Price Freeze, Migrant Worker Exodus, No Subsidy & ASEAN’s AEC! Hope for Thai Farmers?

Thailand’s agriculture sector represents about 20% of Thailand’s economy, and the number of Thais engaged in the sector, while gradually declined for decades, is still in the many millions. A great deal of talk have occurred in Thailand, in why does the majority of Thai farmers remain relatively poor, compared to other Thais and compared to farmers in other countries, such as Japan, Taiwan and Korea.

The Yingluck administration attempted a massive farm subsidy for rice, the main agricultural sector in Thailand, but was much opposed locally and globally, for a variety of reasons, even though farm subsidy is practiced globe over. The theory behind Yingluck’s strategy, is to better the life of farmers with higher income and stimulate the economy, suffered from the global financial crisis.

Yet there is another philosophy at play, in that the old model, of Thailand development, that have enriched the middle class, depending on exploitation of the agriculture sector, with cheap farm goods, cannot be sustained. And that a new thinking is needed, where farm produced goods prices, should be allowed to rise, raising the income of the farm sector, to help dive a more equitable and sustainable growth, as the gap between the rich and poor of Thailand, is one of the worse globally.

However, all that have changed with Prayuth’s coup.

Thailand’s economy, suffering from pro-longed political crisis, is now in a weak recovery phase. However, in recent months, inflation has rocketed up, leading to speculation that the central bank may have to raise interest rates. That could kill Thailand’s weak recovery, so to kill-off inflation a price freeze of some 100 essential consumers goods, including farm products, have been put in place by the Thai junta, reports several local press. That would hurt farmers’ income. Additionally, while farm subsidy is practiced globally, the Thai junta, have bought down the level of subsidy, to a much meaningless level. This would also hurt farmer’s income. Lastly, the junta has also crack-down on migrant workers that much supported Thailand’s farm sector labor needs. Thus again, farmers are being hurt. Worse for Thai farmers, all of that factors, price freeze, no subsidy and labor problems, is coming ahead of the formation of the ASEAN AEC, that will be in place in late 2015. When ASEAN becomes a single market of 600 million people, Thai farmers will have to face the situation, perhaps, from a weakened point that will impact their ability to compete effectively in the ASEAN market and the world arena.

From the Wikipedia: Thai Agriculture in transition

Agriculture was able to expand during the 1960s and 1970s as it had access to new land and unemployed labour.[1] Between 1962 and 1983, the agricultural sector grew by 4.1% on average a year and in 1980 it employed over 70% of the working population.[1] Yet, the state perceived developments in the agriculture sector as necessary for industrialisation and exports were taxed in order to keep domestic prices low and raise revenue for state investment in other areas of the economy.[1]

As other sectors developed, labourers went in search of work in other sectors of the economy and agriculture was forced to become less labour-intensive and more industrialised.[1] Facilitated by state laws forcing banks to provide cheap credit to the agricultural sector and by providing its own credit through the Bank for Agriculture and Agricultural Cooperatives (BAAC).[1] The state further invested in education, irrigation and rural roads.[1] The result was that agriculture continued to grow at 2.2% between 1983 and 2007, but also that agriculture now only provides half of rural jobs as farmers took advantage of the investment to diversify.[1]

As agriculture declined in relative financial importance in terms of income with rising industrialization and Americanization of Thailand from the 1960s, but it continued to provide the benefits of employment and self-sufficiency, rural social support, and cultural custody. Technical and economic globalisation forces have continued to change agriculture to a food industry and thereby exposed smallholder farmers to such an extent the traditional environmental and human values have declined markedly in all but the poorer areas.

Agribusiness, both privately and government-owned, expanded from the 1960s and subsistence farmers were partly viewed as a past relic from which agribusiness could modernise. However, intensive integrated production systems of subsistence farming continued to offer efficiencies that were not financial, including social benefits which have now caused agriculture to be treated as both a social and financial sector in planning, with increased recognition of environmental and cultural values. ‘Professional farmers’ made up 19.5% of all farmers in 2004.[1]

Unique elements of Thai agriculture include irrigation technologieswhich spanned a millennium. It also had administrative structures which originated with agricultural water control. Thailand has global leadership in production and export of a number of agricultural commodities, and its agribusiness sector includes one of the world’s largest multinational corporations. There still remains potential for further large increases in productivity from known technologies.

 

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