Turning crisis into opportunity

Turning crisis into opportunity

Rice farmers reeling from falling prices and the drought are eyeing less thirsty plants

Sasithorn Homudom has shifted away from planting rice to growing less thirsty mung beans on her farm in Nakhon Pathom's Bang Len district. Apichit Jinakul
Sasithorn Homudom has shifted away from planting rice to growing less thirsty mung beans on her farm in Nakhon Pathom's Bang Len district. Apichit Jinakul

The Central region, where vast expanses of green paddy fields normally turn golden brown for harvest in November, has long been known as the nation's breadbasket. Facing the worst drought in a decade, however, the soil is now cracked and baked under the scorching sun.

The El Nino-driven drought has dealt another blow to farmers already struggling from sinking rice prices after the collapse of the Yingluck Shinawatra administration's rice pledging scheme. The scheme set the buying price at 40-50% higher than the market price at that time, in 2014.

Besides rice growers, rubber farmers are also reeling from sagging prices.

Sasithorn Homudom, a 46-year-old farmer in Nakhon Pathom's Bang Len district, however, has managed to escape the hardship and disaster caused by the drought.

Together with eight other farmers in the area, she has made the bold move of shifting away from rice to mung beans, a low-water consuming plant. Fellow farmers uneasy about change are keeping a close eye on the group before making any decision on whether to follow suit.

Mrs Sasithorn's group has borrowed 1 million baht from the Bank for Agriculture and Agricultural Cooperatives (BAAC)'s 15-billion-baht soft loan budget for farmers who plan to switch to less thirsty crops. The one-year loan carries an interest rate of 0.01%.

If the project is successful, Mrs Sasithorn and her group may cultivate more mung beans or even completely abandon growing paddy, she says.

The BAAC has offered a batch of loans in line with the government's push to throw a lifeline to farmers to help ease the burden caused by the drought and low farm prices, and to radically reform agriculture to raise the sector's contribution to the country's economic output from the current 7.8%.

The 72-billion-baht One Tambon One Farming SME loan scheme is part the BAAC's series of loans aimed at spurring farmers to transform themselves from being just planters to value-added agricultural product manufacturers and owners. At present, 30 million out of 65 million Thais are farmers. There are 5 million farm households, of which 3.8 million are rice growers. The lower income of farmers has also been blamed as one of the main causes of the country's stuttering economy.

Mrs Sasithorn estimates the production costs per crop, including fertiliser, land rental, wages and seed for planting mung beans on a 479-rai plot owned by the nine farmers, at 3,400 baht per rai. They expect to earn 4,200 baht, leaving 800 baht per rai in profit.

However, total profit will increase to 1,500 baht per rai if wages and land rental are taken out of the equation as they use their own labour and land.

The estimate is based on a minimum purchase price of 21 baht per kilogramme guaranteed by Isa Farm Co, and assuming each rai can produce 200kg of mung beans.

The estimated profit of 1,500 baht per rai from planting mung beans is higher than the 1,000 baht earned from growing rice. However, farmers may face loses if they hire others to grow rice as costs will reach 6,000 baht a tonne, while the selling price is only 5,600.

"We need to restructure the agricultural sector since we can no longer rely on the current four major farm products -- rice, rubber, tapioca and sugar cane-- as the government must always subsidise these product because their prices fluctuate," Finance Minister Apisak Tantivorawong has said.

The agricultural sector needs to upgrade farm products and seek solutions to address oversupply in some farming areas and whether farmers should shift away from low-yielding crops towards other crops or even change careers, according to Mr Apisak.

Even though Thailand is one of the world's largest rice exporters, yield per rai is lower than several rival countries.

Mr Apisak has instructed the BAAC to create a learning centre for the farming sector to upgrade farmers' skills.

Prasit Boonchouy, head of the Thai Rice Farmers Association, says the root of the problem for local rice growers is a lack of serious study of ways to improve the quality and costs of farm products.

The rice pledging scheme prompted farmers to ramp up their rice planting regardless of quality and production costs, he says.

Ruedeerat Deesawad is an example of those who have managed to add value to farm products.

With a master's degree in international management from Loughborough University in Britain after graduating in computer engineering from Mahidol University, she has successfully transformed her father's lime farming business to become a manufacturer of ready-to-drink lime juice under the brand name of Lemon Me. The product is now available at luxury department stores and supermarkets such as Siam Paragon and Villa Market.

Ms Ruedeerat has borrowed from the One Tambon One Farming SME loan scheme to expand production capacity to 100,000 bottles a month from 60,000 currently. The bank charges her an interest rate of 4% per annum.

Processing is at the heart of value-added products, says Ms Ruedeerat, adding that the price of lime juice is far above one fresh lime sold at 10 baht in the dry season and 1-2 baht in the rainy season.

She also plans to process lime skins left over from squeezed juice into jam in the future, while the ingredients of the ready-to-drink lime juice will be improved by replacing sugar with stevia.

Ms Ruedeerat is also planning to ship lime juice-based products to Singapore if the drink proves popular there. She is also exploring other markets in Asean.

Ennu Suesuwan, chairman of the Thai Chamber of Commerce's sub-committee on rice and former president of the BAAC, says agricultural sector reform could suffer a setback if poor farmers sell their land to investors, especially foreigners, who may use chemicals to ramp up production, which could lead to land degradation in the long term.

He says the best way to avoid the problem is by offering an appropriate return to farmers. The Thai Chamber of Commerce, as a trial, plans to apply the return-sharing model of the sugar-cane industry to rice farming.

In the meantime, Somporn Isvilanonda, a senior fellow at the Knowledge Network Institute of Thailand, says the country needs to diversify major farm products, rice in particular, as 33 million tonnes of paddy are produced every year with a surplus of 5 million.

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