Four pillars of farmer assistance
TMB Analytics
Agriculture including forestry and fishing is now only 10% of Thai GDP but as much as 30-40%, with seasonal variations, of total employment in the country. Agriculture employs 13.5 million workers, almost 10 times that of public administration (government) and defence combined. Agriculture can also serve as a social safety net — during the 1997 Asian financial crisis, many people who lost jobs in the cities were still able to find work back home in rural communities. It is thus good policy to embrace agricultural investment for economic growth and poverty reduction, a recurring theme of Thai governments, and rice farmers have been the main target. Unfortunately, slumping world rice prices are making the government's job more difficult. Thai rice prices fell to their lowest level since 2008, the government's bloated stocks helping cause this fall. This led to an inevitable new round of subsidies to farmers in a difficult to escape vicious cycle?
The government wants to make Thai agriculture more competitive in the long term by adding value so a policy that promotes innovation is clearly necessary. The predominant agribusiness model today is to achieve zero waste. We've seen this in the sugar cane business which now has strong links to renewable energy businesses that need ethanol, and other biofuels and bioplastics from sugar are in the pipeline. Turning rice straw into biofuel and grains into wine, is a path that Vietnam is already moving down. A Cambodian company is extracting fibres from usually wasted lotus stems producing a waterproof and stain-resistant fibre ideal as a high-end fabric. Luxury brands in the US and Hong Kong are selling handwoven lotus fabric jackets for $3,000 to $4,500 each. Rice stems may have similar potential.
A comprehensive agricultural reform package would extend to at least three other pillars. Among them is sector rotation. Arranging job placement outside of harvesting seasons not only gives farmers extra cash but also allows them to smooth their consumption better over the course of the year. Few rice farmers with informal employment are covered by social security even though they can be. Many may have difficulty travelling to the office, and others simply may not be aware of the law, so accessibility and basic financial literacy must be addressed. Finally, there is a market for private insurance. Recent research by Prof S Chantarat of Australian National University (ANU) found that in the aftermath of the 2011 floods rural community risk-sharing was ineffective, as people in the same village suffered similar losses so there has been higher demand for commercial insurance among flooded households. Promoting private insurance would also reduce the burden on the government, typically the insurer of last resort.
Four pillars of farmer assistance
TMB Analytics
Agriculture including forestry and fishing is now only 10% of Thai GDP but as much as 30-40%, with seasonal variations, of total employment in the country. Agriculture employs 13.5 million workers, almost 10 times that of public administration (government) and defence combined. Agriculture can also serve as a social safety net — during the 1997 Asian financial crisis, many people who lost jobs in the cities were still able to find work back home in rural communities. It is thus good policy to embrace agricultural investment for economic growth and poverty reduction, a recurring theme of Thai governments, and rice farmers have been the main target. Unfortunately, slumping world rice prices are making the government's job more difficult. Thai rice prices fell to their lowest level since 2008, the government's bloated stocks helping cause this fall. This led to an inevitable new round of subsidies to farmers in a difficult to escape vicious cycle?
The government wants to make Thai agriculture more competitive in the long term by adding value so a policy that promotes innovation is clearly necessary. The predominant agribusiness model today is to achieve zero waste. We've seen this in the sugar cane business which now has strong links to renewable energy businesses that need ethanol, and other biofuels and bioplastics from sugar are in the pipeline. Turning rice straw into biofuel and grains into wine, is a path that Vietnam is already moving down. A Cambodian company is extracting fibres from usually wasted lotus stems producing a waterproof and stain-resistant fibre ideal as a high-end fabric. Luxury brands in the US and Hong Kong are selling handwoven lotus fabric jackets for $3,000 to $4,500 each. Rice stems may have similar potential.
A comprehensive agricultural reform package would extend to at least three other pillars. Among them is sector rotation. Arranging job placement outside of harvesting seasons not only gives farmers extra cash but also allows them to smooth their consumption better over the course of the year. Few rice farmers with informal employment are covered by social security even though they can be. Many may have difficulty travelling to the office, and others simply may not be aware of the law, so accessibility and basic financial literacy must be addressed. Finally, there is a market for private insurance. Recent research by Prof S Chantarat of Australian National University (ANU) found that in the aftermath of the 2011 floods rural community risk-sharing was ineffective, as people in the same village suffered similar losses so there has been higher demand for commercial insurance among flooded households. Promoting private insurance would also reduce the burden on the government, typically the insurer of last resort.
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