The commercialisation of rice farming in the Northeast has been strongly influenced by state policies affecting farmers’ access to resources (land and water) and inputs (seed, fertilisers, extension, and credit), their management of farm activities, and their appropriation of farm output and revenue (Fig. 1.8).
Land
Private rights in land have been recognised since the nineteenth century and a land titles system was introduced in 1901, administered by the Department of Lands (DOL) (Burns 2004). Land titling was initially concentrated in the Central Plain but was gradually extended to the other parts of the country, including the Northeast, where the DOL had provincial and district offices. Title deeds were issued based on a cadastral survey. However, studies for the fifth National Social and Economic Development Plan (NSEDP, 1981–1985) found that only about 12% of the 23.7 million ha of occupied agricultural land was held by title deeds, a further 49% was held by lesser (unsurveyed) documents, 18% was occupied by claimants without documentation, and 21% was illegally occupied forest land. The Plan set out a strategy to grant secure tenure to agricultural landholders, noting that this would improve access to institutional credit and thus provide the basis for long-term investment by farmers. A land titling project was initiated with support from the World Bank and by 2001 a further 8.5 million titles had been issued over about 4.9 million ha (Burns 2004).
Alongside this initiative, an agricultural land reform programme was started in 1975 to redistribute land to landless farmers and provide titles to “squatters” on public lands (as much of the agricultural expansion had occurred through clearing of forest on what was regarded as public land). The Agricultural Land Reform Office (ALRO) in the Ministry of Agriculture and Cooperatives (MOAC) was responsible for land allocation and titling, and for providing domestic water supplies, village roads, farm ponds, and small-scale reservoirs and irrigation facilities (ALRO 2006). The ALRO also established Agricultural Land Reform Cooperatives, provided agricultural credit and production inputs, supported on-farm and off-farm occupations, and promoted community-based conservation of natural resources (Ekasingh et al. 2008). From 1975 to 2005, 2.1 million ha were allocated to 762,170 households in the Northeast—52% of the total area nationally. This represented 24% of the area of farm holdings in the Northeast, as recorded in the 2013 Census, and 28% of the number of holdings.
Land has also been made available through research to improve its capability. Research by the Department of Land Development (DLD) within MOAC led to the amelioration of saline soil over a large area known as Thung Kula Rong Hai, mainly in Roi Et Province (Fig. 1.2). This enabled the rehabilitation of 88,000 ha to become a major area of jasmine rice production, benefitting 14,280 farm households (Ekasingh et al. 2008).
The effect of this long-term land policy has been to provide secure tenure for large numbers of rice-growing smallholders in the Northeast. While population growth and the closure of the agricultural frontier in the 1980s meant that the size of these smallholdings declined—from an average of 4.5 ha in 1980 to 4.3 ha in 1990, 3.6 ha in 2000, and 3.2 ha in 2013—the area per household member and per worker has remained stable, reflecting the trend to smaller families and the outmigration of younger household members (Grandstaff et al. 2008). This, combined with improvements in infrastructure, has enabled millions of smallholder farmers to capitalise on the opportunities for commercial rice farming since the 1990s. While in some areas farmers are consolidating their paddy fields into larger units to permit land levelling and greater field efficiency in the use of machinery (Rambo 2017), there has not been significant differentiation in the ownership of land. Thus in 2013 51% of landholdings were within the bracket 1.6 to 6.2 ha, accounting for 51% of the total farm area. As Rigg et al. (2012) have highlighted, land ownership and paddy farming remain central to household livelihood strategies, even as non-farm sources of income become dominant.
Water
Access to irrigation has been a less important element in the commercialisation of rice farming, despite official rhetoric about “greening Isan”. There has been a long-term policy focus on the development of water resources for agriculture in the Northeast as a way to intensify rice farming and reduce poverty (Molle et al. 2009; Floch and Molle 2013). Much of this has involved investment in small- and large-scale pump-irrigation schemes, managed by the Royal Irrigation Department (RID) of MOAC, to permit dry-season cropping of rice. However, investment in the required canal system has often lagged and, even where the distributional infrastructure has been satisfactorily completed, the utilisation for dry-season cropping has been much lower than predicted due to the low and variable profitability of dry-season rice (KDML105 is a wet-season variety) and the increasing scarcity of farm labour. The total irrigable area in Northeast Thailand is only 1.2 million ha, with limited utilisation in the dry season (Floch and Molle 2009). Thus most rice production still takes place under rainfed conditions, though increasingly with the benefit of supplementary irrigation from small ponds, as noted above.
Seed
The crucial input that has enabled the commercialisation of rice farming in the Northeast has been the selection, breeding, and dissemination of improved varieties by public agencies. The term “improved”, rather than “high-yielding”, is appropriate as the varieties adopted by farmers were better adapted to local conditions and/or produced higher-quality rice rather than simply increasing yields. The International Rice Research Institute (IRRI) began working in Thailand from 1966, earlier than in the other countries of the Lower Mekong Basin, but the first high-yielding, semi-dwarf variety, IR8, was not adopted because of it low eating quality. However the Rice Department (RD) of MOAC incorporated the semi-dwarf gene in IR8 in a series of locally bred varieties (labelled RD) that were widely adopted in the irrigated areas of the Central Plain. RD1 gave a 50% higher yield but was not adopted due its poor eating quality and high input requirements. Subsequently developed photoperiod-insensitive, high-yielding varieties, especially RD7, RD15, and RD23, became dominant in the irrigated areas of the Central Region, underpinning the rapid rise in output. However, most of this additional production was not consumed domestically but exported as lower-quality white rice or used to make parboiled rice, also for export.
In the 1980s, with the emergence of Vietnam as a major exporter of low-quality rice, there was downward pressure on the international price for this type of rice, whereas the price of higher-quality rice showed an upward trend (Setboonsang 1996). This prompted rice researchers in MOAC to revive earlier efforts to select and breed for rice quality. The major breakthroughs were, as noted above, the selection and promotion of a line of local fragrant rice labelled Kao Dok Mali 105 (KDML105) and its mutagenesis to form RD6, a higher-yielding glutinous variety. Both are medium-term, photoperiod-sensitive varieties that are well adapted to the soil and climatic conditions of the Northeast and respond well to additional inputs. RD6 was rapidly adopted and, by 1995, accounted for 40% of the total wet-season rice area in the Northeast and 83% of the glutinous rice area (Ekasingh et al. 2008). By the same year, KDML105 accounted for 72% of the non-glutinous rice area, increasing to 80% in 2002–2005 (Grandstaff et al. 2008: 332). The ability to secure subsistence with RD6 enabled farmers to allocate more land to production of KDML105 for the domestic and export markets, generating a much higher return.
The provision of improved seed to farmers was facilitated by the Department of Agricultural Extension (DOAE), which provides a linkage between researchers and extension staff. The DOAE’s crop promotion project aimed for increased yields by disseminating good-quality seed of improved varieties (Ekasingh et al. 2008). One approach used was the “seed exchange method”, implemented from 1982 to 1998 for rice, by which a kilogram of farmers’ seed was exchanged with a kilogram of good-quality seed of an improved variety. In poorer areas, the “free rice seed” approach was used. The DOAE also initiated community seed production centres in 65 rice-producing provinces to produce good-quality seed for local dissemination.
Fertilisers
As part of the intensification of rice farming and other crop production, the use of synthetic fertilisers has increased more than tenfold, from around 20 kg/ha in 1980 to 250 kg/ha in 2008, though the rate of increase has slowed. More than 95% of the synthetic fertilisers used in agricultural production are imported (OAE 2011). Urea (46-0-0), used mainly for rice and vegetable crops, is the most important imported fertiliser, accounting for 35% of imports by value, while other widely used fertilisers are ammonium phosphate (16–20), accounting for 9%, and the NPK compound fertiliser 15-15-15 (6%). The import, mixing, and distribution of fertilisers is in private hands and is not subsidised, though the government monitors and regulates retail prices to avoid price spikes which would adversely affect farmers (Chitibut et al. 2014). This regulatory imposition has led to the emergence of a parallel informal market distributing products of variable quality.
Despite the increase in use of synthetic fertilisers, alternative approaches to nutrient management and crop protection have been promoted by the government, particularly since the 2000s. Farmers are encouraged to apply compost, green manure, animal manure, and other organic fertilisers instead of or together with synthetic fertilisers. Organic fertiliser has been adopted for many types of agricultural production, including rice farming. A survey by the Office of Agricultural Economics published in 2010 found that about 48% of farms applied organic fertiliser together with synthetic fertiliser, while 41% used only synthetic fertiliser and 6% used only organic fertiliser. A recent industry analysis concludes: “The organic fertilizers and biofertilizers market is expected to grow as a result of the increased demand for organic food products. Government encouragement by providing subsidies and incentives for the use of organic fertilizers will drive the growth of organic fertilizers” (Mordor Intelligence 2019). The report adds that the government is encouraging private sector production of organic fertilisers and bio-fertilisers in part to reduce the dependence on imported fertilisers.
Extension
For agricultural extension, the Department of Agricultural Extension (DOAE) established in 1967 is mainly responsible for extension of crop production whereas Department of Livestock Development (DLD) and Department of Fisheries are for livestock production and aquaculture, respectively. The DOAE is directly responsible for integrating the concepts and strategies of crop promotion by cooperating with research institutes, universities, agricultural credit, marketing organisations, and other related agencies. Its tasks are to provide extension services and technology transfer to farmers to help increase farm productivity, both qualitatively and quantitatively, and to meet market demands and standards. The DOAE has established a regional office in all regions and also provincial and district offices in all provinces and all districts for the whole country. In each district, there are extension officers to work closely with farmers. District and sub-district agricultural extension officers have a duty to convey knowledge and technologies which have already tested for local adaptability from research institutions to farmers and get feedback regarding the problems and constraints, either technical or biological, being faced by farmers and farmers’ attitudes, and proposed to researchers by extension officers.
In 1999, the DOAE established a new extension system in response to the new constitution law in 1997 and the 9th National Social and Economic Development Plan for giving priority to human development. The new extension system has a principle that farmers will determine the development pathway by themselves and extension officers will be facilitators and coordinators as well as learning partner of farmers. The Agricultural Technology Transfer and Service Center (ATSC) in each sub-district have been established throughout the whole country to be mechanisms for working with farmers as well as other related institutions such as local government, farmer associations, NGOs, and private sector in the agricultural development process. The ATSC is formulated to develop one-stop service centres for farmers and communities in the areas of agricultural development, agricultural production, market development, and natural resources management. The ATSC implementation was carried out on the basis of community-based development by providing opportunity to farmers, enabling them to participate, and promoting their potential to plan and solve existing problems by themselves. Thus, the establishment of ATSC paved the way to decentralisation and empowerment for community development (Panee Boonyaguakul and Surangsri Wapet, 2005, cited in Ekasingh et al. 2008).
Credit
As farmers became more commercialised in their activities, the demand for credit increased. There have been many sources of formal and informal credit available to farmers but the major sources have been the Bank of Agriculture and Agricultural Cooperatives (BAAC), whose operations have been strongly supported by government policies since the 1970s. By 1982, the BAAC provided credit totalling THB 12 billion to about half of the farm households in Thailand. While BAAC met the most obvious credit needs of medium-scale farmers, it had some difficulty in reaching the poorest farmers (Falvey 2000). The use of group-guaranteed loans has been an effective alternative means to lend to poor farmers who lack collateral. Credit has been used by farmers to purchase improved seeds, equipment, fertilisers, and pesticides. Out of 5.8 million farm households in 2008, 3.5 million (59.9%) had agricultural debt. Of these, 63.5% borrowed from the BAAC, 9.2% from cooperatives, 9.9% from village funds, and 7.4% from informal sources. The average agricultural debt was THB 104,640 per household (National Statistics Office 2008).
Farm Management
Farmers in the Thailand are not subject to state direction regarding their choice of crops or production techniques. However, government policy since the 1990s has sought to persuade and subsidise farmers to shift towards “sustainable agriculture”, which has been variously interpreted as integrated farming systems, diversified farming, good agricultural practices (GAP), or organic farming. This push has been given strong ideological support from the late King Bhumibol Adulyadej’s “new theory of agriculture”—part of his philosophy of a “sufficiency economy” (Kasem and Thapa 2012). This promotes the need for farm management to provide food self-sufficiency or food security for farmers.Footnote 4
The emphasis on sustainable agriculture encourages crop diversification, a shift away from agricultural intensification, reduced use of inorganic fertilisers and pesticides, and promotion of organic agriculture and healthier food. A number of programmes have been implemented in support of sustainable agriculture, including subsidised credit and training programmes for farmers who are willing to participate. In 2016, the military government’s National Rice Policy and Management Committee (NRPMC) initiated a scheme that paid qualified farmers subsidies to stop planting rice in areas deemed to be unsuitable and to develop integrated farming systems, with on-farm irrigation, fish, and livestock. According to official maps, most land deemed unsuitable for growing rice is located in the Northeast, though there are doubts about the accuracy of the zoning (Sunsuk 2016).Footnote 5
Concerns about the intensive use of chemical inputs in Thailand have underpinned policies promoting good agricultural practices (GAP) and food safety. GAP-certified farmers are required to use organic fertilisers together with inorganic fertilisers to ensure high-quality produce. They must also use bio-pesticides to control pest outbreaks, though they can apply inorganic pesticides if approved by the business they are contracted to supply (Kasem and Thapa 2012). The area of certified GAP land was 366,000 ha in 2008, considerably more than the 22,000 ha certified as organic. Nevertheless, Thailand is the world’s largest exporter of organic rice and some villages in the Northeast are embracing this version of sustainable agriculture (Chaps. 3 and 4).
Marketing and Pricing
The overwhelming policy intervention in Thailand’s rice industry has been the state’s involvement in the purchase and storage of paddy. In 1976 the export tax on rice was abolished and the first price support programmes were instituted. Price support developed into a rice buffer stock scheme from 1981, intended to stabilise consumer prices and raise farm-gate paddy prices, and a paddy mortgage or pledging programme from 1983, financed by the Bank for Agriculture and Agricultural Cooperatives. The latter used public warehouses or on-farm storage to carry over paddy stocks so that farmers did not have to sell immediately after harvest when prices were low. With increasing subsidisation, more farmers participated (Ekasingh et al. 2008). However, aggressive government intervention to support prices through this mechanism, first in the mid-2000s but most ambitiously from 2011 to 2014 under the government of Yingluck Shinawatra, led to the accumulation of record stocks of up to 18 million t and the eventual collapse of the programme (Welcher 2017) and of the government. At its height, the scheme offered farmers prices 50–60% above the market price, with no upper limit on purchases, thus squeezing out commercial traders, millers, and exporters and severely disrupting the export market. Stocks are still being progressively disposed of in government-to-government deals and auctioned to private buyers at discount prices, but the domestic and export markets have been able to return to some normality (Chuasuwan 2018).
Figure 2.4 traces the FOB export price of Thai A1 Super white broken rice (the reference price for the world market) and of Thai Fragrant Rice over the past two decades, showing the impact of both government policies and global shocks. The figure shows the doubling in the price of white rice as part of the global food price crisis in 2008 and the subsequent even greater price spike brought about by the Thai Government’s 2011–2014 stockpiling. The unavoidable release of carryover stocks combined with the continued expansion of exports from India has brought the world price down again to just above pre-2008 levels. The figure also shows the growing premium in the world market for high-quality rice, encouraging countries such as Vietnam and Cambodia to increase their share of this segment of the market (as discussed in subsequent chapters).
In 2016 the military government announced it would no longer continue with the rice pledging and income insurance programmes. Instead, short-term measures were introduced, including the “Farmer Loans to Delay the Sales of Paddy” (known as “On-Farm Paddy Pledging”), aimed at stabilising the farm-gate prices of fragrant and glutinous paddy rice. The government also approved a budget of THB 45 billion (USD 1.3 billion) under the Rice Farmer Assistance Measure to finance direct payments to farmers adversely affected by drought. Farmers in this programme also are eligible to have their BAAC debt suspended for two years at a reduced interest rate (3% instead of the normal 7%). Moreover, farmers who buy commercial crop insurance will receive partial compensation from the government for losses from natural disasters (Welcher 2017).