the sustainability of vegetable production in the upper north; opportunity costs of producing opium are lower and profit margins of replacement costs are more vulnerable to cost fluctu­ations and environmental hazards.

Finally, further research is needed to clarify effects that changes in the emerg­ing Bangkok market might have on the 10-

cation of northern Thailand's break-even isolines. For example, how much will these isolines shift if vegetable supply continues to rise and prices decline? Sim­ilarly, how much will their locations be af­fected by the market's demand elasticity? Such questions must be answered, be­fore the relationship between cost gradi­ents and potential production of vegeta­bles can be fully ascertained for the region .

REFERENCES

Black, W. 1990. Transportation Geography Bib­liography. Unpublished report to the Trans­portation Geography Specialty Group, An­nual meeting of the Association of American Geographers, Toronto, Canada (April) .

Bourne, W. (ed.) . 1989. A Review and Evalua­tion of Market and Production Performance of Opium Replacement Vegetable Cash Crops Extended in the Highlands of Northern Thailand Between 2528-2531 (1984-1988). Internal Report No. 2. Royal Northern Pro­ject, Chiang Mai, Thailand (June) .

Chamnivikaipong, P. 1995. Director, Technol­ogy Analysis and Report Unit (Office of Nar­cotics Control Board, Technology Analysis and Report Unit) . 1995. Personal Communi­cation (Chiang Rai, Thailand, January 10).

Office of Narcotics Control Board and Thai­German Highland Development Pro­gramme. 1991 . Thai-German Highland De­velopment Programme, Chaing Mai, Thailand.

Rerkasem, K., et al. 1994. Assessment of Sus­tainable Highland Agricultural Systems. Re­port for U.S.A.I.D. by the Natural Resources and Environment Program. Thailand Devel­opment Foundation, Ch iang Mai, Thailand.

Research and Development Center. 1986. Northern Thailand Vegetable Marketing Pro­ject. Phase I Report: Fresh Processed Vege­table Market Survey. Payap University, Chiang Mai, Thailand.

Research and Development Center. 1988. Changes in the Northern Thai Hills: An Ex­aminat ion of the Impact of Hill Tribe Devel­opment Work 1957- 1987. Research and De­velopment Center Report No. 42, Payap University, Chiang Mai, Thailand.

Rh ind, D. 1975. A Skeletal Overview of Spatial Interpolation Techniques, Computer Appli­cations, Department of Geography, Univer­sity of Nottingham, 2 (3 and 4) : 293- 309.

Royal Project. 1995. Unpublished crop data. Chiang Mai, Thailand: Royal Project, Mae Hea Station.

Shinawatra, B. 1985. Highland-Lowland Inter­relationships in Northern Thailand: A Study of Production, Distribution and Consump­tion . Unpublished Ph.D. dissertation, Depart­ment of Agricultural Economics, Michigan State University, East Lansing.

Thai-German Highland Development Pro­gramme. 1994. Impact Assessment Study: Nam Lang 1994. Internal Report 179. Chiang Mai, Thailand.

United Nations Drug Control Programme. 1994. Integrated Pocket Area Development Project: Final Project Report (1990- 1994). Re­port (AD{THN98/562). Bangkok, Thailand.

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