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The Global Donor Platform for Rural Development commissioned three comprehensive studies to capture Platform members’ knowledge on key issues affecting the delivery and impact of aid in agriculture and rural development: -Policy coherence for agriculture and rural development; -Aid to agriculture, rural development and food security; -Strategic role of the private sector in ARD.
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Global Donor Platformfor Rural Development
WORKING PAPER
– THAILAND ––––––––––––––––––––––
–––––––––––––––––––––
The Global Donor Platform for Rural Development commissioned three comprehensive studies to capture Plat-form members’ knowledge on key issues affecting the delivery and impact of aid in ARD:
PKP 1 Policy coherence for agriculture and rural developmentPKP 2 Aid to agriculture, rural development and food security – Unpacking aid flows for enhanced
effectivenessPKP 3 The strategic role of the private sector in agriculture and rural development
The PKPs are the products of extensive surveys of Platform member head office and field staff, visits to countryoffices, workshops dedicated to sharing findings and refining messages, and successive rounds of comments ondrafts.
On the basis of each PKP, separate policy briefs will be published.
For more information on the PKPs visit donorplatform.org
This working paper is only available electronically and can be downloaded from the website of the Global Donor Platform for Rural Development at:www.donorplatform.org/resources/publications
Secretariat of the Global Donor Platform for Rural Development,Dahlmannstrasse 4, 53113 Bonn, GermanyEmail: [email protected]
The views expressed herein are those of the authors and do not necessarily represent those of individual Platform members.
All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes isauthorised, without any prior written permission from the copyright holders, provided the source is fully acknowledged. Reproduction of material inthis information product for resale or other commercial purposes is prohibited without written permission of the copyright holders. Applications forsuch permission should be addressed to: Coordinator, Secretariat of the Global Donor Platform for Rural Development, Dahlmannstrasse 4, 53113Bonn, Germany, or via email to: [email protected].
© Global Donor Platform for Rural Development 2011
About thePlatform Knowledge Piece series
Prepared by:Platform Secretariat
Published by:Global Donor Platform for Rural Developmentc/o Federal Ministry for Economic Cooperation and Development (BMZ)Dahlmannstraße 4, 53113 Bonn, Germany
Study conducted by:Overseas Development Institute, London
Authors:Lídia CabralJohn HowellGeraldine Baudienville
Photo credits:www.istock.com/Günter Guni/skyhouse; www.fotolia.com/africa/Ivan Gulei/lulú;www,pixelio.de/hjördis Kozel/Rauner Sturm
August 2011
PKP2-COVER-RZ-INNEN-U2-U3_140911_PRINT:Layout 1 12.10.2011 10:54 Uhr Seite 1
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 1
Contents
Contents ....................................................................................................................................................................... 1
Figures .......................................................................................................................................................................... 3
Tables ............................................................................................................................................................................ 4
List of Acronyms .......................................................................................................................................................... 5
Introduction .................................................................................................................................................................. 8 Context 8 Research questions ................................................................................................................................................... 8 Methods ..................................................................................................................................................................... 9 Value chains selected ................................................................................................................................................ 9
Sector overview .......................................................................................................................................................... 10 Development of Thailand‟s agricultural sector- progress and milestones since 1980 .............................................. 10 Transition to an industrial economy ......................................................................................................................... 11 Sector productivity ................................................................................................................................................... 11 Rural poverty reduction ............................................................................................................................................ 13 Exports 14 Achievements .......................................................................................................................................................... 14
Retreat of the State? .................................................................................................................................................. 16 National master plan ................................................................................................................................................ 16 Export taxation ......................................................................................................................................................... 17 Price controls ........................................................................................................................................................... 17 Agricultural credit policy ........................................................................................................................................... 18 Regulatory environment ........................................................................................................................................... 19
Overall ................................................................................................................................................................. 19 Seeds .................................................................................................................................................................. 19 Agrochemicals ..................................................................................................................................................... 19 Biotechnology ...................................................................................................................................................... 20
Provision of public goods ......................................................................................................................................... 20 Infrastructure ....................................................................................................................................................... 20 Agricultural research and extension .................................................................................................................... 20 Food safety standards ......................................................................................................................................... 23 Rice pledging scheme ......................................................................................................................................... 24
Summary ................................................................................................................................................................. 25
Role and impact of the private sector ...................................................................................................................... 27 Introduction .............................................................................................................................................................. 27 Private sector investment in the rural sector ............................................................................................................ 27 The rise of modern trade .......................................................................................................................................... 30 Contract farming and outgrowing as a dominant modality ....................................................................................... 32 Standards, certification and traceability ................................................................................................................... 34 Organics .................................................................................................................................................................. 35 Impact of private sector activity ................................................................................................................................ 37
Food price inflation .............................................................................................................................................. 37 Higher production costs ....................................................................................................................................... 38 Farmer livelihoods ............................................................................................................................................... 38 Opportunities for off-farm incomes ...................................................................................................................... 39 Food security ....................................................................................................................................................... 39 Sector competitiveness ....................................................................................................................................... 40
Summary ................................................................................................................................................................. 40
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 2
Case studies ............................................................................................................................................................... 42 Rice 42 Chicken 45 Horticulture .............................................................................................................................................................. 49 Cassava ................................................................................................................................................................... 53 Rubber 56 Sugarcane ............................................................................................................................................................... 59
Role of the donor community ................................................................................................................................... 64 Overview of donor support ....................................................................................................................................... 64 Non-government organizations ................................................................................................................................ 66
Conclusions................................................................................................................................................................ 68 Main outcomes ........................................................................................................................................................ 68 Major challenges ...................................................................................................................................................... 69
References .................................................................................................................................................................. 71
Annex: Organizations interviewed ........................................................................................................................... 80
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 3
Figures
Figure 1: Agriculture share of GDP (percent) 12
Figure 2: Employment in agriculture (percent of total employment) 12
Figure 3: Labour productivity: GDP per worker in agriculture and industry 13
Figure 4: 11th NESDP Strategy 3: Supporting agriculture 16
Figure 5: General food inflation, low income inflation and rural inflation 18
Figure 6: Research and extension budget relative to crop GDP 21
Figure 7: Agencies funding and undertaking agricultural research in Thailand 22
Figure 8: Certified organic area in Thailand 1998-2009 (ha) 35
Figure 9: Thailand GINI Index 1981-2009 41
Figure 10: Rice yields in Southeast Asia (t/ha) 42
Figure 11: Rice value chain 43
Figure 12: Distribution of benefits of paddy pledging programme by farm income decile 2006-07 44
Figure 13: Distribution of poultry production in Thailand 46
Figure 14: A vertically integrated chicken supply chain 46
Figure 15: Vegetable production and area planted (1985 – 2005) 49
Figure 16: Supply chain for vegetables in Thailand 51
Figure 17: Thailand food quality infrastructure 52
Figure 18: Cassava- area planted in Thailand (ha) 1961-2009 53
Figure 19: Cassava - yields in Thailand (kh/ha) 1961-2009 53
Figure 20: Cassava root production in Thailand 2001 to 2011 54
Figure 21: Cassava value chains in Thailand 55
Figure 22: Rubber expands to the northeast (2006-2010) 56
Figure 23: Major rubber-based farming systems 57
Figure 24: Rubber- domestic value chain 58
Figure 25: Sugar production and exportable surplus 1980-2010 60
Figure 26: Utilization of sugarcane 61
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 4
Tables
Table 1: Growth of discount stores 1996-2010 30
Table 2: Thailand Organic Production and Value (2003-2009) 36
Table 3: Comparing rice policies- Abhisit vs. Yingluck 44
Table 4: Summary of Poultry Production and Marketing Systems in Thailand 47
Table 5: Thailand and world broiler meat production and exports 48
Table 6: Rubber- planted area, harvested area, production, yields 57
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 5
List of Acronyms
AADCP ASEAN-Australia Development Cooperation Program
AAN Alternative Agriculture Network
ACFS National Bureau for Agricultural Commodity and Food Standards
ADB Asian Development Bank
AEGFS ASEAN Expert Group on Food Safety
AFSN ASEAN Food Safety Network
ARDA Agricultural Research Development Agency
ASPL Agricultural Sector Program Loan (Asian Development Bank)
AVRDC Asia Vegetable Research and Development Center
BAAC Bank for Agriculture and Agricultural Cooperatives
BIOTEC National Center for Genetic Engineering and Biotechnology
BOI Board of Investment
BOP Base of pyramid
CDP Country Development Partnership Program (World Bank)
CIDA Canadian International Development Agency
CGIAR Consultative Group for International Agricultural Research
CIAT International Center for Tropical Agriculture
CIMMYT International Maize and Wheat Improvement Center
CIRAD Centre International de Recherche Agronomique pour le Développement
CPF Charoen Pokphand Foods
DANIDA Danish International Development Agency
DEP Department for Export Promotion
DIT Department of Internal Trade (Ministry of Commerce)
DTDP Doi Tung Development Project
FAO Food and Agricultural Organization of the United Nations
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 6
FAO RAP FAO Regional Office for Asia and the Pacific
FAOSTAT FAO online database of global agricultural statistics
FTI Federation of Thai Industries
GDP Gross Domestic Product
GEF Global Environmental Facility
GI Geographical Indication
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
GMS Greater Mekong Subregion
HPAI Highly pathogenic avian influenza
IRRI International Rice Research Institute
JBIC Japan Bank for International Cooperation
JICA Japan International Cooperation Agency
LDC Least developed country
ME Ministry of Education
MOAC Ministry of Agriculture and Cooperatives
MOF Marketing Organization for Farmers
MOST Ministry of Science and Technology
MRL Maximum Residue Limit (for pesticide residues in agricultural commodities)
NARS National Agricultural Research System
NESDB National Economic and Social Development Board
NESDP National Economic and Social Development Plan
NIC Newly industrialized country
NRP Nominal rate of protection
NRCT National Research Council of Thailand
NSTDA National Science and Technology Development Agency
NTFP Non-timber forest products
NZAID New Zealand Agency for International Development
OAE Office of Agricultural Economics (Department of Agriculture)
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 7
ORRAF Office of Rubber Replanting Aid Fund
OTOP One Tambon, One Product
PDA Population and Community Development Association
RASFF Rapid Alert System for Safety in Food and Feed (European Union)
RDPB Royal Development Projects Board
RNFE Rural on-farm employment
SCOST [ASEAN] Subcommittee on Food Science and Technology
SIMS Sugarcane Information and Management System
SME Small and medium enterprises
SPS Sanitary and phytosanitary
TCC Thai Chamber of Commerce
TDRI Thailand Development and Research Institute
TICA Thailand International Cooperation Agency
TISTR Thailand Institute of Scientific and Technological Research
TRF Thailand Research Fund
TTDI Thailand Tapioca Development Institute
TTSA Thai Tapioca and Starch Association
UNDP United Nations Development Programme
UNESCAP UN Economic and Social Commission for Asia and the Pacific
USAID United States Agency for International Development
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 8
Introduction
Context
This Country Case Study for Thailand aims to contribute to a broader study (the Platform Knowledge Piece, or PKP) undertaken by the Overseas Development Institute (ODI) as part of the ongoing Global Donor Platform for Rural Development debate. The PKP aims to improve our understanding of the role of the private sector in agricultural and rural development and to propose practical measures for donors to engage with the private sector and support this role more effectively. This analysis therefore focuses upon how public, private and donor actions impact upon value chains for key agricultural commodities specified in the Terms of Reference.
Research questions
The overall PKP (and the current case study) attempts to address three research questions, each comprising a number of sub-issues: Research question 1: How has the private sector responded to the „rolling back‟ of direct state
involvement in rural areas?
Has the state „rolled back‟ since 1980 and, if yes, in what ways (i.e. price liberalisation, phase-out of
monopsony procurement, disposal of state assets, private actors replacing state actors)?
Where in the value chain does state intervention – or the lack of it - really impact on private sector
development (i.e. input markets, support institutions, infrastructure, etc.)?
Does the state intervene more forcefully in food staples markets than traditional exports and cash crops
for the domestic market?
Has the state also retreated from „public goods‟ functions which have constrained private sector
development (i.e. R&D, economic infrastructure, regulations, etc.)?
Why did „rolling back‟ happen (or not)?
Has the private sector flourished in areas of more limited state intervention?
How has the private sector responded to changes in the regulatory and enabling environment and other
opportunities?
Research question 2: What is the impact of this private sector activity on low-income rural households
and the dynamism and competitiveness of the agricultural sector?
What have been the trends in private sector activity in the selected value chains?
Investment (disaggregated by farmer, domestic private sector, domestic public sector, aid or FDI) in value
chain;
Production, trade, consumption outcomes;
Productivity, dynamism and competitiveness of the agricultural sector.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 9
What are the linkages between the agricultural sector and the non-farm rural economy?
What has been the effect of this private sector activity on low-income households (jobs, incomes,
livelihoods – direct, indirect and dynamic on low-income households (and others); spill-over effects
(positive and negative) on low-income households)?
Research question 3: What has determined the success of donors, governments, NGOs and other
initiatives to stimulate private sector development?
How have donors and others tried to stimulate private sector development?
To what extent have these efforts worked and what have been the reasons for success or failure?
Methods
This report is based upon face-to-face interviews in Thailand with 26 key players in government,
academia, the donor community, NGOs and the private sector, conducted by Dr George Fuller
(consultant to ODI) and additional interviews and research conducted by the current author. These
organizations are listed in Appendix 2. In addition, a review of publicly available Thai and English-
language academic and grey literature was conducted as part of the research, building upon Dr Fuller‟s
study. Extensive use was made of data from FAOSTAT, World Bank Development Indicators, and the
Thai Development and Research Institute, and the report has also made use of the findings reported in
ODI‟s own recent report “Thailand‟s progress in agriculture: Transition and sustained productivity growth”
by Henri Leturque and Steve Wiggins.
Value chains selected
The six commodities selected as case studies in the Terms of Reference for this study are rice, chicken,
cassava, horticulture, rubber and sugarcane - all strategically important either as domestic staples or as
exports.
The report is organized as follows. Following this introduction (Chapter 1), Chapter 2 provides a brief
overview of Thailand‟s agricultural sector, its overall policy context, performance and achievements.
Chapters 3 to 5 then analyze the respective roles and contributions of the State, private sector and donor
/ NGO community, from the perspective of the three research questions. Chapter 6 then reviews the
influence of public policy and private sector intervention for the six specified agricultural value chains
(rice, chicken, horticulture, cassava, rubber and sugarcane). The final chapter draws together evidence
from the literature to address the research questions and comes to some overall conclusions based on
these findings.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 10
Sector overview
Development of Thailand’s agricultural sector- progress and milestones since 1980
Thailand‟s status as a major net exporter of food and agricultural commodities has dominated the policy
agenda in recent decades (Isvilanonda, 2011). Agricultural exports include strategically important
commodities such as rice, cassava, sugar, rubber and poultry products. The country‟s export orientation
brings with it two overarching policy goals - domestic food security, and export earnings. Today both
goals are threatened by declining competitiveness within the sector, and (most recently) by the erosion of
purchasing power, particularly among the rural poor. Recent increases in oil and food prices as well as
sharply rising farm production and input costs have contributed to increasing food insecurity in Thailand.
The gravity of the implications for political stability has not been lost on Thailand‟s newly-elected
government, which is making major efforts to implement a new rice pledging scheme (discussed later in
this report). High food prices threaten the urban poor while low prices put producers in jeopardy. The
government needs the support of both to remain in power.
Current national objectives for agriculture are stated as follows:
maintaining stable growth of the agricultural sector;
restructuring production through agricultural diversification;
increasing free trade in agriculture and removing agricultural protection measures;
improving efficiency in use and conservation of agricultural natural resources and the
environment; and
improving the standard of living and quality of life in rural areas.
In terms of competitiveness, Thailand‟s economy has always been highly vulnerable to the impacts of
trade liberalization. Realizing the dangers ahead, Thailand used the Uruguay Round negotiations on
agriculture to call for stronger international trade rules to limit the dominance of more powerful nations in
influencing the terms of trade against weaker, developing countries such as herself (Poapongsakorn and
Ungphakorn, 1995). Thailand also sought restraints on export subsidization, especially by the US and EU,
since these had the effect of reducing the competiveness of Thailand‟s producers in domestic as well as
export markets. As the multilateral processes stalled, successive governments turned to bilateral FTAs;
Thailand has negotiated, or is negotiating, a dozen bilateral Free Trade Agreements (Leturque and
Wiggins, 2010). The country has benefited from its FTAs with Australia, China and Japan through
improved access to foreign markets not only for traditional exports but also for a wide range of agricultural
products.
However, these FTAs were negotiated with industry rather than agriculture foremost in mind, and resulted
in the realization of the very scenario the country had feared a decade earlier. For example, Thailand‟s
FTA with China removed tariffs from a range of fruits and vegetables traded between the two countries.
The ensuing flooded of cheaper imports brought with it adverse impacts on the livelihoods of many small
Thai producers (Chantasasawat, 2006). In the case of the FTA with Australia, Thailand‟s nascent dairy
industry could not hope to compete with Australia‟s in a liberalized market.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 11
Transition to an industrial economy
Until the 1980s, agricultural exports were viewed as a source of revenue for the government. The lack of
organization of primary producers and low supply elasticities for most agricultural commodities meant that
imposition of export taxes entailed little political risk because such taxes would not significantly dampen
output. Given the vulnerable position of small farmers and their lack of organization, taxing agriculture,
and especially rice, was lucrative and politically irresistible. Until 1986, rice exports were subject to a fixed
export tax, ad valorem duty, volume limits and a requirement that exporters sell a share of rice at rates
below market price. Exporters were further penalised by over-valuation of the baht. Rice exports were
indeed taxed until 1986 (Siamwalla et al., 1993; Leturque and Wiggins, 2010), when farmers began to
voice vehement opposition to the export levy. Farmers pointed to the inequity of a tax which effectively
transferred wealth from the rural poor to comparatively wealthy urban consumers. Nonetheless, the
eventual phase-out of these levies during the 1980s owed more to a political imperative to satisfy the rural
electorate than to any interest in relieving the hardships of the farm population.
Despite the export levy, Thailand‟s agricultural sector had grown rapidly, and continued to expand
following its phase-out, driven mainly by massive public sector investment in rural infrastructure,
especially roads and irrigation systems. The introduction of Green Revolution technologies (notably the
introduction of IR-8 rice into the national rice breeding programme) provided further stimulus, and
contributed to improved livelihoods and increased overall food security. Growth was facilitated by state
laws obliging banks to provide cheap credit to the agricultural sector; the government itself provided its
own credit through the Bank for Agriculture and Agricultural Cooperatives (BAAC). The state further
invested in education, irrigation, rural electrification and rural roads, and the agricultural sector continued
to grow at an annual average rate of 2.2 percent between 1983 and 2007. Technical progress, as
measured by total factor productivity, accounted for 25 percent of agricultural growth from 1980 to 1995
(Chandrachai, 2004). Growth was spurred by the relatively large size of Thai farm holdings, and by the
ease with which forest land could be converted to agricultural use.
The rapid pace of industrialization and urbanization in the last 20 years led to rising wages, increasing
costs in field crop production. Government policy began to shift toward meeting increasing urban demand
for livestock products and horticultural crops, as well as to an increased emphasis on rice production.
More recently there has been major policy support for biofuels, leading to a substantial expansion in oil
palm acreage, and also a major drive to expand rubber production to new regions, particularly the
Northeast.
Sector productivity
The government‟s drive for farm mechanization (National Farm Mechanization Plan, 2005) along with
rapid expansion of the emerging industrial sector began to impact upon the agricultural sector. The
hitherto seasonal departure of agricultural wage-earners from the land to the cities became increasingly
permanent, accelerating the long-term decline in agriculture‟s share of total GDP, which subsequently fell
from 20 percent in 1980 to just 12 percent in 2009 (Figure 1).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 12
Figure 1: Agriculture share of GDP (percent)
Source: World Bank national accounts data, and OECD National Accounts data files (reported in www.indexmundi.com)
As recently as 1980 agriculture represented 70 percent of employment (Leturque and Wiggins, 2010); by
2009 the percentage had fallen to 41.7 percent (World Bank, 2011). Yet, agriculture remains a major
source of employment (Figure 2).
Figure 2: Employment in agriculture (percent of total employment)
Source: World Bank, World Development Indicators, reported by www.indexmundi.com
The difference between the shares of agriculture in GDP and employment suggests a large labour
productivity gap between agriculture and manufacturing (Figure 3).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 13
Thailand‟s overall economic growth from 1960-1985 reduced the agriculture sector‟s relative profitability
through declining relative agricultural prices, and the migration of production factors to sectors with higher
relative productivity (Martin and Warr 1994; Siamwalla, 1996). Rising prices and increasing FDI in the
industrial sector increased labour productivity relative to the farm sector. Meanwhile, rising labour rates
and falling prices squeezed farm profits, further diverting investment flows to non-farm economic sectors,
and depressing agricultural growth relative to the rest of the economy.
Figure 3: Labour productivity: GDP per worker in agriculture and industry
Over the last decade, increased productivity has increasingly replaced area expansion as the principal
engine of growth. This was triggered by increasing scarcity of new land for expansion, rising labour costs,
increasing competition for water in agriculture, and the need to stay competitive in international markets.
How has this productivity increase been accomplished? A range of factors have contributed, including a
shift to higher-value crops (especially fruits and vegetables) as well as livestock products and fisheries.
ICTs, including new software platforms for logistics, production planning, and traceability technology have
also played an increasing role in productivity enhancement, value creation and food safety.
Nevertheless, while the sector as a whole has diversified, individual farmers on the other hand have
tended toward greater specialization. This specialization has been driven by a significant increase in
contract farming (Poapongsakorn 2006), greater efficiencies in marketing and logistics (including
improved access to international markets) and substantial expansion in processing and agribusiness in
general.
Rural poverty reduction
The productivity gap, attributed by Isvilanonda to the inability of the manufacturing and informal sectors to
absorb rural labour (Isvilanonda, 2003), carries significant implications for rural poverty and rural/urban
inequality. Although the country‟s economic growth helped Thailand succeed in its poverty alleviation
efforts, rural poverty remains a serious problem. Ninety percent of Thailand‟s poor live in rural areas, and
67 percent of Thailand‟s poor live in the agriculture-dependent northeastern provinces. Until the mid-
1980s the decline in poverty was due principally to the growth in agriculture. But since then, poverty
reduction has been largely accomplished through growth in the industrial sector.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 14
Nevertheless, Thailand‟s resilience following the global financial crisis of 1997 is attributed at least
partially to the agricultural sector, which was able to absorb and provide a safety net for large numbers of
displaced industrial workers. Nevertheless, despite the impressive overall reduction in poverty, urban-
rural income disparities have widened, and rural poverty is still a serious problem, especially across the
northeastern provinces (as noted above) and in parts of the south.
Exports
Agriculture is as important for its export earnings as it is to household food security, accounting for over
15 percent of total exports (including invisibles). Thailand is the world‟s leading exporter of rice, canned
and frozen seafood, processed chicken, processed shrimp and canned pineapple. Other key food/feed
exports include cassava, sugar, maize, fruit and vegetables. Thailand‟s food exports were valued at
US$24.38 billion in 2010, and are expected to rise to US$28.5 billion in 2011 according to the National
Food Institute (NFI). Main export markets include the United States, Japan, Association of South East
Asian Nations (ASEAN) and the European Union (EU). As a result, Thailand is ranked the world‟s 13th top
supplier of food.
Export of ready-to-eat food has also increased rapidly as a result of major private sector investment in
value-added products. Government incentives have also contributed to diversification into more value-add
products. Thailand has become one of the world‟s largest producers and exporters of processed foods,
with over 50 percent of total food production exported, much of it as processed food. Thailand has over
10,000 food and beverage processing companies, producing over 28 million tons of processed foods
annually (Ministry of Industry, Thailand). More than 80 percent of the raw materials are locally sourced.
However, Thailand is not competitive in protein-based crops and is rapidly losing competitiveness in
quality beef and low-value products such as oil palm, soybean, and low-quality rice.
Achievements
Thailand experienced 30 years of rapid economic growth from the 1960s to the 1980s, during which GDP
grew at 7 to 8 percent annually and agricultural GDP at 4 to 5 percent. Then in the mid-1980s,
convergence of a number of factors, both domestic and external, led to a decline in the agricultural
sector‟s growth. There was no more new land available for expansion, and the global price depression,
rising wages, and water shortages in many areas, all took their toll.
Nevertheless, producers, the private sector and the public sector responded to ensure continued strength
in exports and to meet a growing domestic demand. The government ended taxation of exports and
switched to a policy of support and protection. Farmers mechanized to reduce labour costs and invested
in water pumps and pond digging to address the growing scarcity of water. To meet changing consumer
demands they switched to higher value commodities: horticulture, livestock and fisheries. Contract
farming emerged as a new production and marketing modality, making use of new technologies and
management practices. This „retooling‟ of the sector inevitably changed the nature of the linkages and
dependencies among farmers, companies and government agencies.
Leturque and Wiggins (2010) sum up the achievements of Thailand‟s agricultural sector as follows:
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 15
Agricultural development in Thailand since 1960 has facilitated the country‟s transformation into
an urbanised economy based around manufacturing. There have been two phases: rapid
agricultural growth based on utilisation of underused land and labour; and, as Thai farming began
to shed land and labour, slower but continued growth through higher productivity.
Rural poverty has fallen from more than 60 percent in the early 1960s to barely more than 10
percent in the new century. Food prices have halved, and hunger and child malnutrition have
reduced greatly.
Much has been achieved through private initiative, including a successful agribusiness sector.
Despite political turbulences in Thailand, the state has played an essential role in setting the
investment climate and investing in education, roads and research, as well as supporting
agricultural credit to small farmers.
Thailand leads the world in producing and exporting rice, rubber, canned pineapple, and black tiger
prawns. It leads the Asian region in exporting chicken meat export and several other commodities, and
feeds more the four times its own population. Thailand also seeks to expand its exports in livestock. But
even as Thailand‟s agricultural sector has succeeded in maintaining its status as one of the world‟s top
food exporters in the face of a volatile global market, significant challenges to its global competitiveness
lie ahead as trade barriers continue to fall, and the government‟s options to protect its producers are
diminished by liberalization of global markets, and especially by the forthcoming formation of the ASEAN
Economic Community (AEC).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 16
Retreat of the State?
National master plan
The country‟s 11th five-year National Economic and Social Development Plan is currently being drafted, to
serve as a Master Plan for development of all economic sectors, including agriculture. Among its overall
goals, the NESDP11 recognizes the agricultural sector as a foundation for society and food security, and
aims to increase the share of the agricultural sectors in the economy, and strengthen the sector‟s
competitiveness. Its strategy for accomplishing these goals is summarized in Figure 4 below:
Figure 4: 11th NESDP Strategy 3: Supporting agriculture
Source: Kumpa. (2011)
To enhance equity and food security for resource-poor farmers, the plan also aspires to improving land
resource management and to a land redistribution programme. However, despite the NESDP‟s
positioning as a Master Plan, questions remain over policy coherence, where responsibility for various
aspects of agricultural policy (such as production, trade and food safety) are shared among several
Ministries. Moreover, despite the laudable aims of the NESDP, Thailand does not possess a single
integrated agricultural policy. Instead, policies are determined by commodity, according to the realpolitik
of political influence exerted by well-connected commodity lobbies (Siamwalla and Setboonsarng, 1989
and 1991).
With this perspective, it is easy to understand why Thailand protects producers of its key export
commodities, despite its strong competitive position in global markets. Imports of many commodities are
subject to tight controls through a range of instruments including import prohibitions, licensing
arrangements, local content rules and requirements for special case-by-case approval of imports. Such
restrictions apply to a wide range of crops, including major crops such as soybeans, palm oil, rubber, rice
and sugar, but also onions, garlic, potatoes, pepper, tea, raw silk, maize, coconut products and coffee
(Warr and Kohpaiboon, 2007).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 17
Export taxation
Historically, the most dramatic shift in state policy was the elimination of direct taxation of agricultural
exports, and the subsequent shift to a policy of protection. Export taxes were completely eliminated for
rice during the 1980s, and for rubber in 1990. Cassava exports have continued to be taxed to a minor
extent through the system of export quotas. Maize and chicken exports on the other hand, have never
been subject to taxation. This shift from a „pro-consumer‟ to a „pro-producer‟ policy has resulted in more
or less neutral nominal rates of protection for most exportable crops, except a few imported competing
crops such as palm oil and soybean (Poapongsakorn, 2009; Warr and Archanun, 2007). Since then
successive governments have increased subsidy levels through the agricultural price support programme
with a stated aim of improving farmers' income.
Most of this evolution in taxation and protection has involved the elimination of price distortions that once
penalized agricultural export industries. For example, soybeans were an export crop before 1992 but
have since become a net import item (subject to quota restrictions). This coincided with a switch from
negative to positive nominal rates of protection (NRPs). Since the early 1990s, the domestic soybean
industry has benefited from NRPs between 30 and 40 percent. Sugar is also an export commodity, but
the domestic sugar industry is heavily protected by a system that taxes domestic consumers and
transfers the revenue to producers. The NRPs have averaged over 60 percent.
The government‟s various approaches to provide farm support have been generally unsuccessful in their
stated objectives of raising farm incomes, although they have certainly benefited exporters. Though these
programmes have so far not caused major distortions in the economy or significantly disrupted Thailand's
comparative advantage in global markets, this may change at least in the case of rice (see Sections 3.6.1
and 5.1) where pledging prices in the domestic market now exceed world price.
Price controls
Thailand‟s status as a major food producer and exporter has meant that for policymakers, food security
has never been as important as commodity price control (although the Office of Agricultural Economics
has been entrusted with drafting a food security policy). Currently the respective commodity policy
committees control prices for strategic crops such as rice, sugar, rubber, palm oil and cassava. In addition
to these commodity policy committees the Ministry of Commerce, through its Department of Internal
Trade, has a broad mandate to regulate domestic consumer prices. Still, this has evidently not been
enough to dent the rapid pace of food price inflation (Figure 5). It is significant that food inflation has been
highest for rural people.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 18
Figure 5: General food inflation, low income inflation and rural inflation
Source: Ministry of Commerce (2011) Note: RPI baseline year (2002) = 100
Agricultural credit policy
Lack of access to credit hampers agricultural investment and reduces productivity, especially for small-
scale farmers (World Bank, 2007). Despite the success of many microfinance schemes targeting Base of
Pyramid (BOP) actors, provision of rural credit remains a challenge in most developing countries (World
Bank, 2007). In 1975, the Bank of Thailand mandated commercial banks to allocate 5 percent of all
commercial loans for agriculture, at below-market rates. This broke the stranglehold of informal lenders,
middlemen and millers over farm finance, and increased the supply of rural credit from US$ 80 million in
1975 to US$ 160 million by 1984. Poapongsakorn and Isvilanonda (2008) reported a 17-fold increase in
loans through the Bank for Agriculture and Agricultural Cooperatives (BAAC) from 1985 to 2003, when
loan disbursement reached almost US$ 7.5 billion, driven partly by an innovative group liability guarantee
scheme that gave collateral-free access to short term credit.
Under its regular lending programme BAAC makes various types of loans available to both individual
client farmers and farmers‟ institutions via agricultural cooperatives and farmers' associations. In addition,
provision of technical assistance and marketing support are forthcoming from relevant public and private
sector agencies. BAAC also makes credit provisions to special integrated agricultural development
projects and agribusiness schemes. In addition, BAAC provides loans for agricultural related activities
and is now implementing a pilot project for providing loans for non-farm activities. Farmer borrowers are
categorized by the BAAC according to their creditworthiness.
Though this much-improved access to credit boosted technology adoption and encouraged crop
diversification, the lower risk profile and lower delinquency rates of large commercial farmers mean that in
practice, small-scale farmers still face serious difficulties in accessing credit. As a result they remain
dependent on informal lenders and usurious interest rates. Through its intrinsic bias towards larger, low-
risk clients, agricultural credit may thus have worsened the competitive position of smallholders and
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 19
widened the equity gap. Strict borrowing and repayment criteria for farmers, requiring use of hard assets
as loan collateral (typically the title deeds to the farmer‟s own land), have perpetuated debt cycles and led
to forfeitures (The Nation, 2008a; Isvilanonda and Bunyasiri, 2009).
During the Thaksin era (2001-06) the government instigated its “Village Fund” scheme – a populist
measure providing Baht 1 million per village to finance small business loans. However, loans were
reportedly used to finance consumption, rather than production or business (e.g. purchase of vehicles or
mobile phones or other non-essential goods). Critics argue the programme has led to a culture of
dependency, rather than a culture of entrepreneurship, among beneficiaries.
Regulatory environment
Overall
Thailand‟s relatively lax regulatory environment has generally been favorable to private business. A low
regulatory burden on private companies reduces business costs and encourages increased investment,
including in research. However, at the same time, it imposes little incentive to develop technologies that
conserve environmental resources or produce other nonmarket goods (Fuglie et al., 1996).
Seeds
Regulations governing seed are stipulated in Thailand‟s Seed Act. This law describes seed labelling
requirements and minimum allowable germination requirements for 20 species of seed. In addition to the
Seed Act, the Plant Quarantine Act controls importation of plant pests and diseases in planting materials.
A strong working relationship between the hybrid corn seed industry and government crop research and
regulatory agencies resulted from a combination of personal ties and a well-organized seed association.
Seed companies recruited scientific and management staff from universities and the public sector,
helping to solidify this relationship. The hybrid corn then established the Seed Association of Thailand to
promote their interests. In 1994, the Asia Pacific Seed Association (APSA) was formed with assistance
from FAO to promote the seed industry and improve seed supply in the region.
Agrochemicals
Import tariffs on fertilizers were gradually reduced during the early 1990s, and finally eliminated in the
early 2000s. Since then, there has been little government intervention in the agricultural input markets
(Isvilanonda, 2008). This policy stands in contrast to some other Southeast Asian countries, where input
subsidies form part of general subsidization programmes for agriculture.
Nevertheless, both chemical fertilizers and pesticides were occasionally distributed free to farmers
through the Department of Agricultural Extension (DOAE), particularly during emergencies. Aside from
this, inputs are distributed to farmers by the Market Organization for Farmers (MOF) and cooperatives
using loans financed by the Farmers' Aid Fund, with subsidized transportation cost. However, these
efforts are regarded as having limited impact, and were often inaccessible to those who needed them
most. The ready availability of old, toxic and persistent pesticides in Thailand has given much cause for
concern, and led to increasing international scrutiny of pesticide residue levels in Thai food exports. One
private sector response to this problem was the initiation of the Safe Use Project by the Thai Crop
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 20
Protection Association. The project provided training for farmers, retailers, and extension workers to build
awareness and promote proper storage, handling and application of pesticides.
Most recently, a pesticide re-registration process was implemented by the Department of Agriculture. The
process is intended to rigorously re-evaluate all pesticides based on strict international standards.
However, the programme stipulated that any products not reregistered by 22 August, 2011 would lose
their current registration. Unfortunately only a few re-registrations were completed by the deadline,
rendering sales of the vast majority of pesticides technically illegal in Thailand after this date. The
unintended consequence has been that until the backlog of applications has been processed, newer,
safer products cannot be made available, while the market is meanwhile flooded by smuggled and
counterfeit products.
Biotechnology
Although Thailand was the first Asian country to allow field trials of genetically modified crops (GMOs), it
has since retreated from commercializing genetically modified crops, under strong pressure from activist
groups, and also because of the importance of its non-GMO export markets- particularly EU and Japan.
No progress is expected until a national biosafety framework has been established, which is unlikely to be
prioritized in the foreseeable future given the strength of anti-GMO activism and popular antipathy.
Provision of public goods
Infrastructure
Over the past three decades, Thailand has seen massive investment in basic infrastructure, particularly in
the expansion of the national road network. Thailand became highly competitive in international markets
with the development of its road infrastructure during the 1960s, and the subsequent opening up of the
impoverished Northeastern region. A major rural electrification followed during the 1980s. The improved
transport and communications infrastructure facilitated access to information as well as physical access to
markets. Today, mobile phone penetration in Thailand is among the highest in the region, although an
ongoing legal dispute over 3G concessions has left Thailand lagging well behind its neighbours in
deploying technologies such as 3G and Wimax, despite a government pledge to invest in widening
broadband internet access to rural areas.
The major expansion in the national road network has not, however been matched by the national rail
service, which has seen no substantive investment or upgrading over the past 30 years.
Since the late 1980s, the major levels of public investment in irrigation infrastructure have been curtailed
by fewer opportunities for low-cost irrigation schemes, as well as rising opposition to the social and
environmental costs associated with large dams. The falling world price for rice during that period was
also a factor in the decision to end new public investment in large-scale irrigation projects (Siamwalla et
al., 1991).
Agricultural research and extension
Empirical evidence from much of the developing world demonstrates the impressive returns on
investment to agricultural research – far above those of other public sector investments. Alejandro Nin
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 21
Pratt and Shenggen Fan of the International Food Policy Research Institute (IFPRI) estimate that on
average, the rate of return to National Agricultural Research Institutes (NARS) in developing countries is
60 percent, which is higher than investments in education and roads (Nin Pratt and Fan, 2010). These
authors add that RORs were highest in the Asia-Pacific region (78 percent). Setboonsarng et al. (1991)
and the Thailand Development Research Institute (1994) found similar high rates of return in Thailand.
TDRI‟s latest research showed that R&D by both the public and private sectors has played a very
important role in agriculture, yielding returns ranging from 40 per cent to as much as 200 per cent in some
cases (Poapongsakorn, 2011).
The MOAC accounts for around 95 percent of total government spending on research and extension
(Poapongsakorn 2006, p. 54), most of it on crop production. The early 1970s saw substantial growth in
public sector capacity in plant breeding, which laid a strong foundation for the sector‟s subsequent
expansion and growth in its global competitiveness, particularly for maize, cassava, sugarcane and
irrigated rice. Much of this effort was supported by the international donor community and implemented
through technical collaboration with CGIAR institutions such as IRRI, CIMMYT and CIAT. Thailand‟s
maize breeding effort was supported variously by the Asian Development Bank, FAO, the Rockefeller
Foundation and USAID.
However, despite the early success of Thailand‟s crop breeding programme, since the mid-1990s public
R&D spending on agricultural research has continuously declined relative to agricultural GDP
(Poapongsakorn, 2006), even as production became more intensified and dependent on technology to
sustain competitiveness. The intensity of crop research in relation to crop GDP is shown in Figure 6:
Research and extension budget relative to crop GDP.
Figure 6: Research and extension budget relative to crop GDP
Source: Suphannachart and Warr (2009), cited in FAO (2011)
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 22
Modern varieties of rice, rubber cultivars and improved varieties of hybrid maize, soybean and cassava
have achieved very high rates of adoption (Poapongsakorn, 2006; World Bank, 2009). This has been
praised as a private sector achievement, with an attendant implication of public sector inefficiency.
However, it is important to remember that in reality (and with the exception of rice) this later period of
intensification was only made possible by the private sector‟s ability to build upon the strong foundation
already established by the public sector.
Likewise, hybrid cassava from CIAT was introduced in 1975 for breeding purposes, laying the foundation
for Thailand‟s cassava varietal improvement programme (Isarangkura, 1986). Germplasm was introduced
from many other countries, including India, Japan, USA and Australia, in many cases facilitated by FAO.
However, the outcomes of the cassava breeding programme never matched the benchmark
accomplishments set by the rice varieties developed by IRRI (Suphannachart and Warr, 2011).
Although the private sector has been actively involved in some aspects of agricultural research in
Thailand, no systematic record of its magnitude is readily available. Based on a survey of private
investment in agricultural research in 1996, Fuglie (2001) estimated that the private sector was
responsible for about 13 per cent of total agricultural research in Thailand, but was focussed heavily on
livestock production, rather than cropping. For crops, private R&D is concentrated mainly upon
developing hybrid seeds for field crops, especially maize used in animal feeds, and on improving
productivity of sugar cane, oil palm and rubber.
In November 2007, the government announced a reform of agricultural research, mandating the National
Research Council of Thailand (NRCT) to plan, coordinate and evaluate national research policy in
agriculture. This was indeed a challenging task, given an institutional context with parallel, overlapping or
even contradictory mandates. Public sector agencies funding and undertaking agricultural research are
shown in Figure 7 below.
Figure 7: Agencies funding and undertaking agricultural research in Thailand
Note: ARDA – Agricultural Research Development Agency; BIOTEC – National Center for Genetic Engineering and Biotechnology; ME – Ministry of Education; MOAC – Ministry of Agriculture and Cooperatives; MOST – Ministry of Science and Technology; NESDB – National Economic and Social Development Board; NIA – National Innovation Agency; NRC – National Research Council of Thailand; NSTDA – National Science and Technology
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 23
Development Agency; RDPB – Royal Development Projects Board; TDRI – Thailand Development Research Institute; TISTR – Thailand Institute of Scientific and Technological Research; TRF –Thailand Research Fund. Source: Adapted by the author from Johnson et al. (2008)
From an institutional perspective it is not surprising to find agencies under different Ministries driven by
overlapping and sometimes competing agendas (Poapongsakorn, 2011). Illustrating both the internal
schisms within the public sector, as well as an atmosphere of mutual distrust between the private and
public sectors, a study by FAO: “The Dynamic Tension Between Public and Private Plant Breeding in
Thailand (FAO, 2011) concludes:
[Plant] breeding and associated changes in crop management have been central to maintaining
competitiveness of Thai agriculture in international markets with varying strategies across crops
reflected in government investment priorities.
Redefining the public sector‟s role in plant breeding in the context of expanding private-sector
capacity in maize, horticulture and, most recently, hybrid rice has faced difficulties in shifting long-
established research capacities that have been successful in the past.
Thailand is investing significantly in agricultural biotechnology but is doing this through the
Ministry of Science and Technology (MOST) and not through the Ministry of agriculture and
Cooperatives (MoAC). This has resulted in a lack of effective linkages between conventional
breeding capacity and molecular breeding efforts.
With further trade liberalization within ASEAN, Thailand is well placed to develop as a regional
seed hub. Investments in diagnostic and phytosanitary capacity are supporting this development.
Difficulties in synchronization in capacity development between public and private-sector plant
breeding and between conventional and molecular plant breeding is most obviously reflected in
the increasing shortages of conventional plant breeders.
These conclusions note both Thailand‟s strong potential for growth, and the institutional constraints and
path dependencies that hamper its realization. Artachinda and Akratanakkul (2010) note the inefficiencies
created by the lack of coordination of research programmes, and describe a formal approach to priority-
setting in agricultural research using the case of biotechnology. However, there appears to be little
immediate prospect for policy reform in agricultural research.
On a positive note, the National Research Council of Thailand (NRCT) is funding a project to help
researchers gain access to the latest agricultural research. The Thailand Research Indexing Hub, uses
the “Thai e-Government Interoperability Framework (TH e-GIF)” as a data exchange standard. An
agricultural knowledge repository has been developed (http://anchan.lib.ku.ac.th/agnet/ ) in collaboration
with 18 Thai agricultural research institutions and 44 university faculties participating. The work is
coordinated by the Thai National AGRIS Centre, and ultimately aims to extend to create a National
Agricultural Repository to serve Thailand‟s agricultural research community.
Food safety standards
Thailand‟s continuing status as a top global exporter hinges on the credibility of the guarantees it can
provide for the safety and quality of food produce. The increasingly stringent requirements of importing
countries and buyers for traceability and certification impose significant compliance burdens which
compromise market access, especially for resource-poor small farmers. Excessive and poorly regulated
use of pesticides, and the ready availability of toxic organophosphates and organochlorine products
raises the risk of food safety alerts in destination markets. With a relatively weak and under-resourced
regulatory and enforcement structure, Thailand faces the real and serious risk of long-term exclusion from
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 24
some of its key markets (e.g. Japan, USA, EU) as a result of inadequate responses to sanitary and
phytosanitary (SPS) issues in food exports. With the failure of structural subsidies and other policy
interventions, institutional supervision of food quality is emerging as the new priority of state intervention
in agriculture.
Indeed, major efforts are under way to ensure compliance with SPS requirements of destination markets,
the National Bureau for Agricultural Commodity and Food Standards (ACFS) is a focal point for many of
these efforts. ACFS also serves as a regional focal point and host for the ASEAN Food Safety Network.
These measures include institutional reforms of the accreditation and government certification system
including ACFS itself (to provide greater separation of functions in line with ISO65 requirements),
traceability systems, upgraded minimum standards and increased surveillance and laboratory testing
capacity. Responsibility for food safety is distributed among various agencies within the Ministries of
Agriculture, Public Health and Industry.
There has also been considerable engagement with the private sector in this process, with producer,
processing and exporting organizations, private sector certification bodies and destination markets all
participating. For the moment, these efforts have made progress in raising confidence levels, at least
within the EU.
The EU‟s 2009 threat to ban the import of five Thai vegetable groups, including basil, chilli, bitter gourds,
eggplant and parsley was accompanied by an increase in the level of sampling at ports of entry.
Subsequently, pesticide residue and micro-organism contamination issues escalated sharply in early
2010, with pest contamination emerging later in the year. The Thai government responded with a pre-
emptive suspension of exports to the EU of the five affected groups from 1 February 2011, thereby
avoiding an official EU ban that could have been extended to other markets. Subsequently, exports of 16
types of vegetables in the five affected categories were permitted on a case-by-case basis due to
implementation of improved food safety standards and traceability systems. At the time of writing, this
clearance had been granted to only 4-5 exporters. Thailand is also expected to resume exports of fresh
chicken to the EU soon after the EU lifts its measures protecting against avian influenza, since the
disease has not been reported in the Kingdom for three years.
However, it remains to be seen whether such efforts to raise standards of food hygiene and surveillance
will be sustained, and whether they will prove adequate to mitigate the threat of import bans in key
destination markets such as the US, Japan or EU.
Rice pledging scheme
Rice policy is determined by the Rice Policy Committee, comprising the Ministry of Agriculture and
Cooperatives and Ministry of Commerce. The Committee proposed six strategies for sustainable
development to be implemented from 2007-1011, of which the most controversial aimed at rice price
stabilization (BOT, 2007). Following abolition of export taxes in the 1980s the government withdrew from
intervention in the domestic rice market, only to re-enter when the Thaksin government was elected in
2001. The government introduced a rice price guarantee policy which functioned as a mortgage
programme. Farmers were offered low interest government loans “…against the pledge of rice, with the
pledged rice cancelling the debt if rice prices do not meet a target.” (World Bank, 2007: p. 36).
The programme, implemented by the Bank of Agriculture and Agricultural Cooperatives (BAAC) allowed
farmers to sell their paddy to government agencies and also repurchase it within 90 days at a three
percent interest rate. The programme was popular due to guaranteed prices set well above market prices,
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 25
resulting in large stockpiles of up to 5 million metric tons in 2005-2006. However, by 2008, stocks had
fallen to 2.82 million metric tons.
Critics claim the scheme undermined the market and failed to benefit farmers. According to
Poapongsakorn (2009) the programme increased farm gate prices during the harvesting period, only to
depress the market later in the season once rice stocks were released.
Poapongsakorn also noted that the increased popularity of the scheme left a reduced supply of paddy,
resulting in fewer local rice traders and central paddy markets operated by the private sector. These
market inefficiencies could be expected to result in longer-term instability of food supply and food prices.
The mortgage program was suspended for a time due to mounting costs, corruption and inefficiency, then
relaunched in 2008 (The Nation, 2008b) at a time when world market prices were at their highest in 30
years. The motivation for such an economically questionable strategy may have been political rather than
economic (Forssell, 2009).
In September 2011 the government announced a controversial and populist paddy pledging programme,
raising minimum guaranteed prices for farmers by more than 60 percent, to Bht 20,000 per tonne for
jasmine paddy, and Bht 15,000 per tonne for white rice. The scheme has been widely criticized, with the
high pledging prices predicted to result in losses to the State of up to Baht 250 billion (The Nation,
2011a). Concerns have also been raised that the scheme may breach WTO rules on subsidies, and may
even fail in its declared goal of increasing farmer incomes.
Summary
This chapter has discussed the evolution of State intervention in agriculture and its shift from a policy of
export taxation to protection for key strategic commodities. These policies are generally not regarded as
having succeeded in improving the livelihoods of farmers, as they were implemented largely as a political
response to satisfy powerful producer lobbies.
Neither have price controls stemmed food inflation; indeed rural food price inflation is increasing faster
than the overall CPI. Nevertheless, with populist policies in vogue, the newly elected government has
introduced several new schemes purporting to help the poor and reduce imbalances between town and
country, especially for marginalized areas in the south and northeast. These policies, particularly the new
rive pledging scheme, appear to be aimed at strengthening social cohesion and political stability, even if
this threatens Thailand‟s competitive position in world markets.
The State‟s role in provision of public goods has included basic infrastructure, research and extension,
access to credit, and pesticide regulation. The government‟s major rural infrastructure programmes (rural
roads, large-scale irrigation and electrification from the 1960‟s to the 1980‟s) laid a foundation for
subsequent private sector growth and expansion of the agricultural sector from the mid-1980s.
Similarly, Thailand‟s research and extension (R&E) programmes--especially its crop breeding
programmes-- grew substantially growth during the early 1970s, providing a strong foundation for the
sector‟s subsequent expansion and growth in its global competitiveness, particularly for maize, cassava,
sugarcane and irrigated rice. However, the public sector programme began to falter in the 1990s and
private sector seed companies quickly built on the breeding programmes and genetic materials hitherto in
the public domain, and integrated them into their own proprietal F1 hybrid breeding programmes.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 26
The generally lax legislative environment has favoured private sector growth, particularly for seeds and
pesticides. However, in the case of seeds, the lack of protection for new varieties discourages new
investment in R&D, whilst the pesticide regulatory system appears to have become dysfunctional, with
the recent re-registration programme overwhelmed with administrative and capacity constraints.
Latterly, State policy has increasingly prioritized food safety, and major initiatives are currently under way
on food standards, certification, and traceability. These are principally driven by pressure from destination
markets, especially the EU. Private sector organizations such as producer and exporter associations,
private certification bodies such as GLOBALG.A.P, and traceability solution providers are strongly
engaged as partners in many of these programmes.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 27
Role and impact of the private sector
Introduction
The previous chapter has provided an overview of public policy in order to explain the evolution of
Thailand‟s agricultural economy. This chapter turns to the role of the private sector in driving the sector‟s
ongoing transformation. Following a brief introduction to the private sector‟s engagement in the sector, we
focus on four major changes in the institutional arrangements within the agricultural sector, all
predominantly private sector-driven. These are identified as follows:
the rise of modern trade as a dominant force in retailing;
the shift to contract farmers and outgrower production systems;
the new emphasis on standards, certification and traceability to serve export markets,
and
increasing interest in the organic farming market.
Together these shifts help characterize the profound changes that have taken place in recent years - in
production, supply chain management, markets, and quality management. We then examine some
aspects of their aggregate economic outcomes and impacts on productivity and competitiveness. We also
consider trends that disproportionately affect smallholder farm households, and linkages between the
agricultural sector and the non-farm rural economy.
It would be simplistic to attribute impacts or benefits to either public or public sector activities due to the
complexity of the interrelationships and the many exogenous factors at play. For example, although
agribusiness has taken the lead in driving adoption of contract farming, a conducive policy environment
was a prerequisite to encourage domestic and foreign investment. Similarly, the success of tomato
contracts in the Northeast was predicated upon earlier massive public investment on irrigation, roads and
rural electrification.
The chapter concludes with some evidence from the literature on the overall dynamism and
competitiveness of the sector and its linkages to the non-farm rural economy, thus providing perspective
for the more detailed commodity case studies in Chapter 5.
Private sector investment in the rural sector
The Thai Board of Investment (BOI) reported 599 investment applications by foreign capitalized firms
(foreign capitalization 10% or more) in the period January to July, 2011 (up 34.9%, compared to the same
period in the previous year), with a total investment worth of Baht 205.2 billion (up 89.4% compared to the
same period in the previous year) (BOI, 2011). Small scale investment applications worth under Baht 100
million accounted for 56.8% of the total. Of these, 48 applications valued at Baht 10.5 billion were in the
agriculture and processed agricultural goods sector. Though Thailand's Foreign Business Act (1999)
forbids foreigners from owning businesses relating to farming and livestock, foreigners may still run farm
businesses in Thailand in the form of joint-ventures in which Thai nationals must own at least 51 percent
of the shares.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 28
Increasingly, agility in harnessing appropriate technologies and best practices is essential to sustain
export competitiveness products and retain market share. The private sector has invested heavily in
agricultural R&D, and particularly in food and food processing. For example, agribusiness companies
have developed new high-yielding hybrids of corn, vegetables, rubber and small animals. Meanwhile,
agribusiness firms and supermarkets alike continue to invest in new production, processing and post-
harvest technologies, in new product development, and in transport logistics. Private sector companies
are also actively diversifying their portfolios. Some examples of recent strategic private sector
agribusiness investments are given below.
Charoen Pokphand Foods (CPF) is Thailand‟s leading agro-industrial and food conglomerate. Its core
businesses are livestock including chicken broilers and layers, duck and swine) and aquaculture (shrimp
and fish). The company has also reportedly set aside some US$199 million for overseas investment in
2011. CP has also moved into downstream operations though its ownership of 7-11 convenience stores
throughout the country.
Saha Farms: In July 2011 the International Finance Corporation (IFC) (the private sector arm of the
World Bank Group) signed an investment agreement in Bangkok to provide a US$70 million financing
package to the Saha Farms group, one of Thailand's major integrated producers and exporters of poultry
products. IFC's investment will contribute to the company‟s expansion, enabling it to improve productivity
by constructing a new farm, relocating existing farms from suburban Bangkok to Lopburi Province, and
extending its network of 2,000 contract farmers. The relocation will also improve income distribution and
economic opportunities in the province and help stem population influx into Bangkok. IFC will also advise
Saha Farms, currently a family-owned enterprise, on its plans to list the company on the Thai stock
exchange. IFC's financing package consists of a US$35 million loan for its own account and an equity
investment of up to US$10 million equivalent in the company's share capital.
Danone: In January 2011 the French dairy giant Danone announced its aim to use Thailand as a
production base for the ASEAN market following the implementation of the ASEAN Free Trade Area
(AFTA). The company had already invested Baht 572 million to construct a processing plant in Ayutthaya
that opened in early 2010.
Nestlé: In August 2011 Nestlé pledged $120 million as part of a two-year growth strategy to increase
manufacturing of its products, support expansion of existing factories and construct a new Nestlé quality
assurance centre in Thailand. The company has extensive investments in coffee and milk production in
Thailand. The company cited the increasing sophistication and focus on health and nutrition of Thai
consumers, and Thailand‟s competitive advantage within the ASEAN region.
Betagro: Originally an animal feed producer and distributor, the Betagro Group has diversified to become
one of the leading players in Thailand‟s integrated agricultural business, with 31 companies under its
umbrella. It is active in the feed, poultry, swine, and animal health businesses, and has recently turned its
attention downstream, with a joint-venture Japanese restaurant chain, and establishing a foothold in the
retail market with own-brand products. Betagro has also expanded into overseas markets. The
application of technology, especially in the area of food safety and product traceability, has long been at
the heart of the group‟s growth strategy, and is crucial to the company‟s success in exporting to the
Japanese market. The company developed and installed its own e-traceability system in 2002 for chicken
and pork- an industry first. The collaboration between Betagro and the National Science and Technology
Development Agency (NSTDA) is a good example of a public-private partnership in technology
development and adoption.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 29
Mitr Phol: Mitr Phol, Asia's largest sugar producer, has also diversified its portfolio into renewable
energy from ethanol and biomass, MDF fibreboard, and bioplastics. In March 2011 it announced an
investment of US$ 123 million (3.7 billion baht) in new renewable energy projects, and will also expand
the group's power business to neighbouring countries, starting with a biomass plant in China. The
company has signed a 15-year contract to supply power to the Chinese government and is hoping to sell
about 70,000 tonnes of carbon credits a year in addition to the 100,000 tonnes each from its biomass
plants at Dan Chang and Phu Khieo. The group has also targeted development of other types of power
plants including solar and co-generation, and has expressed interest in developing renewable projects in
Laos, where Mitr Phol currently operates a sugar mill, but has put on hold plans for a similar operation in
Cambodia, where it has a sugarcane plantation (Bangkok Post, 2011a). Mitr Phol conducts its own
agronomy and breeding research programmes from its Sugarcane Research Centre at Phu Khieo.
Mitr Phol is also planning to invest in bioplastics, which it anticipates will become a global trend. Thailand
is ideal for cultivating energy crops such as sugarcane, maize and cassava as feedstocks. To prepare
itself for the new business, the company is studying increasing the sugarcane yield to ensure adequate
feedstock supplies. The company has allocated about US$ 333 million (Baht 10 billion) to improve
irrigation to raise productivity in the plantations of its sugarcane farmers (The Nation, 2010).
Other major agrifood conglomerates active in Thailand are Dole (U.S.), Cargill (U.S.), Nestle
(Switzerland), Royal Friesland Foods (Netherlands), the Unilever Group (Anglo-Dutch), Siam Cement
Group (Thailand), Grampiam (UK) and Ajinomoto (Japan).
The above examples of strategic agro-industry investments underscore the private sector‟s influence in
shaping the ongoing transformation of Thailand‟s agriculture. Companies and farms are switching to
higher value products that can be further processed; there is an increasing level of specialization for
production of high value products, as well as diversification to meet new demands of both domestic and
export markets.
The exacting requirements of importers in destination markets have driven a shift towards
„professionalization‟ of farming to ensure traceability and consistent standards of product quality and
safety. These processes have to a large extent been initiated by the private sector itself, without
significant government intervention or support. As part of this process, substantial organizational and
institutional changes were inevitable over the past decade, including the following:
Growing concentration at all levels, particularly in the retail and processing sectors;
Increasing farm size as firms seek economies of scale in production, food manufacturing,
marketing and distribution;
Private sector standards for food quality and safety are proliferating;
Transactions of foods are increasingly arranged through the use of contracts;
More large-scale retailers and manufacturers are relying on specialized procurement channels
and dedicated wholesalers; and
Food is increasingly being diverted into formal sector retail outlets, such as supermarkets, rather
than being sold informally in local wet markets or via wholesale spot markets such as Talaad Thai
or Sri Mommuang.
These trends have been accompanied by, or reflect the intensification of technology adoption and / or a
reconfiguration of institutional arrangements within the sector, driven overwhelmingly by the private sector
agri-food industry and clients in destination markets. The following sections of this chapter examine four
fundamental changes in institutional arrangements that help define the influence of the private sector
on Thailand‟s agriculture:
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 30
the rise of modern trade and vertical integration within the supply chain;
the emergence of contract farming as a dominant modality of production;
the growing importance of standards, certification and traceability to serve export
markets; and
the new interest in organics, driven by a burgeoning global demand.
The rise of modern trade
The „supermarket revolution‟ came quickly to Thailand. Since the 1980s there has been a rapid advance
of modern retail food outlets, in response to newly-affluent urban middle classes, smaller families, and
changes in lifestyle. The advent of the four types of „modern trade‟ retail food outlets (department stores,
supermarkets, hypermarkets and convenience stores) has brought changes not only in consumption
patterns, but has also influenced the entire upstream supply chain. The early appearance of giant peri-
urban superstores became controversial when studies emerged of the wide radius of their impact on
traditional „Mom and Pop‟ grocery stores in communities. In 2002, the Thailand Development Research
Institute‟s report of its survey of traditional retail outlets (Thailand Development Research Institute, 2002)
found a net closure rate of 15% of traditional retail outlets located within a one kilometre radius around a
hypermarket. Traditional retail outlets were disappearing at a rate of 7.6% per year, while revenues at
remaining outlets fell by 8% per year (Tokrisna, 2002).
Despite policies to deter foreign ownership, by 2002 ten transnational food retailers were operating in
Thailand; the highest in south-east Asia at the time (Reardon, 2007; Mutebi, 2007; Isaacs et al., 2011).
According to Euromonitor International (2009d), hypermarket sales reached US$ 64 billion with a total of
163 outlets in 2008, a growth of 37 and 34 percent in terms of sales and number of outlets since 2005,
respectively. By 2010, a total of 1,005 modern trade outlets (including hypermarkets, mini-marts and
convenience stores) had been established around the country (Table 1).
Thailand‟s four main hypermarket chains -- Tesco, Carrefour (now taken over by Big C), Makro and
TOPS, together with nationwide convenience outlets such as 7-Eleven (the franchise in Thailand owned
by the agribusiness giant CP Foods) have driven the development of higher quality food standards,
offering a price premium for contracted producers (Boselie et al., 2003) and also created new domestic
markets for organic, hydroponic and other products defined by production process rather than tangible
quality attributes (discussed in the following section). Over the last three to four years these chains have
diversified and expanded their markets through new retail formats such as minimarts (e.g. „Tesco
Express‟) and latterly, „community malls‟ and the internet.
Table 1: Growth of discount stores 1996-2010
Discount stores 1996 1998 2000 2004 2006 2008 2009 2010
Tesco1 5 14 24 60 91 106 663 782
Big C 11 20 23 40 49 66 67 106
Carrefour2 2 6 11 20 24
31/7,160
39 69
Siam Makro 13 16 19 23 29 41 44 48
TOTAL 31 56 77 143 193 244 813 1,005
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 31
Sources: (1) Cited in Yodkamolsart, S and Suchinpram, V (2008) (2) Company Annual Reports, 2004-2010. Notes: 1/ Figures include convenience stores and mini-marts 2/ Carrefour withdrew from Thailand and sold its business to Big C in January 2011.
Tesco entered Thailand in 1998 in a joint venture with Charoen Pokphand Foods (Tesco Lotus); in 2003,
Charoen Pokphand sold its shares to Tesco. When Tesco opened its doors, it stressed its intentions to
source products locally. Whilst this sounds good, local sourcing does not mean local suppliers receive a
fair deal. Modern trade retailers in Thailand have used their power to exert excessive pressure on
producers, and have been accused by critics of adding to the culture of materialism and over-
consumption, and of contributing to a „Westernisation‟ of Asian diets (Pingali, 2007). In 2002, all four
major retailers were found guilty of unfair trading practices (Just-food.com, 2002).
Supply chains have been both shortened and rationalized. Responsibilities and risks are increasingly
transferred to producers, who must do more as wholesalers have been eliminated. For example, TOPS
Thailand slashed its fresh produce suppliers from 250 to 60 while also eliminating many wholesalers. The
remaining “preferred suppliers” deliver directly to a distribution centre outside Bangkok (Boselie et al.,
2003). The consolidation continued: Ruben, Boselie and Lu (2007) reported that 60 percent of TOPS'
fresh produce is sourced from only five preferred suppliers.
Moreover, in modern trade supply chains the decoupling of procurement systems from local communities
is intrinsic, along with the establishment of large distribution centres (displacing traditional wholesalers),
and mandatory compliance with private standards under contract farming arrangements (Reardon et al.,
2007). It was therefore hardly surprising that tensions resulting from these new institutional arrangements
triggered a major backlash against transnationals among Thai organizations and activists concerned over
the impact on small farmers and traditional community grocery stores. These movements also
successfully co-opted anti-foreigner nationalist sentiment to advance their agendas.
Increasingly, strategies aimed at including small producers in supermarket supply chains involve
partnerships between public and private sector stakeholders. Contract farming is a typical and usually a
required marketing arrangement for these farmers. Frequently, contract farming initiatives have been
supported by donors and involve academic and/or other research institutions from developed countries,
working in partnership with domestic institutions, centres of excellence and the private sector. Under such
arrangements company field staff provide extension advice and conduct crop inspections in cooperation
with the public sector extension service (DOAE). As early as 2003, TOPS and Thai Fresh United initiated
a series of pilot projects involving Thai and Dutch stakeholders aiming to improve produce safety and
quality, and facilitate certification of small producers according to Thai and international standards. This
trend continues today, with the major retailers closely engaged in consultations relating to national safety
and quality standards.
Increasing intensity of competition caused by consolidation in Thailand‟s retail food market has triggered
the introduction of small-scale mini-marts, such as Tesco Express, in addition to the proliferation of 7-
Eleven convenience stores, which themselves have boosted the market for ready-to-eat and frozen food
products. Traditional grocery stores could never compete with these 24h outlets, and many have
disappeared.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 32
Contract farming and outgrowing as a dominant modality
Contract farming in its many forms has emerged as a powerful new paradigm for innovation in Thai
agriculture, in many cases taking over the role of public sector extension systems as a primary source of
technology, inputs and market access (Ellis et al., 2008). Moreover, evidence suggests that at least some
forms of contract arrangements may contribute to alleviation of rural poverty (Setboonsarng, 2006).
Contract farming systems have brought fundamental changes in the way farmers acquire technology,
credit, and inputs, and also in their management of risks. Post-harvest processing, quality control,
marketing, and systems of farmer organization may all be managed differently. Where land tenure
remains a critical determinant for farmer investment in improving soil fertility, contract farming can offer
new security and performance-based incentives for farmers to switch technologies and manage
agricultural lands for the longer term.
In the late 1970s the CP Group pioneered contract farming along the whole production chain, providing
farmers with seeds to contract farmers, who produced raw materials for the animal feed that the company
produced and supplied to its contract poultry farmers. Recent years have seen acceleration in the area
under contract farming in Thailand, as a widespread response by private sector agribusiness companies
both to market failures and the need to access R&D and technology more effectively. Contract farming
offered companies an ideal channel to exploit new market opportunities more efficiently, whilst reducing
market risk for smallholders.
The expansion in contract farming in subsectors such as poultry and horticulture has been encouraged by
successive National Economic and Social Development Plans, and supported by incentives from the
Board of Investment. In 1995 the government approved policies to promote 12 agri-business industries in
food processing and manufacture. CPF discloses (CPF Annual Report 2003) that it received the following
BOI incentives to promote its contract farming efforts include the following:
Exemption from import duties on machinery as approved by the Board.
Exemption from income tax for certain operations for a period of 5 years and 8 years from
the dates on which the income is first derived from such operations
50 percent reduction in normal income tax rate on net profits derived from certain
operations for a period of 5 years commencing from the expiry dates in 2 above.
A deduction of an amount equal to five percent of the increased income of certain
promoted operations over previous year for ten years.
The government also facilitated private sector contract farming schemes by supporting interaction among
smallholders and between them and private companies supplying inputs and purchasing products- the
so-called “4-sector scheme” (Benziger, 1996). For a time, the Thaksin government promoted cross-
border contract farming in Laos and Myanmar, but these efforts appear to have been abandoned due to
security risks or logistic failures. As these industries developed, higher standards required for exports
further encouraged the development of vertical integration and contract operations (Poapongsakorn,
2011).
As a result, crops such as sugarcane, baby corn and asparagus have proven successful under contract
farming arrangements. With baby corn, farmers sign contracts with village middlemen, who provide
inputs, credit, and mechanization services. These contracts provide a guaranteed minimum price, but
allow higher prices if the prevailing market price increases. Asparagus is treated slightly differently, with a
main condition to guarantee a fixed price for the whole year, according to grade. Potato contract farming
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 33
in Chiang Mai follows the same model and is considered a successful example of private-public-farmer
cooperation (Sriboonchitta and Wiboonpoongse, 2008).
Over time, these developments have dramatically changed the institutional roles of different actors, with
private companies taking on roles previously performed by government. The institutional innovations
generated by companies are an implicit recognition (a) of the shortcomings of public sector structures and
models; (b) of the benefits that can accrue from improving connectivity among actors; and (c) the need for
agility in tailoring institutional capabilities to suit emerging circumstances.
While contract farming in its many forms has long been employed in Thailand, its potential contribution to
poverty reduction has only been investigated in recent years (Uathavikul, 2004; Zola, 2004a, 2004b;
UNCTAD, 2005; Setboonsarng et al., 2006; Auansakul, 2006). For farmers, contract farming can provide
credit, technology, chemical inputs, and access to markets from which they would otherwise be excluded.
Moreover, contract farming can lead to improvements in income while reducing some of the risks farmers
face from production and price fluctuations (Eaton & Shepherd, 2001; Winters et al., 2005; Zola, 2006).
However, studies (e.g. Tiongco et al., 2008 for swine; Baumann, 2000 for tree crops; and Singh, 2005)
also point to economic, social and environmental risks and implications associated with large-scale
private sector expansion and vertical integration. In particular, in schemes managed for short-term gain
rather than long-term sustainability, power inequalities may force vulnerable farmers into greater
indebtedness and even landlessness, further compromising their livelihoods and food security. Critics
such as Singh (2005) point to possible linkages between contract farming as operated by Thailand‟s
largest agribusiness conglomerates and the consolidation of farm holdings seen in the shrimp subsector.
Recent studies indicate that the benefits to growers of contract farming may be sector-specific. A recent
review of successes and failures in implementation of contract farming in Thailand (Sriboonchitta and
Wiboonpoongse, 2008) found that while the poorest farmers were not excluded from contract farming,
special measures may be needed to facilitate participation. The study found that contract farming had
succeeded in crops such as soybean, baby corn, sweet corn, potatoes, tomatoes and eggplant, as well
as vegetable and corn seed. Vegetable processing and potato contracts were especially successful.
Though these authors cited improved production and management skills and bargaining power as longer-
term benefits to small farmers, they nevertheless conceded that farmers may be better off under non-
contract production scenarios. Conversely, in the capital-intensive poultry industry, the loans required for
participation are seen as a significant and long term drag on farmer income (Delforge, 2007).
Whilst contract farming was conventionally implemented within a national context, Thailand has
witnessed significant growth in cross-border contract farming. Thai agri-food companies, motivated by
lower costs of land and wages and sometimes by land concessions in neighbouring countries, have
turned to Laos, Myanmar, Cambodia and Vietnam to source raw materials for processing in Thailand.
This initiative has been actively promoted by the Asian Development Bank as a follow-up to the
establishment of the East-West and North-South Transportation and Economic Corridors within the
Greater Mekong Subregion (GMS), and also by the Ayeyawady-Chao Phraya-Mekong Economic
Cooperation Strategy (ACMECS). With major infrastructure projects to connect the countries of the GMS
under way, the coming years will likely see a strong growth in contract farming schemes within Thailand
and the rest of the GMS to serve global as well as regional markets.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 34
Standards, certification and traceability
Safety and private quality certification schemes incorporating farm-to-fork traceability serve as a proxy to
replace the trust that used to exist when food was locally produced, and when consumers personally
knew the producers of the food they ate. Today, affluent Thai and other Asian urban consumers are
increasingly interested in the „story‟ behind the food they consume, and will often pay a premium, basing
purchasing decisions on provenance or production system.
Certification brings added benefits for producers and exporters in verifying the authenticity of high-value
niche products such as organic or fair-trade produce- an increasingly important source of value-added in
Thailand‟s agriculture. Authentication is therefore key to building and sustaining value addition through
facilitating product differentiation. Thai agri-food companies have long recognized this, and major food
exporters such as Betagro and Charoen Pokphand Group (CP Group) as well as the major supermarket
chains have already implemented in-house traceability systems to provide key data to their customers,
regulatory authorities and consumers. However, critics say this trend primarily serves the needs of rich
urban consumers, brings no benefit to poor consumers and comes at the expense of resource-poor
smallholders.
Some emerging trends can be identified:
The imposition of strict quality standards and increasing traceability requirements by the food industry are
making such schemes a de facto price of market entry;
New advances and combinations of enabling technologies (e.g. RFID) are removing traditional obstacles
to, and improving efficiency of traceability systems, driving more transparent and faster information
exchange among supply chain actors;
The ability to authenticate origin and production systems holds promise to boost farmer income by
encouraging shifts in production from low-cost commodities to niche markets for value-added premium
produce with non-tangible attributes (e.g. „organic‟, „fair-trade‟ and „identity-preserved‟ produce).
In an attempt to address international concerns over food safety in exported agricultural products, the
private sector has spearheaded a drive to accelerate the local certification programme and raise
standards. ThaiGAP (Good Agricultural Practice) is a voluntary private sector standard for safe and
sustainable Thai farm products, which is certified as equivalent to the GLOBALG.A.P standard. The
ThaiGAP standard assures food safety and quality at all stages along the supply chain, and claims to
promote sustainable agriculture.
ThaiGAP was developed by the Thai Chamber of Commerce (TCC), the National Food Institute,
Kasetsart University (Kampaengsaen), the Thai Fruit and Vegetable Producer Association, the National
Metrology Institute of Germany, and the German Technical Co-operation to help overcome barriers to
certification under the GLOBALG.A.P scheme (e.g. language, costs and complexity of application). The
TCC‟s food and agriculture committee believes that recognition of the standard will improve Thailand‟s
export potential and improve access to the all-important EU market. The project prioritizes high-risk fruits
and vegetables, followed by shrimp products (Bangkok Post, 2011b).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 35
Organics
Thailand‟s first plantings of organic crops took place in 1991, pioneered by NGOs such as the Alternative
Agriculture Network and Green Net who aimed to promote sustainable farming practices. Though by the
mid 1990‟s a national organic crop standard had been drafted and ACT (the first private sector organic
certification body) established, uptake was slow, with the area under cultivation for organic products in
Thailand remaining below 1 percent of the country‟s total cultivable area (Willer and Kilcher, 2011).
Nevertheless, in recent years a combination of factors has stimulated rapid growth of the domestic as well
as the export market for niche products such as organic, fair-trade, ethical and „traditional‟ products, and
the sector is now gaining momentum. Green Net reported that from 2008 to 2009 the organic land area
almost doubled from 17,000 ha to almost 31,000 ha (Green Net, 2011). The number of certified organic
farms also showed a rapid rebound in 2009 following the 2008 economic crisis, reaching a total of 5,358
farms on a total 30,725 hectares (Figure 8).
Figure 8: Certified organic area in Thailand 1998-2009 (ha)
Source: www.greennet.or.th (2011)
While consumers worldwide have become increasingly health-conscious and concerned over food safety,
efficiencies and economies of scale created by the establishment of globally-connected modern trade
supply chains have enabled small, remotely located producers in developing countries to access markets
and help satisfy these demands (for example, Thai jasmine rice, and organic fruit and vegetables). Total
production in 2009 was valued at US$44.7 million (Table 2 ), most of which was exported (Green Net,
2011). Thailand‟s 2010 organic exports (mostly rice) were valued at aboutUS$39.9 million (Thai Rice
Exporters‟ Association, 2011).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 36
Table 2: Thailand Organic Production and Value (2003-2009)
Source: Green Net (2011)
Gradually, mainstream agri-business have realized the opportunities, and initiated large-scale organic
trade initiatives, often under contract farming arrangements. Opportunities in these markets are important
factors driving the emergence of a new class of more specialized farmers geared to higher margins for
their producerk. The establishment of the Thai Organic Trade Association and the Thai Organic
Agriculture Foundation reflects the surge in commercial interest in organic farming in Thailand. Both
domestic and export markets for organic food products are now in rapid expansion and price differentials
between conventional and organically grown products, and also between conventional and food safety-
certified products, range from 10-30 percent. Thailand‟s organic exports in 2009 were valued at US$110
million (Ministry of Commerce, 2010).
Organic agriculture in Thailand covers rice, fruits and vegetables, wild products such as honey and herbs,
and there is one certified organic shrimp producer (Sureerath Farm). Thailand has no organic livestock
production. Several groups produce organic rice, mostly jasmine rice grown in Surin and Yasothon
provinces, sold by two main traders - Capital Rice Co. Ltd. and GreenNet Cooperative. Most is exported
(mainly to European markets) with only a small quantity sold locally (Panyakul, 2007).
Thailand‟s state and private sector are joining forces in a bid to develop the country‟s nascent organic
agriculture sector into a major export earner. However, finding the right incentives to convince farmers to
make the switch from traditional methods is proving difficult. According to a quantitative study conducted
by Panyakul (2007), total costs at the farmers‟ organization level for setting up organic certification
exceeded the benefits for the initial and ongoing phases. However, the balance may by now be shifting,
with the growing increase in demand for organic produce at home and among foreign visitors, and an
even greater demand for such products in key export markets such as the US, Japan and EU.
The Ministry of Commerce is actively engaged in promoting organic agriculture, providing training and
access to funding to food chain actors – producers, processors, and exporters – to assist them take
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 37
advantage of the growing demand (MOC interview), and help reduce the annual cost of importing
agricultural chemicals and pesticides (estimated at US$ 975 million).
Although currently most organic products such as rice, fresh fruits and vegetables are sold as raw
commodities there is a shift towards value-added processed products (e.g. sugar, cassava starch, palm
oil and non-food products such as soaps and spa products). According to the International Federation for
Organic Agriculture Movements (IFOAM), this subsector is in its infancy as Thailand cannot yet guarantee
reliable year-round supplies of raw material to feed a large-scale processing industry (Gordy, 2010).
However, this area has clear potential for expansion in an increasingly industrialized and capital-intensive
production environment.
Impact of private sector activity
The changes in Thailand‟s agrifood systems carry significant implications for growth, poverty alleviation
and food security. How have these market-driven changes affected small farmers‟ access to
regional/global value chains? What has been the effect of this private sector activity on low-income
households?
The reconfiguration of supply chains, driven overwhelmingly by the private sector, has brought a rapid
increase in value addition opportunities through agribusiness relative to primary production, with agro-
processing enterprises boosting demand and expanding markets. Private sector investment by
agribusiness companies has raised farm productivity and produce quality, and stimulated market-led
innovation throughout the respective value chains. However, the distributive effects of such changes tend
to favour processors, exporters and buyers rather than farmers, who are price takers in the value chain,
with relatively few options and no bargaining power. Thus, the observed modernization of agrifood
systems poses particular risks for smallholder farmers.
Because Thailand‟s national statistical surveys do not report the necessary data, quantitative evaluation
of the direct impacts of agribusiness development on employment, value addition and rural incomes
poses a significant challenge. However, trends in food prices, opportunities for off-farm employment and
food security indicators offer important insights into the overall impact on livelihoods and welfare of
smallholders. These are considered in brief below.
Food price inflation
Food price inflation (see Figure 5: General food inflation, low income inflation and rural inflation ) has led
to an overall fall in net purchasing power for poor households, who spend a higher percentage of
household income on food. Low-income households in rural areas are vulnerable to increases in non-rice
food prices, whilst those in urban areas are vulnerable to increases in the price of rice) (Isvilanonda,
2011).
But increasing rice prices should benefit farm households that are „net sellers‟. However, because the
share of net buyer households is higher for households owning less than 0.8 ha, the value of net
monetary surplus ends up disproportionately in the hands of large scale farmers. The impact of food price
inflation thus falls disproportionately upon the poorest farmers, who tend to be net food buyers rather than
producers.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 38
Higher production costs
Farm input prices have risen sharply over the past five years, driven by spiralling oil prices. In his analysis
of 2007 household survey data, Isvilanonda (2011) hypothesized that subsistence farmers/small-scale
farmers have been hardest hit by the rise in farm input costs as their higher cash expenses are not fully
compensated for by their often meagre market surplus of rice. His simulation results supported the
hypothesis, finding that small-scale farmers have been severely impacted by rising operating costs;
farmers with less than 0.8 ha being especially vulnerable.
Farmer livelihoods
Contract farming is reported to reduce overall risk and increase net incomes for participating farmers.
Farmers participating in some corporate contract farming schemes are reported to earn more than non-
participants (Setboonsarng, 2006), but these are mainly larger farmers, and we may anyway question the
validity of ascribing a simple causal relationship on the basis that participants in such schemes tend to be
more advanced, successful lead farmers. Contract farm participants may thus be self-selected, and would
have earned more, irrespective of the institutional framework. This author has so far yet to find evidence
of studies comparing incomes of participants and matching non-participant cohorts in Thailand. Meso-
level impacts on livelihoods will depend upon factors including the form of contract, the broader
implications of large contract schemes on the community, the market, and on the environment.
But clearly, access to markets for small farmers is not facilitated by new safety and quality compliance
burdens imposed by transnational corporates in destination markets, or by the requirements of domestic
modern trade buyers. There is increasing concern that the goals and credibility of certification systems
may be subverted by certified players who purchase and consolidate the outputs of smaller uncertified
farms in their locality (or indeed nationally), and sell/export them as part of their own output under their
„legitimate‟ certification.
Indeed, individual certification is often difficult to implement in practice due to the practicalities and
transaction costs in dealing with large numbers of small scale farmers. In an attempt to increase
smallholder participation in certification schemes, producer associations are working with GLOBALG.A.P
and MOAC to explore models of group certification (known as „Option 2‟ under GLOBALG.A.P). In 2007,
a private-public partnership project was initiated to develop ThaiGAP as a private voluntary standard.
Supported by public and private sector funding from the Office of Small and Medium Enterprises
Promotion, the Thai Chamber of Commerce and the Thai Fruit and Vegetable Producers‟ Association in
cooperation with Kasetsart University, the National Bureau of Agricultural Commodity and Food
Standards as well as the Ministry of Agriculture, the ThaiGAP standard was developed with a view to
achieving international recognition through benchmarking with GLOBALG.A.P. Equivalence was officially
recognized in 2010.
In the aquaculture sector, FAO and Thailand‟s Department of Fisheries recently completed an initiative,
working with farmer cooperatives in the provinces of Chonburi, Chantaburi, Petchaburi, Trang and Krabi,
to establish functioning internal control systems within farmer groups in order to empower small scale
producers and enhance their ability to reach compliance with mandatory as well as private standards
(NACA, 2011).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 39
Opportunities for off-farm incomes
During the last 30 years, rural Thailand has accomplished a high degree of diversification into off-farm
employment. This is indicated by the strong labour outflows from agriculture into industry, and migration
into the major cities. Since the country‟s recovery from the 1997 crisis, the share of rural non-farm
employment (RNFE) in total rural employment again rose, fuelled, no doubt by the ubiquity of mobile
phones and easy access to e-commerce throughout the country. Regional variations in the incidence of
RNFE are also evident, as might be expected. At the macro level, agricultural growth and average size of
landholding have emerged as the two most important determinants of the growth of RNFE in Thailand.
This reflects the dearth of non-capital-intensive alternatives available to smallholders to set up their own
business (Panda, 2008).
The government‟s „One Tambon One Product‟ (OTOP) scheme aimed to tap into traditional indigenous
arts and crafts to establish rural-based cottage industries to create new job opportunities and provide
supplemental income. The programme was initially considered a success, but many SMEs subsequently
complained of the lack of markets, and the programme since seems to have faltered due to this supply-
side focus.
Food security
The country produces more than enough rice to support its population, yet many vulnerable rural
households do not consume enough food to meet their basic energy and nutritional needs. According to
Isvilanonda and Isriya Bunyasiri (2009), the household food poverty line in 2007 was at 779 baht (US$
22.58) / person / month, or approximately 54 percent of the total poverty line. Using the official food
poverty line, 416,410 people in Thailand (0.65 percent of the population) were affected by food poverty,
with the problem concentrated largely in the rural North and Northeast.
Food availability and accessibility have been challenged by both endogenous factors (the price/wage
squeeze, poor terms of trade, and reduced competitiveness) and exogenous ones (global economic
crisis, oil price, and globalization of food markets). In early 2008, food security suddenly entered the
policy debate in the wake of the sharp rise in rice prices that itself followed in the wake of soaring oil
prices. In 2002 a Strategic Plan Proposal on Food Security was drafted as part of the Establishment of
Food Safety Master Plan for Domestic Consumer in Thailand under the Public Health Act (1992), and
supported by the Health Department and the World Health Organization, Bangkok.
In 2004, a study by the Office of the National Economic and Social Development Board (NESDB)
conducted in 12 provinces found that 79 percent of farmers surveyed felt that they had low or moderate
food sufficiency while practicing conventional chemical-based agriculture. Only 9 percent reported a high
level of food sufficiency (Prachason, 2009). The review of Prachason confirms the impacts indicated by
rising food price inflation, higher input costs, and barriers to market entry from small farm households.
The four key components of food security (availability, access, utilization and stability) are all adversely
affected by these trends.
Finally, the rush by large agribusiness groups to plant rubber and energy crops, particularly oil palm, has
also affected food crop production and could further accelerate land use appropriation and trigger further
rises in the price of staples.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 40
Sector competitiveness
The long-term decline in agriculture‟s share in aggregate national output has already been noted, with the
continuing contraction attributed in part to declining terms of trade for Thailand‟s exports. While for the
moment Thailand‟s exports continue to ride high, it is important to take note that agriculture sector
competitiveness over the past two decades has been predominantly supply-driven, grounded
substantially in Thailand‟s excellence in producing its traditional crops, more or less using traditional
methods. However, the sector‟s competitive position is being steadily eroded (MOC, 2009;
Poapongsakorn, 2011). With realignment towards a market-led trading environment, growers and
exporters today face unprecedented challenges, driven by a convergence of several exogenous factors:
consolidation of global value chains; imposition of increasingly stringent, market-driven quality, safety and
„niche‟ standards, and a fast-moving, globalizing trade environment.
Export growth in particular is constrained by these new demands, with small and medium enterprises
(SMEs) bearing the brunt of the impact as they largely lack financial or technological resources or skills to
comply with new importer requirements for safety and quality standards. Today‟s standards-driven global
trading environment thus presents small farmers with formidable barriers to market access (Markelova et
al., 2008). Their relatively higher transaction costs compared with more „efficient‟ corporate production
units render them increasingly marginalized and in extremis, commercially non-viable (Vorley and Fox,
2004).
Summary
Beginning with some examples to illustrate the continuing strong private sector investment in the
agricultural sector, this chapter has considered the profound transformation that accompanied the
„professionalization‟ of the sector, particularly over the past decade. The nature of this transformation is
described in terms of four fundamental shifts in institutional arrangements – the rise of modern trade in
retailing, the dominance of contract farming at the production level, the influence of standards,
certification and traceability, and the growing interest in organics. All these trends are driven
overwhelmingly by the private sector.
Private sector investment in Thailand‟s agricultural sector has led to a reconfiguration of supply chains,
clearing the way for opportunities to produce higher value products in place of raw commodities. There
has also been a significant rise in downstream agro-processing enterprises, boosting demand, e.g. for
ready-to-eat and convenience products. Whilst private sector investment has stimulated market-led
technological innovation and raised farm productivity and produce quality, the distributive effects of such
changes tend to benefit processors, exporters and buyers rather than farmers.
Thus, the modernization of agri-food systems exposes smallholder farmers to increased risks, and can
constrain their access to local and international value chains. Though there appear to be no empirical
studies to quantify such impacts, farmers – especially small farmers- are clearly losing ground. On the
production side farmers are increasingly vulnerable to downward price pressure from modern trade
buyers and rising input costs, resulting in declining net incomes and spending power, and on the
consumption side to food price inflation. We see these trends reflected in reduced employment
opportunities – both farm and off-farm- in rural areas, and a sharp increase in overall inequality in
Thailand since 2006, as measured by the GINI index (Figure 9). The Office of the National Economic and
Social Development Board projects that the urban population (those living in municipal and peri-urban
areas) will increase from 39.2 percent of the total population to 47.2 percent by 2028 (Kmonwatananisa,
2008).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 41
Figure 9: Thailand GINI Index 1981-2009
Source: World Bank, World Development Indicators - updated March 2, 2011, cited in www.indexmundi.com
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 42
Case studies
Rice
Thailand exports more than half of its total rice production (Poapongsakorn, 2011). In 2010 Thailand
exported an estimated 9.03 million tons of rice, or US$ 5.3 billion in value. Whilst this was a retreat from
the record peak of 10 million tonnes in 2008, Thailand still retains its position as the world's largest rice
exporter. Thailand‟s exports accounts for 30 percent of the world‟s rice market (Thai Rice Exporters
Association, 2011). However, Thailand's worst floods in half a century have inundated farms and mills,
making it unlikely that it can meet its export targets for 2011.
In the 1980s growth in rice production was driven mostly by area expansion, but was also stimulated by
public investments in irrigation (Falvey, 2000; Isvilanonda and Bunyasiri, 2009). Despite this, average
yields have remained stubbornly low compared with those of other rice producers in the region (Figure
10). Of the five countries shown, Thailand has the lowest per hectare yields.
Figure 10: Rice yields in Southeast Asia (t/ha)
Rice production has not undergone the same type of transformations seen in the chicken, cassava and
horticulture sectors, where contract farming encouraged the development of highly productive growers to
service the processors and export markets. For now, contract farming in the rice sector remains limited
mostly to organic growers. The rice value chain is shown schematically below in Figure 11.
Private seed companies are anxious to provide high-yielding hybrid seeds and at least five companies
have active programmes in Thailand; however, their efforts have met with strong opposition from activists
and the Rice Department itself. Nevertheless, the five companies engaged in developing rice hybrids are
currently negotiating with the Rice Department to set up a national yield trial system under irrigated
conditions (FAO, 2011; Poapongsakorn 2011). However, any yield gains from hybrid rice would primarily
benefit the farmers in the irrigated Central region rather than the poor farmers in the rainfed Northeast.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 43
An estimated 16 million Thai rice farmers, mostly in the Northeast region, remain poor (Vanichanont,
2004). In the Northeast there is little or no access to irrigation and smallholdings growing only one crop
per year are common. Most of these small farmers rely on at least one family member working in a
factory. Sometimes the farmers themselves will work at least part time in factories and must hire labour
to help them in the fields.
Figure 11: Rice value chain
Source: Adapted from Maneechansook (2011)
In contrast, closer to Bangkok, farmers in the Central region have access to irrigation and can grow up to
five crops over a two year period. Moreover, these farmers have more opportunities to diversify into high
value added crops because of the availability of irrigation. These farmers tend to be merchant farmers
and can usually make a living from their crops although family members often seek additional income
from factory work. Since these farmers are closer to Bangkok than the farmers in the Northeast region,
they have better access to jobs that pay more than the jobs available to farmers in the Northeast; the
cumulative result is a marked disparity of income between the two regions (Ahmad and Isvilanonda,
2003).
Poapongsakorn (2009) investigated the distribution of benefits of the rice pledging program, and found
clear evidence pointing to distributional inequalities, with benefits increasing with scale of operation
(Figure 12 below).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 44
Figure 12: Distribution of benefits of paddy pledging programme by farm income decile 2006-07
Note: Assumes the benefit received by each farm household is equal to its share of marketable surplus of paddy. Source: National Statistics Office socio-economic survey 2006, cited in Poapongsakorn (2009)
Thailand‟s new Prime Minister Yingluck Shinawatra has committed her government to buying rice from
farmers at higher prices to boost their incomes. In the midst of disastrous floods that have destroyed
some 20 percent of the main season rice crop, the government launched its highly contentious rice
mortgage scheme. The scheme differs fundamentally from the scheme introduced by the Abhisit
government, as summarized in Table 3 below.
Table 3: Comparing rice policies- Abhisit vs. Yingluck
Source: BAAC (2011), cited in Isaan Record 7 Oct., 2011
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 45
However, the new pledging scheme has not been especially well received by farmers, particularly as
farmers appear even more vulnerable to exploitation by millers. The price for unmilled rice is set at 15,000
baht, or around US$480 per ton from October 2011, compared to $330 a ton previously. For fragrant rice,
the price will be over 25,000 baht or $830 per tonne. Critics argue that under the new scheme, Thai
farmers will not benefit, whilst opportunities for corruption are greater through the creation of perverse
incentives. Poorly regulated rice millers now have more incentive to replace good quality rice with poor
quality rice, often by smuggling lower-priced rice from neighbouring countries. In addition, national
politicians assigned to specific mills are expected to meet a certain quota of rice. This mandated
relationship between millers and the politicians is unlikely to benefit farmers.
Of even greater concern is the predicted impact on the overall competiveness of Thai rice, which will fall
because of its substitutability by lower-cost Vietnamese rice. The Thai Farmers‟ Association has urged
the government to set a paddy rice quota for farmers to prevent land owners from exploiting the rice
mortgage scheme and increasing indebtedness among farmers (Bangkok Post, 2011c).
In the domestic market, per capita rice consumption has fallen from 119 kg p.a. in 1990 to 100 kg p.a. in
2011 (Isvilanonda and Kongrithi, 2007; Institute of Nutrition, Mahidol University, 2011). This is attributed
to changes in urban lifestyles and Westernization of diets associated with increased affluence.
Nevertheless, total consumption continues to rise because of the growing population.
The sharp rises in world rice prices are expected to be felt domestically too. With rice as a staple for rural
households living near the poverty line, the expected jump in food price inflation is likely to adversely
affect net household income and food security status for many low-income rural households who are net
rice buyers.
Chicken
The poultry sector is recognized as the country‟s greatest agro-business success story. Over the past 40
years the industry has been transformed from a backyard activity into a leading source of foreign
exchange. Today the industry is one of the most advanced in the world. The private sector, represented
primarily by large agribusiness units such as Charoen Pokphand Foods (CPF) has driven this
transformation from family farm to technologically advanced, industrial-scale, vertically integrated
operation. As a result, 90 percent of output is produced in large integrated operations or corporate farms.
However, the small backyard operation remains a mainstay of rural areas and 98 percent of the country‟s
poultry producers fall into this category (Figure 13, Heft-Neal et al., 2008).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 46
Figure 13: Distribution of poultry production in Thailand
Source: Rushton et al., adapted by Heft Neal et al.(2008)
The structure of the value chain for vertically integrated poultry production was analyzed in detail by Heft-
Neal et al. (2008) and is summarized in Figure 14: A vertically integrated chicken supply chainFigure 14
below.
Figure 14: A vertically integrated chicken supply chain
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 47
Note: Solid lines represent market transitions, while dotted lines denote internal resource movements Source: Heft-Neal et al. (2008)
The characteristics of poultry production and marketing systems in Thailand are summarized in Table 4
below.
Table 4: Summary of Poultry Production and Marketing Systems in Thailand
Source: Adapted from Taenkaew (2001), cited in Heft-Neal et.al (2008): p. 50
Chicken production increased from 82,000 tons p.a. in 1961 to 1.3 million tons in 2002, the peak
production year before Highly Pathogenic Avian Influenza (HPAI) hit the country (Heft-Neal et al., 2008;
FAOSTAT). The increase in chicken productivity was accomplished by using contract farming to introduce
new crossbreeds that use feed more efficiently, combined with modern housing, ventilation and
husbandry techniques. CP‟s quest for low-cost feed motivated the company‟s interest in hybrid corn seed,
which spawned a new and profitable business unit for the company (Chia Tai). New technologies adopted
by CP‟s contract farmers gave them a strong competitive advantage over smaller independent broiler
farms, who could not achieve similar productivity and economies of scale.
The 2004 HPAI outbreak severely reduced poultry exports and led to stricter regulations on imported Thai
poultry meat. Importing countries banned imports of fresh and frozen chicken meat from Thailand,
accepting only cooked poultry imports. In response to the HPAI challenge, the Thai broiler industry
improved farming systems to mitigate animal health and food safety risks. All integrated producers now
strictly implement bio-security measures from farm to processing. Nearly all broiler houses of integrated
producers are equipped with evaporative cooling systems which, in addition to increased productivity,
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 48
reduce disease exposure and mortality rates. This has been a key factor for the absence of HPAI
incidents since the last affected flocks were depopulated in November 2008.
The net effect of the bio-security measures has been an expansion of integrated operations at the
expense of contractors and small farmers. Most integrators in Thailand engage in a combination of
contract farming and in-house farm production, giving them oversight over all production stages.
On the other hand, smallholders have struggled to adapt but many have been unable to raise sufficient
capital to meet new mandatory requirements. Their access to markets has eroded as large-scale closed
systems became de rigeur (Heft-Neal et al., 2008). Still, backyard chicken raising of indigenous breeds
remains common in small villages (Na Ranong, 2008).
Since 2004 broiler meat exports have slowly recovered; by 2008 Thailand accounted for 4.6% of total
global broiler meat exports, making it the 15th largest producer of chicken meat. By 2010 production had
recovered to 2002 levels (Table 5).
Table 5: Thailand and world broiler meat production and exports
Production (ready-to-cook equivalent, 1000 MT)
2007 2008 2009 2010 2011* %
Thailand 1,050 1,170 1,200 1,280 1,380 +8%
World 68,525 71,718 72,293 75,991 78,283 +3%
Exports (ready-to-cook equivalent, 1000 MT)
2007 2008 2009 2010 2011* %
Thailand 296 383 379 432 475 +10%
World 7,381 8,413 8,213 8,793 8,913 +1%
Note: Chicken paws are excluded. Data for 2010 is preliminary. * Data for 2011 is forecast. % represents percent change from 2010 to 2011. Source: USDA (2011a)
Currently, only processed chicken products from Thailand are allowed into Japan. Despite the outbreak‟s
negative effect, Thai poultry exports to Japan have been steadily increasing and are projected to continue
to do so. In 2009 Thailand was responsible for 56% of Japan's prepared poultry meat imports; poultry
exports to Japan for the January to May period of 2011 are already 28.8% higher than the same January
to May period of 2010.
Overall, Thailand's export growth is expected to increase by 15%, to US$ 219 billion in 2011 (DEP, 2011)
amid renewed confidence to the expected lifting of the EU‟s ban on imported uncooked chicken meat,
which was extended until 30 June 2012. Thailand poultry producer Saha Farms Group has mapped out a
US$ 489.4 million (15 billion baht) plan to expand production capacity in order to meet higher anticipated
import demand.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 49
Horticulture
Thailand has a well-developed and diversified horticultural sector including fruits, vegetables, floriculture
and ornamentals, and serves as an important source of income, employment and nutrition for many
smallholder households. In 2008, fresh fruit and vegetable (FFV) exports were valued at US$1.3 billion
(38.9 billion baht, or 4% of total agricultural exports) with the most important fruits and vegetables being
durian (US$ 103 million, or 3.1 billion baht), longan (US$ 86.7 million, or 2.6 billion baht), asparagus (US$
25.97 million, or 779 million baht) and baby corn (US$ 15.23 million or 457 million baht). In the same
year, processed fruit and vegetables exports reached US$ 1.82 billion (54.5 billion baht) with the most
important products being canned pineapple (US$ 570 million, or 17.1 billion baht), pineapple juice (US$
183 million, or 5.5 billion baht), canned corn including baby corn (US$ 200 million or 6 billion baht) and
canned fruit salad (US$ 103 million or 3.1 billion baht).
By 2009, total exports of horticultural produce had reached US$ 3.38-3.79 billion (101.4-113.6 billion
baht) per year, with fruits and vegetables accounting for US$ 2.34 billion, or 70.3 billion baht (OAE, 2010).
The most important fruits and vegetables for export are longan, durian, asparagus, and baby-corn.
Thailand produces over 140 kinds of vegetable crops. The main crops are chilli, sweet corn, baby corn,
yard-long beans, Chinese kale, watermelon, cucumber, water spinach and pumpkin. Vegetable
production steadily increased from 1985 through 2005, as did the area cultivated (Figure 15). In 2005
Thailand exported 1.3 million tons of vegetables and imported 280,000 tons (Johnson et al., 2008,
FAOSTAT). Currently, vegetable production amounts to 4.7 million tons p.a. cultivated on an area of
approximately 406,000 hectares.
Figure 15: Vegetable production and area planted (1985 – 2005)
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 50
In 1969, His Majesty the King established a series of Royal Projects in the northern border areas to
promote high value vegetable production to alleviate poverty among the many ethnic groups in the
mountains straddling the remote borders with Laos and Myanmar, and to give them a viable alternative to
opium. These projects are considered a major success. Opium production has virtually vanished from the
region and farmers enjoy annual incomes at or above the national average of 30,000 baht per year
(Jayamangala, 2006). Today, many be people have access to high value export markets and a supply of
nutritious vegetables (Sananikone, 2006). Though these projects were conceived as part of a drug
eradication programme, the focus evolved towards diversification to expand income opportunities; later,
under pressure from the demands of export markets, the emphasis has shifted towards compliance with
safety and quality standards.
In the Central region, west of Bangkok, large integrated corporate production and processing enterprises
have sprung up (e.g. Swift, River Kwai, KC Fresh), many achieving GLOBALG.A.P or organic
certification. As with chicken production, contract farming is the norm in the fruit and vegetable subsector.
With rising urban incomes and increasing health consciousness of consumers, higher safety and quality
standards have grown in importance for domestic as well as export markets. There is now a growing
domestic market for vegetables branded as “safe” or organic. Such produce typically carry significant
price premiums over non-branded produce (interviews and Johnson et al., 2008).
Thailand‟s highest value export markets are Japan and the EU. The private sector has played a major
role in penetrating these markets through (a) organization of packing houses that cater to surrounding
farmers either through contracts or through informal agreements; and (b) through rigorous compliance
with importing country and private importer standards for quality and safety. Asparagus has emerged as
an attractive alternative high-value crop for smallholders under contract farming arrangements
(Uathavikul, 2004). Revenues from fresh asparagus exports reached approximately US$ 28.1 million in
2005, representing 14% of Thailand‟s total vegetable exports (Wanamolee, 2008).
A generalized value chain for fruits and vegetables is shown in Figure 16 below. The sector is dominated
by smallholders, who sell either directly to a packinghouse or to an aggregator who consolidates produce
and then sells to the packinghouses. Almost 95 percent of fruit growers belong to grower groups
contracted to processors or exporters. These actors control 72 percent of the added value in the chain
and thus hold considerable bargaining power in relation to grower groups due to their control over both
domestic and export markets. Packhouses generally ship directly to wholesale and retail customers in the
EU or Japan, usually by air from Chiang Mai or Bangkok. Note that in the case of the EU, pressure on
meeting SPS standards has resulted in a system where growers and packhouses wishing to serve the EU
market must be registered with the Department of Agriculture (interviews).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 51
Figure 16: Supply chain for vegetables in Thailand
Source (Johnson, 2008)
The horticultural sector suffers from a number of constraints to competitiveness. Some of these are systemic,
relating to Thailand‟s geographical distance from key markets such as the USA and EU, and increasingly
stringent food safety and quality requirements of importing countries. Such constraints apply to most categories
of fruits and vegetables, but particularly to fresh and perishable produce. Other constraints apply to specific
value chains, for example unsustainable farming practices in tangerine production, fluctuations in supply of
longan, and limited access to export markets for tropical fruits and vegetables.
To understand the reasons for these constraints to subsector competitiveness in a rapidly globalizing trading
environment, it is important to remember that Thailand‟s horticultural sector remains dominated by smallholders.
These producers typically have limited access to almost all the necessary types of resources (e.g. financial,
knowledge, technological capacity) deemed essential to participation in today‟s export trade environment. They
seldom employ systematic modern farm management practices, quality control is often haphazard, and - of
greatest concern - chemical residues are frequently detected. For tree crops, production planning is often
inadequately managed, and the lack of coordination among producers sometimes leads to seasonal gluts. Use
of inputs such as chemicals and water is often inefficient, sometimes posing hazards to health and the
environment. Agricultural runoff, especially in upland areas, creates widespread but largely unreported
environmental problems such as contamination of watercourses.
Moreover, most fruit and vegetables are exported as fresh or chilled produce, with a correspondingly low level of
processing and value-added. Processing is still limited in scope, and pineapple and corn are the only processed
products of any economic significance. Thailand is the world‟s largest producer and exporter of pineapple and
baby corn.
Thailand‟s exports are particularly impacted by inadequacies and systemic inefficiencies in the regulation and
enforcement of official food safety standards. As production in Thailand has expanded and producers have
increasingly targetted higher value export markets, the government has strengthened monitoring systems to
ensure compliance with overseas SPS requirements. Thailand‟s food quality infrastructure is shown in Figure 17
below.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 52
Figure 17: Thailand food quality infrastructure
Source: Anon (2006)
However, despite these measures, Thai produce has remained as a persistent violator of EU standards for
pesticide residues, microbial contamination and insect pests. The EU has recently sent expert teams to
Thailand on three separate occasions to advise on remedial action (EU, 2010).
Overseas buyers do not recognize test certificates issued by the government-owned Laboratory Centre
for Food and Agricultural Products Co., Ltd (renamed in 2008 as the Central Laboratory (Thailand) Co.
Ltd.). Neither do they recognize certificates of GAP compliance issued by the Department of Agriculture.
However, accreditation of official control bodies in Thailand and their compliance with internationally
accepted norms (e.g. ISO/IEC17025) are now being addressed to protect the long term viability of
Thailand‟s export markets. The National Bureau of Commodity and Food Standards (ACFS) is
spearheading reform of the accreditation and certification system to achieve ISO/IEC17025 compliance.
In the meantime, exporters typically arrange for certification of their suppliers against GLOBALGAP or
other standards by accredited private sector certification bodies.
In view of the substantial and ongoing losses caused by food safety issues in exported produce, private
sector producer groups and exporters have been actively engaged in working to find solutions, for
example in collaborating to secure equivalence between the ThaiGAP and GLOBALG.A.P. standards,
and also in developing traceability solutions. Recently a collaborative public-private sector initiative
between CAT Telecom Public Company Limited (CAT), Department of Agriculture (DOA), National
Bureau of Agricultural Commodity and Food Standards (ACFS), Thai Fruit and Vegetable Producer
Association (TFVPA) and FXA Company Limited (FXA) signed a memorandum of understanding to
coordinate an electronic traceability system named „CAT e-smart Farm‟. The new electronic food
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 53
traceability system designed by FXA aims to build trust from trace-back procedures of quality control
process of 16 vegetables exported to EU. The system uses GIS technology to pinpoint the location of
each GAP-certified farm.
Cassava
Thailand‟s cassava industry was originally developed to serve the European and Asian animal feed
industry. Thailand has since become the world‟s largest producer and exporter of tapioca starch and
starch derivatives, with 70% market share and total export value of US$ 470 million in 2008. However,
due to high local labour costs and rapid growth in competition from Vietnam and Indonesia, Thailand‟s
competitive edge has been declining.
Whilst in the early years production was achieved mostly by area expansion (
Figure 18), as with other crops, production has since grown mostly through yield increases.
Figure 19, development of new varieties and distribution of high quality planting materials are managed
by the government and the Thai Tapioca Development Institute, in collaboration with the International
Centre for Tropical Agriculture (CIAT), through CIAT‟s Cassava Office for Asia at the Department of
Agriculture in Bangkok.
Figure 18: Cassava- area planted in Thailand (ha) 1961-2009
Figure 19: Cassava - yields in Thailand (kg/ha) 1961-2009
Source: FAOSTAT (2011)
Though the private sector‟s role in varietal improvement has been limited, agribusiness has been active in
production and processing of cassava, primarily for export markets, but latterly also to serve new demand
from the domestic ethanol production industry. Private sector initiative was responsible for organizing plot
consolidation among farmers to permit increased mechanization and efficiency in planting and production
(Hershey and Howeler, 2001; Howeler and Hershey, 2001).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 54
In 2008/09 Thailand produced 30.3 million tons of cassava on 1.3 million hectares (FAO RAP, 2007; Thai
Tapioca and Starch Association, 2010). Production for 2008/9, 2009/10 and 2010/11 are estimated at 30, 22
and 21 million tons, respectively, while planted areas were relatively flat at 1.28, 1.168 and 1.104 million
hectares, respectively (Thai Tapioca Development Institute, 2011; Thai Tapioca and Starch Association,
2010). The sharp decline from 2009 is attributed largely due to a devastating outbreak of cassava
mealybug (Figure 20).
Figure 20: Cassava root production in Thailand 2001 to 2011
Source: (Thai Tapioca and Starch Association, 2010)
Thailand exports approximately 70 percent of its cassava production and is the world‟s biggest exporter
(Poapongsakorn 2011, FAOSTAT). Almost all of Thailand‟s dried cassava exports (chips and pellets) are
destined for China, whose burgeoning demand is stimulated by the country‟s growing energy needs
combined with a ban on grain-fed ethanol plants and the increasing demand for animal feed. Some high
value cassava starch exports (e.g. modified starch products) go to the EU.
The cassava value chain comprises two major sub-chains (Figure 21) – the dried cassava and the starch
value chains.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 55
Figure 21: Cassava value chains in Thailand
Source: Kaplinsky, et al. (2011)
From 2009 to 2010, ethanol produced from cassava fell from 1.72 million litres a day to just 0.75 million
litres a day, in line with weakening demand. The ensuing fall in farm gate prices have led to calls to
introduce a new pledging scheme along the same lines as that for rice.
Given cassava‟s strategic importance as an industrial and energy feedstock, it will be important to quickly
recover from the declining production seen over the past two years, and which has been further impacted
by the 2011 floods. Re-establishment of a stable supply will be particularly important as (a) twenty-five of
Thailand‟s thirty-six ethanol facilities utilize cassava as a feed stock, and (b) Thailand seeks to increase
the contribution of value-added products from cassava. For example, PTT Aromatics, a large Thai
petroleum refining company, has announced that it will invest over US$150 million into the construction of
a new jet biofuels facility using cassava. The new facility will be unique in that it will be the first to produce
bio-based aviation fuel that meets new European regulations set to come into force in 2012. Furthermore,
major bioplastics firms are evaluating Thailand as the site for future manufacturing facilities. PTT recently
took a US$ 150 million 50 percent equity share in US-based NatureWorks LLC (a Cargill subsidiary),
which produces polylactic acid-based bioplastics. A new biopolymer production facility in Thailand is
scheduled to be completed by 2015.
Thailand has also declared its interest in serving as a regional base for technology transfer. Under the
„South-South Technology Transfer: Ethanol Production from Cassava‟ initiative, funded by the Global
Environmental Facility (GEF), Thailand will serve as a focal point in forging cooperation with Vietnam,
Laos, and Burma. The four-year programme will be launched in 2012, and includes building of two pilot
ethanol plants in Thailand and Vietnam which could be taken to commercial scale with private sector
investment In a subsequent phase (Bangkok Post, 2011d).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 56
Rubber
Thailand is an important rubber producer, accounting for about 35% of global latex production (OAE,
2011). The crop is an important source of employment, with approximately 600,000 working in rubber-
based industries. With a total planted area of approximately 2 million hectares, production is concentrated
in the Southern provinces, although the government plans to extend into the north and northeast of the
country under an ambitious expansion programme: “Rubber Cultivation for Raising the Sustainable
Income to Farmers in the New Planting Area Phase 1 (2004-2006)” The Office of Rubber Replanting Aid
Fund (ORRAF), a State body, has launched a second expansion phase, focusing on the Northeastern
region. By 2010, rubber cultivation in the Northeast had extended to over 940,000 ha (Figure 22), with the
rest spread over the North and Central provinces.
Figure 22: Rubber expands to the northeast (2006-2010)
Source: Baumüller et al. (2010)
Production is mainly undertaken by smallholders (95%), with an average land holding of 3.2 ha
(Priebprom, 2001). In 2010, total fresh latex production amounted to approximately 3 million tons, valued
at US$ 8.1 billion (249.2 billion baht) was exported from Thailand in 2010, representing a 76 per cent
growth from 2009 (Table 6: OAE, 2011). Almost all the country‟s rubber is now devoted to clonal rubber,
originally introduced to Thai farmers by ORRAF.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 57
Table 6: Rubber- planted area, harvested area, production, yields
Source: Office of Agricultural Economics (2011), accessed from http://www.thainr.com
Rubber is grown on a total area of about 2 million hectares under five main farming systems as shown in
Figure 23.
Figure 23: Major rubber-based farming systems
Source: Somboonsuke (2002)
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 58
Rubber is one of the country‟s biggest exports. Ninety percent of total rubber exports is in raw or
unprocessed form, i.e. latex, rubber cup lump, smoked sheets, or concentrated latex. The remainder is
exported as finished products such as tyres, gloves, or scientific instruments. At present, eight foreign
tyre producers have invested in Thailand, (including Bridgestone Co Ltd Siam Rubber Co Ltd, Siam
Michelin Co Ltd, and Goodyear (Thailand) Co Ltd. The majority of Thai companies produce gloves,
elastic bands and condoms from natural rubber. China and India are currently the largest importers due to
their booming economies.
An overall picture of the rubber value chain is provided in Figure 24 below.
Figure 24: Rubber- domestic value chain
Source: Kaiyoorawong and Yangdee
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 59
The government‟s promotion of rubber has already had a dramatic impact on land use patterns. Driven by
government policies, the production system was transformed from being a mixed agroforestry operation
(“rubber forest” or suan somrom, “integrated plantation”) into a large-scale high-yielding clonal rubber
monoculture. Current incentives to plant rubber are leading smallholders in southern Thailand to convert
their farms to rubber monoculture; Rubber plantations now cover most of southern Thailand at all
elevations. Rubber trees are shallow-rooted and their cultivation on lands with 40-60 degree slopes has
increased the risk of erosion and landslides.
Clearly such large scale land use conversion will have significant implications for the economic and food
security of hundreds of thousands of rubber farming households, as well as agro-biodiversity and the
conservation of forest ecosystems. Monocultures have replaced food plants and animals and undoubtedly
to loss of local wisdom. From a sustainable livelihoods perspective, small farmers are vulnerable to
market uncertainties, but the predominance of rubber as the primary source of income for many small
producers ensures an adequate income flow to cover times of crisis (Viswanathan, 2008).
In northeastern Thailand, traditional rice culture is yielding to the more profitable rubber cultivation, and
according to Jitjam et al. (2009) has brought with it a positive impact on livelihoods. Labour migrants
returning from the traditional rubber-growing provinces of the South are bringing with them new
agronomic and production skills, production of bio-fertilizers, latex extraction methods, and sheet making.
Associations and organizations of rubber farmers have emerged to represent farmers in marketing
negotiations, and for procurement of inputs.
Somboonsuke et al. (2009) have also researched the viability of alternatives to rubber monocultures.
Their simulation model, covering ten years of data, compared three smallholding rubber-based farming
systems: rubber-fruit, rubber-rice, as well as rubber monoculture. The study found that the rubber-rice
system yielded the lowest and the rubber-fruit system the highest returns. This finding has also been
supported by others (e.g. Simien and Penot, 2011), citing the need for diversification to prepare for
possible future commodity price volatility and noting the potential of durian as a high-value „economic
buffer‟ to counter any new drop in rubber prices.
Sugarcane
The last 30 years have seen the expansion of upland cash crops above the rainfed lowland rice
ecosystem, especially in the Northeastern region. With a fall in returns to rice relative to sugar, whose
prices were supported by sugar mills, farmers converted low-yielding and drought-prone upper paddies
into more profitable sugarcane plantations.
Since then, Thailand‟s sugar industry has continued to grow rapidly, both in terms of production and
refining capacity, in response to rising domestic and international demand (Figure 25). Sugarcane
growing and processing is now one of Thailand‟s largest industries, and the country ranks among the
world‟s top three sugar exporters. Total sugar exports in 2010 reached a record 95.7 million tons of cane,
or 9.66 million tons of refined sugar in 2010 (up 35% from 2009). USDA predicts that 2011 may see a
new record production up to 10.2 million tons from 100 million tons of cane (USDA, 2011).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 60
Figure 25: Sugar production and exportable surplus 1980-2010
Source: Commonwealth Bank (2011)
Sugarcane is grown on an area of just over 1 million hectares. Although grown in most provinces,
production is concentrated in the central region, which accounts for more than 50 percent of total output.
There are currently about one million sugarcane farmers in Thailand. In the face of rising oil prices,
demand for ethanol has further stimulated production and increased revenues in the sector.
Nevertheless, cane yields are comparatively low, at 50 - 55 tons per hectare. Output growth is still largely
based on expansion of areas under harvest; contributing factors are the low levels of mechanization,
combined with the fact that more than 95% of the sugarcane area is rainfed, receiving no irrigation. In
2008 the Cabinet approved a National Action Plan on Sugarcane Development to drive primary
production as well as improve efficiency. The plan comprised seven measures, involving land
improvement, efficient use of fertilizers, water source development and management, logistics and
geographical information systems, industrial restructuring, and mechanization. The overall goal was to
increase efficiency and bring down costs, thus encouraging investment in secondary industries. In
September, 2010 the government approved a US$ 100 million (3 billion baht) three year soft loan for cane
growers to buy harvesters to improve efficiency. At the time of writing, loan applications totalling US$ 47
million (1.4 billion baht) have been received under this programme.
Thailand‟s sugar industry has always benefitted from public subsidies, which is attributed to its strong
political lobbying power (Warr and Kohpaiboon, 2007). Sugar is an export commodity, but the domestic
sugar industry is protected by a system that taxes domestic consumers and transfers the revenue to
producers. NRPs have averaged over 60 percent.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 61
The role of sugarcane as a feedstock for a range of industries ensures strong and growing demand.
Utilization of sugarcane and its products is shown in Figure 26 below.
Figure 26: Utilization of sugarcane
Source: Office of the Cane and Sugar Board (OCSB), Ministry of Industry
Though Thailand‟s 47 sugar mills typically have their own plantations to ensure reliable feedstock supply,
this is supplemented by contract farming, either on a formal or informal basis. The mills do not deal
directly with farmers, but operate via middlemen or “quota men” who recruit participating farmers to meet
the mill‟s forecasted demand. In practice, sugar growers can only operate if they have been allocated
such a quota, since the sugar mill is the only buyer in the area (i.e. the mills enjoy monopsony powers
over growers). This system extends to cross-border contract farming by Thai companies to source cane
grown in Laos and Cambodia. According to Arjchariyaartong (2006) farmers reported the following
problems under such arrangements:
High labour costs for sugarcane cutting
Losses incurred through price penalties caused by non-standard cutting of sugarcane
sticks at a height of about 6-8" from ground level
Rejection of sugarcane by factories due to contamination by waste in the sugarcane
(farmers must bear cleaning costs).
The private sector has played an active role in enhancing productivity through investment in advanced
technologies. Perhaps the best example of an integrated, community-centred approach is provided by
Mitr Phol Sugar Group, the country‟s largest sugar manufacturer, with an annual milling capacity of 1.3
million metric tons, 208,000 hectares under cane production and 5 mills around the country. The group
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 62
claims to place strong emphasis on community development, and has invested in community
development projects impacting on 30,000- 40,000 households of cane farmers. Among its initiatives, the
following are some examples (from Naktipawan, 2011).
In 2002, Mitr Phol Sugar Group began utilising geospatial technologies through the Sugarcane
Information and Management System (SIMS) initiative. SIMS launched a number of programmes
to improve productivity, from planning and planting to cane harvesting. SIMS was subsequently
integrated with financial and legal information on the Web, and the service was renamed as
“Cane Smile.” SIMS and Cane Smile address the following issues:
Land-use and cane area mapping: Coupled with remote sensing imagery and GPS, land use map
and soil series map accurately identify and determine contract farmer's cane plantations.
Additional data such as actual land usage, soil properties and prevailing climate help seek out
potential areas for cane cultivation.
Early crop monitoring: The applications assist in plantation zoning, gauging crop conditions and
analysis, leading to the improvement of cane yields. This can also fill up any gaps spotted in data
analysis.
Cane production estimation: Geospatial technologies ensure precise measurement of plantation
areas to support cane supply estimation techniques with mapping accuracy of 95% and surveying
time cut by one-third.
Harvest planning and monitoring: The harvesting sequence with cane farmers is mapped out and
coordinated to cut the cane at its optimum sucrose content. Cane backlogs are eliminated and
logistical obstacles in delivery smoothed out. Data on cane maturity and climate conditions for
each plot of land are stored in the database memory for monitoring. Harvested fields are GPS
marked on a real time basis, so the mill management is well aware of the remaining cane supply
for each day.
Irrigation planning: Remote sensing images help identify sources of water and design an efficient
irrigation application for the farming communities, who review and work together with the mill
management to build irrigation systems.
Investment of > US$ 10 million (300 million baht) from 2011-13 to improve irrigation systems for
its contract farmers covering 5,120 hectares in five provinces. At present, 40 per cent of Mitr
Phol‟s contract farmers already have irrigation systems, and the company expects to increase
that to 60-65 per cent by 2013 (The Nation, 2011b).
Dan Chang Bio Energy Power Project and Phu Khieo Bio Energy Power Projects - two 40MW
biomass-fuelled cogeneration plants, burning up to 90t/hour of bagasse to provide process heat
and electricity, which is sold to the national grid. There plant can also accommodate alternative
biomass fuels to ensure continuous power generation during the non-crushing season.
In terms of farmer support and assistance, the „Cane Smile‟ system comprises three main elements: GIS,
a web database, and an online loan approval scheme. It offers prompt credit information, shortens loan
processing time, and provides updated information on fertilizer and plantation management. This
streamlined process reduces the chances of overestimating cane output and ensuing likelihood of loan
defaults, and shortfalls of raw materials.
Mitr Phol conducts its own R&D at its Sugarcane Research Centre, with a staff of 55 working on high-
yielding, high-sugar content, disease-resistant sugarcane varieties to suit its own farms as well as those
of its contract farmers. The centre collaborates with BIOTEC, and is working in areas such as the use of
molecular biology, particularly marker-assisted selection, to develop new smut-resistant varieties.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 63
In terms of the impact of sugar production on smallholders, a mixed picture emerges. In 2009 the
Alternative Agriculture Network – Esan published a strong critique of the expansion of sugarcane in the
northeast of Thailand, and in the way farmers are disadvantaged by inequitable contract terms (Mapati
and Sriprasit, 2008). Based on fieldwork in Dong Dib village, Pontong district, Roi Et province, AAN‟s
main conclusions were as follows:
Government promotion of bioethanol has encouraged farmers to grow sugarcane in their rice
paddies and orchards. ANN is further concerned for the future of dry evergreen forests- a
significant resource for non-timber forest products (NTFP) for the community, including
vegetables, indigenous herbs, and mushrooms.
Sugar factories sometimes renege on their promises to pay pre-agreed prices to farmers.
Sugarcane needs considerable investment in irrigation and fertilizers to reach its production
potential, and many farmers became indebted to the sugar factory as a result of loans for planting
material, tractor rental, fertilizers, pesticides, and labour. Some farmers are forced to sell their
land. Moreover, farmers may not even be able to check on the size of their debt until harvest
time.
The farmers‟ contracts with the sugar companies include several deductions, including additional
fees for the Sugarcane Farmer Association, personal insurance contracts (a 1-year contract
between each farmer and the sugar factory, committing the farmer to supply an agreed volume),
and a quota insurance contract.
Soil degradation and environmental contamination has been caused by the high quantities of
fertilizers and herbicides used, including increases in abortions among buffaloes, fish
abnormalities, and air pollution caused by the practice of burning the fields to make harvesting
easier and quicker.
To counter this negative perspective, Thai sugarcane farmers enjoyed record prices after a continuous
surge over the past few years, with most of them able to improve their standard of living and expand their
plantation areas. Though prices have since declined, The Nation (2011) reports that sugar has allowed
entire communities in parts of Chaiyaphum and Supahanburi Provinces to improve their homes, buy new
vehicles, expand their planted areas, and invest in their children‟s education.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 64
Role of the donor community
Overview of donor support
Thailand has progressed rapidly from its status thirty years ago as a least developed country (LDC) to
newly-industrialized country (NIC) and most recently in August 2011, its promotion to the ranks of „Upper-
middle-income-economy‟ under the World Bank classification. Over this period, bilateral and multilateral
support has progressively dwindled as Thailand demonstrates its ability to fend for itself.
Historically, Japan, USAID and Australia have been at the core of overseas development assistance to
Thailand. Japan has long been Thailand‟s largest donor. Japan's Technical Cooperation to Thailand in
2009 amounted to US$48 million, covering all sectors. A large proportion of Japan‟s ODA to Thailand is
provided as loans. Japan‟s share in the total amount of loans provided to Thailand during this five-year
period exceeded 90 percent of total lending, including loans provided by international organizations such
as the World Bank and ADB. The Japan International Cooperation Agency (JICA) terminated all grant aid
to Thailand in 1993, except for grassroots and cultural grant aid.
The World Bank and ADB were Thailand‟s main donors until the 1997 economic crisis. However, on 2
May 2002 plans for a US$300 million Agricultural Sector Program Loan (ASPL) provided by ADB to
support Thailand‟s policy reforms in the agriculture sector were cancelled prematurely at the request of
the Thaksin government. The official reason given was to reduce Thailand‟s external public debt, but the
loan had become controversial for several reasons, including opposition to proposed introduction of
irrigation user fees under the reform programme. Other key conditions of the proposed ADB reform
related to minimizing government intervention in markets and prices, including elimination of government
competition with the private sector and withdrawal from procurement and distribution of fertilizer. The loan
also required a review of its intervention in other agricultural input markets to ensure equitable access of
small and marginal farmers to inputs. Given the political interests at play, such conditions would have
been difficult to satisfy. At the time of the closing of the loan, US$150 million (half of the loan amount)
remained undisbursed.
In the context of ADB‟s support for PSD it is also worth noting its inclusion as a loan condition of the
implementation by the Department of Cooperative Promotion and DOAE of a countrywide program “to
stimulate establishment by the private sector (cooperatives and farmer groups) of a network of one-stop
service centers at regional, provincial, and district levels to facilitate trading of agricultural inputs and
outputs, exchange of market- and technology-related information and access to credit.”
ADB coordinates its efforts in Thailand closely with those of the IMF, World Bank, and Government of
Japan, which are the other three major sources of official external (loan) assistance to Thailand, as well
as UN agencies and bilateral donors.
The total portfolio of external loan and grant assistance amounts to over $10 billion, of which the ADB,
World Bank, and the Japan Bank for International Cooperation together account for 95 percent of the
total. ADB interacts regularly with their counterparts in the IMF, World Bank, and JBIC, Australian Agency
for International Development (AusAID), Canadian International Development Agency (CIDA), European
Union (EU), Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), Japan International
Cooperation Agency (JICA), UNDP, and the Kenan Institute of Asia (which is supported by USAID). ADB
lists the following opportunities for possible cooperation with the above agencies: education sector
development and accountability activities with AusAID and UNDP; accountability activities with CIDA;
SME development, decentralization, and agriculture/natural resource management activities with GIZ;
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 65
specialized financial institutions restructuring, SME development, area development, economic corridors
development, and border town development with JBIC and JICA; poverty alleviation activities with UNDP;
and SME development and accountability activities with the Kenan Institute of Asia.
Apart from the World Bank, ADB and Japan, other donors have tended to provide their assistance mainly
in the form of grants, and they too have reduced their bilateral cooperation with Thailand. Canada
(Canadian International Development Agency: CIDA), New Zealand (New Zealand Agency for
International Development: NZAID) and Australia (Australian Agency for International Development:
AusAID) are moving in a similar direction towards terminating their bilateral cooperation with Thailand.
For example, Germany (German Technical Cooperation: GIZ, formerly GTZ) implemented a bilateral
cooperation programme from 2004 to 2010 focusing on competitiveness and eco-efficiency. GIZ has
provided significant support to stimulate private-public partnerships in Thailand, via the Thai-German
Programme for Enterprise Competitiveness, and its Eco-Efficiency Programme. Support was given to
encourage mapping and matching of innovation in selected agro subsectors, in cooperation with consortia
of universities, the Federation of Thai Industries and private companies. GIZ also provided marketing and
technical support for exporters of organic shrimps to Europe, and has supported efforts to popularize
ThaiGAP and gain equivalence with GlobalG.A.P. In the palm oil subsector, GIZ has worked with the
Office of Agricultural Economics and the private sector to encourage adoption of sustainable palm oil
standards, and with the Thai Organic Trade Association and Ministry of Commerce in promoting organic
foods to health-conscious consumers.
GIZ also implemented a joint project sponsored by the German Federal Ministry for Economic
Cooperation and Development (BMZ) to establish „Northern Agro Industrial Clusters‟. Focusing on three
agro sub-sectors (longan, tangerines, and saa (mulberry) paper) the project aimed at promoting
competitiveness and eco-efficiency of Thai agro-industries, reducing production costs and improving
product quality, productivity, environmental performance and export opportunity.
Though GIZ and other donors have withdrawn from Thailand in line with its GDP growth, and as Thailand
itself emerges as a donor country, GIZ continues its presence in Thailand with a programme on climate
change mitigation, and its regional consultancy services arm. GIZ and other donors have recognized
Thailand as a natural base for regional cooperation, and have empowered their Thailand offices to
service their regional activities. For instance, following the closure of USAID‟s bilateral assistance
programme in 1995, it reopened as a regional office in 2003. Germany and Australia are doing likewise.
The ADB also opened a regional office in Bangkok in January 2005, to coordinate activities under the
Core Environment Programme for the Greater Mekong Sub-Region Program (GMS Program), though
ADB‟s Core Agricultural Support Program for the GMS is managed from ADB‟s headquarters in Manila.
This program offers some support for subregional projects in agriculture, in which Thailand can
participate.
Thailand‟s relationship with the World Bank has progressed from that of loan recipient towards a true
development partnership. Under the “Country Development Partnership” (CDP) programme launched in
2000, the Bank works with other partners to address specific challenges identified by the Government.
Each CDP is led by the Government with support from other stakeholders, including the Bank and other
donors. The CDP also serves as a vehicle for engaging civil society, the private sector, and other partners
in the policy design, implementation, and monitoring process.
Cooperation between the European Union and Thailand commenced in the 1970s. In the early stages
emphasis was placed on assisting the Royal Thai Government‟s crop diversification efforts and boosting
farmers' incomes. Over time the focus of cooperation evolved and shifted towards economic assistance in
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 66
line with Thailand‟s rapid growth. The EU no longer sees its role as a donor of development assistance
but rather as a facilitator of knowledge sharing and a partner for policy dialogue on key development
issues. As a result, EU and Thailand developed a cooperation strategy based increasingly on technical
assistance to help meet Thailand‟s development priorities and serve mutual interests.
Today the EC Delegation in Bangkok oversees a diverse portfolio of co-operation projects in Thailand; the
Thailand-EC Co-operation Facility provides targeted EC support for strategic interventions on a demand-
driven basis covering areas such as environment, health, higher education, technology and economic
collaboration. For the period 2007–2013 a new and innovative partnership between Thailand and the EU
places emphasis on these areas as well as on capacity constraints crucial to advancing Thailand's
national development agenda, though this does not include agriculture in its scope. The EU has
established a Thai-EU Business Forum as a first step towards its goal of obtaining approval for a EU-Thai
Chamber of Commerce. In agriculture, the EU has supported projects related to strengthening the export
capacity of Thailand‟s organic agriculture, strengthening official control systems for shrimp safety and
quality standards, and Geographical Indicators.
FAO‟s regional headquarters for Asia and the Pacific are located in Bangkok but current programs in
Thailand are limited. FAO recently completed its implementation of an ADB-financed project on organic
supply chains for smallholders for the GMS.
The Kenan Institute Asia (KI Asia) is supported by USAID, and is perhaps unique in that unlike bilateral
donors, it supports private sector development in the form of technical assistance and market research.
KI Asia undertakes contract research and consultancy to help food processing companies, for example, in
market research.
Australia (ASEAN-Australia Development Cooperation Program (AADCP) funded a project from 2005 to
2007 coordinated by ACFS in Bangkok is to build confidence in ASEAN's ability to support domestic safe
food production and consumption, and facilitate international trade and competitiveness. The two year
project was supervised by the ASEAN Secretariat and ASEAN Expert Group on Food Safety (AEGFS) in
cooperation with the ASEAN Food Safety Network (AFSN) and ASEAN Subcommittee on Food Science
and Technology (SCOST).
Thailand International Cooperation Agency (TICA) coordinates Thailand‟s own development assistance to
neighbouring countries. TICA works closely with several traditional donors, both bilateral and multilateral,
under a partnership framework of trilateral cooperation, including the Colombo Plan, donor countries
(France, Hungary, Japan, Sweden, Singapore) as well as UN agencies such as UNDP, UNFPA, and
UNICEF. Meanwhile, TICA is also exploring the possibility of extending the partnership arrangement with
other donors, including Canada and Switzerland.
Non-government organizations
The Gates Foundation has funded research in Thailand on malaria, which is important in agricultural
areas that border Cambodia and Myanmar. In addition the Gates Foundation provides support for the
Population and Community Development Association (PDA), a Thai social enterprise that uses a market-
based approach to help empower poor farmers and link them to markets. Through its educational and
training projects at the community level PDA serves as a model for market-based approaches to helping
poor rural communities achieve independence. This is in contrast to government policies of cash
payments to the poor that tend to foster a culture of dependence.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 67
In 1969, His Majesty the King established a Royal Project in the northern border areas to promote high
value vegetable production to alleviate the poverty among ethnic groups inhabiting the area, and to offer
them viable alternatives to opium cultivation. For the diverse ethnic groups living in these remote highland
border areas, these projects have resulted in vastly improved living conditions, access to high value
export markets and a supply of nutritious vegetables for the urban consumers (Sananikone, 2006). Opium
production has by now vanished from the region and farmers have enjoyed annual incomes at or above
the national average of 30,000 baht per year. (Jayamangala, 2006).
One of the most successful examples is provided by another Royally-inspired project- the Doi Tung
Development Project (DTDP) in Chiang Rai Province, northern Thailand. DTDP has adopted the social
enterprise model to offer landless „slash & burn‟ cultivators employment, a degree of land tenure,
technical training, credit and market access. Over the past 22 years since the project‟s inception, the 29
participating villages have reversed the deforestation that had devastated the area, eradicated opium
cultivation, introduced new crops such as coffee and macadamia that provide sustainable livelihoods, and
helped develop new non-farm cottage industries such as weaving, saa (mulberry) paper-making and
handicrafts. Social cohesion and dignity have been restored to drug-ravaged communities. In 2009 the
DTDP won the Schwaab Foundation‟s „Social Entrepreneur of the Year‟ award for the East Asia region.
Because the DTDP model has been successfully replicated in other countries including Afghanistan,
Myanmar and Aceh, the approach may offer promise as a practical and effective alternative to
conventional extension measures for enhancing livelihoods and social welfare in the rural sector
(www.doitung.org).
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 68
Conclusions
Main outcomes
This analysis has attempted to elucidate the roles of the public and private sectors as well as the donor
community in shaping Thailand‟s agricultural sector. To illustrate the effects of state policies and private
sector interventions, six key agricultural value chains have been described in overview as specified in the
Terms of Reference. In addressing the three main research questions and sub-issues, the report has
provided an overview of State intervention in agriculture, including the switch from taxation to support for
the sector, provision of public goods such as research and extension, agricultural credit and commodity
strategies.
The report notes the fundamental importance of State intervention in infrastructure (rural roads,
electrification and irrigation) as a prerequisite for private sector development. The subsequent retreat of
the State in certain areas during the late 1980s, for example in large-scale irrigation infrastructure, market
intervention and in the phase-out of monopsomy procurement, is also documented.
Finally, the role of regulation in constraining technological progress is mentioned in the context of seeds,
biotechnology and pesticides, and in terms of its attempts to limit the entry of foreign actors in the
agricultural sector, especially in food retailing. Evidence from academic and grey literature is given in
relation to the overall efficacy and impact of State programmes and especially their roots in political,
rather than macro-economic logic, the political influence of powerful private sector conglomerates and the
distributional effects of commodity support programmes. The political lobbying power of large
agribusiness conglomerates has created a policy environment that protects exporters and large
producers, while doing relatively little to improve livelihoods, food security and equity for small farmers.
Turning to the private sector, the report notes that the State has in general allowed considerable
operational latitude to the private sector. Laws and regulations are often unevenly enforced and easily
circumvented. The private sector has flourished, and helped propel Thailand as one of the world‟s top
food producers and exporters. State R&D spending on crop breeding was highly successful in the 1970s
and 1980s, and was strongly supported by the international donor community. New crop varieties and
knowledge emerging from the pipeline were incorporated into private sector breeding programmes that
emerged as public sector spending declined and skilled plant breeders were lured from government.
Since the 1990s the private sector helped transform the sector, responding to importer concerns over
food safety and quality as well as trade globalization. The report uses four key shifts to highlight this
transformation- the reconfiguration of supply chains through the rise of modern trade food retailing; the
emergence of contract farming as a dominant production modality; standards, certification and traceability
and the growing interest in organics. All these trends have been driven overwhelmingly by the private
sector.
Whilst private sector investment has stimulated market-led technological innovation, raised productivity
and produce quality, critics note that the distributive effects of such changes tend to benefit processors,
exporters and buyers rather than smallholder farmers who face increased risks and limited access to local
and global value chains. Small farmers are clearly losing ground, whether through their vulnerability to
downward price pressure from modern trade buyers, rising input costs, declining spending power, or to
food price inflation. We see these trends reflected in reduced employment opportunities – both farm and
off-farm- in rural areas, and a sharp increase in overall inequality. The prosperity and dynamism of rural
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 69
areas are in decline, and migration to the major cities is rising rapidly in the absence of suitable off-farm
economic opportunities in rural areas.
Thus we may conclude that though Thailand has been successful in reaching its Millennium Development
Goal target with respect to poverty alleviation, this has been accomplished largely through growth of the
industrial sector, rather than as an outcome of agricultural sector stimulation or rural development policy.
Both State policies and private sector interventions have, whether by design or neglect, served large
business interests rather than the rural poor. Recognizing this, the multilateral and bilateral donor
community has attempted to address these concerns through policy guidance and reform to minimize
market distortions and perverse incentives that affect the poor, and to give specific assistance to
strengthen the competitive position of resource-poor small farmers. NGOs and social enterprises have
likewise attempted to provide livelihoods to disadvantaged small farmers, and align economic welfare with
sustainability goals.
Major challenges
As a “lagging sector” in the context of rapid and sustained transformation of the Thai economy, agriculture
and the rural sector face a wide range of existing and emerging challenges. These include constraints on
access to technological innovations, skills, knowledge, financing, environmental and resource
management, land ownership, and water rights; as well as new demands of a changing international
trading environment. The main responsible ministry, MOAC, is seen to have changed little over the years,
leaving a widening gulf between its existing institutional structure and operations, and its ability to cope
with the unfamiliar demands and changing rules of an agricultural sector in rapid transition.
While public goods matter, some policy challenges are institutional, above all in linking small farmers to
lucrative but increasingly demanding supply chains and ensuring that land tenure protects rights while
allowing full-time farmers to use agricultural land. In restructuring toward land-intensive but less water-
intensive commodity production there is a need to re-examine land and water policy. In the process of
commercialization, laws are needed to facilitate land transfer and the increase in farm size. In the case of
water, there is a need to shift from ineffective supply augmentation to demand management. Institutional
reform or innovation is needed to establish water rights and regulate the allocation of water among
sectors.
Thailand has successfully developed its food processing industry to add value to raw food commodities,
and must continue to drive the transition to higher value products to serve an increasingly sophisticated
domestic, regional and global demand. Organic, geographical Indication (GI) and other niche products
have already made inroads, and because the sector is increasingly market-driven, contract farming for
both specialist niche products and commodities has been eagerly embraced by the private sector. This
restructuring of agriculture will require more sophisticated and intensive management provided either by
individual farmer-entrepreneurs or by contract farming. There is a need to promote professionalism in
farming, to provide farmers with information on new farming techniques and to lower the cost in
establishing business relations with modern food marketing firms. Farmers' groups may achieve
economies of scale in obtaining extension services and in dealing with marketing firms.
Technological change has been one of the main driving forces in the growth of agricultural productivity
and Thailand will have to continue to invest in research if it is to remain competitive. However, there is a
need to prioritize public sector research to focus on those areas not covered by the private sector.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 70
Moreover, the public sector faces a shortage of qualified research and extension workers due to the
unattractive reward system in government service.
However, the overarching challenge will be to reduce the inequalities that have steadily widened in Thai
society between urban and rural areas, and especially between the Central region and the periphery.
Policy responses to this challenge have historically been populist in their aims, rather than addressing
root problems, (i.e. they have been politically rather than economically driven) and their goals have
almost always been subverted by inefficiency and corruption. Moreover, distributional effects mean that
benefits from crop subsidies tend to accrue disproportionately to exporters, manufacturers and large
agribusiness firms, with little if any remaining for smallholder farmers. For the government, the continuing
exodus from agriculture, and the increase in rural-urban migration pose major questions in terms of its
ability to implement effective policy reforms that can sustain rural livelihoods and reverse the erosion of
the sector‟s export competitiveness.
The government‟s laissez-faire approach has left the private sector accustomed to considerable
operational latitude, which arguably has contributed to Thailand‟s export leadership in key commodities,
but has brought with it a range of social and environmental issues. It remains a key role for government to
ensure the private sector operates in a socially and environmentally responsible way and mitigates the
adverse social and environmental impacts of intensifying farming systems.
The government‟s role in provision of public goods (especially agricultural R&D) has steadily declined,
and it remains to be seen to what extent the private sector will invest in R&D to address fundamental
national challenges in situations where the benefits cannot readily be appropriated to recover costs (e.g.
the stagnation of rice productivity, or competition for water).
Discontent among farmers as a result of inequitable terms of trade within restructured supply chains
represents an increasing threat to the sector‟s long-term sustainability, to the availability of capital to allow
rural people to diversify their livelihoods while permitting specialised farmers to invest and innovate, and
to social stability within rural communities. While Thailand‟s accomplishments in poverty reduction are
attributed primarily to manufacturing growth, the creation of new off-farm opportunities will be critical to
alleviating the concentration of poverty in rural areas, especially in the Northeast, and to help reduce the
rural-urban income gap.
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 71
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Annex: Organizations interviewed
Affiliation Sector * Commodity
Thai Rice Foundation G, N Rice
Biotechnology Alliance Association N All
Singapore National Institute of Education,
Nanyang Technological University A Rice
Chulalongkorn University A All
Kasetsart University A, N, G All
Policy Institute for Farmer Welfare N, G All
Thai Development and Research Institute N, G All
Syngenta P All
Cargill P Cassava
Cargill P Chickens
Pioneer P Corn
Bayer CropSciences P All
Thai Broiler Association P Chickens
Thai Sugar Millers P Sugar
Tapioca Development Institute P Cassava
Mechai Viravaidhya Foundation N All
TG Agritrade P Horticulture
CP Foods P Chickens
Sustainable Agriculture Foundation N All
Fair Trade Original N Horticulture
Kenan Institute Asia N All
Platform Knowledge Piece 3: The strategic role of the private sector in agriculture and rural
development: Thailand working paper 81
Department of Agriculture G Horticulture
Thai Rice Exporters Association P Rice
Thai Organic Agriculture Foundation N All
Office of Agricultural Economics G All
Department of Agriculture G All
Department of Agricultural Economics G All
Rice Department G All
*
G = Government
A = Academia
N = NGO
P = Private sector