Term Paper on "Role of Land Settlement Cooperative in the Kingdom of Thailand and Its Business Performance"

Term Paper 70 pages (18921 words) Sources: 1+

[EXCERPT] . . . .

Role of Land Settlement Cooperative in the Kingdom of Thailand and Its Business Performance

Prior to the Cooperative Crisis

Agriculture is a mark of civilization for the mankind.

It is beyond economy.

It is a part of our society, and a part of our culture." (Kittiampon)

Interview: Thailand...," 2000)

Cooperative Contentions

This researcher contends that in Thailand, an agricultural cooperative's business duties, when dealing with farmers may be divided into two primary scopes:

The first "scope" consists of the original idea founding the agricultural cooperative, focusing on money, in the realms of either savings or loans.

Another "scope," marketing needs to cover the dual aspects of marketing agricultural products, such as providing pertinent agricultural input to members and gathering members' products to resell.

The primary problem regarding the "Business Performance," of the Thai agricultural cooperative is that it can, in fact, perform very well in the former scope, yet potentially fail in the latter. This researcher purports, albeit, that the latter constitutes the component, not only the most helpful in the agricultural sector, but also the most vital to its "lifeline."

Producing agricultural commodities does not prove to be a difficult task for Thai farmers. Their record reflects they can readily learn and adapt to utilizing new technologies, provided they know doing this will prove beneficial and/or more profitable. To locate the market to sell their products or secure a fair price, however represents the other side of the story.

In the past, the marketing process potentially proved to be much more complicated than the individual farmer could complete, due to the fact the farmers lacked marketing information (i.e. standard price; amount of demand), farm planning, transportations and facilities etc..

In other words, the farmers lacked basic, primary skills to successfully run a business; the primary reason the marketing function should be improved in the agricultural cooperative. Agricultural cooperatives could best help farmers, this researcher argues, by:

joining together to increase the farmers' bargaining power; if sharing marketing information to prevent production overloads and/or lower price; etc.

Could Thailand's current cooperative crisis stem from the fact: "the local collectors" or, in another word, "the middle men" conducting business between producers and consumers get richer and richer? These private sectarians possess an extraordinary amount of influence not only on farmers, but also in setting the price for their products.

To investigate this situation, I distributed a number of questionnaires, specifically asking the members of a cooperative to share their opinions. My primary focus for implementing the questionnaire relates to the cooperatives role and performance in securing and reselling the members' products. Questions and/or points of contention this researcher presents include:

Where do members sell their products?

To whom do they sell their products?

Why do they sell their products the way they do?

What is the difference of the price they receive the compared to potential prices if other avenues were accessed?

In addition, this researcher plans to schedule an interview with the manager of this cooperative to obtain an idea regarding his thoughts about the gathering and reselling function.

Cooperative Background

In 1972, His Majesty the King's advocated for joint ownership of land by farmers' groups to prevent transference of land tenure into the hands of absentee landlords and financiers. In addition, His Majesty promotes the advocacy of co-operative villages in which members and their families receive the right to till the land for perpetuity, while the governing board of the co-operative is responsible for marketing, purchasing of necessary seeds, crops, foodstuffs and agricultural equipments or utensils for the members. These benefits were realized in the Land Development Projects on a co-operative basis at Hup kapong, Phetchaburi Province (120 km southeast of Bangkok).

This Land Development Project provides farming families with permanent and sufficient land to work and live on, thus eliminating shifting cultivation and illegal settlements. This project simultaneously promotes agricultural activities that have procured the highest possible yield in produce.

The Land Development Project began with 146 farmer households, with each farmer receiving an agricultural field, 25 rais, to cultivate both in and out of an irrigation zone.

The current membership has increased to include 429 farmers. In Thailand the cooperative law states that in a family, only one person may become a member of one type of cooperative, whereas, if this constriction were not mandated, the number of agricultural cooperative members would most likely be double its current number.

Particular Policies

During the years 1987 to 1991, as recorded in Thailand's 6th Economic and Social Development Plan, the Thai government began to implement the development of agricultural production systems. This particular policy focused on reducing agricultural product prices' risk, ensuring a steady market and guaranteed price for produce, along with improving the quality and quantity of produce. In response, under the supervision of government agencies, albeit strategy was implemented to achieve targeted policies; to support the collaboration of agribusiness and farmers through "contract farming" (Naritoo, n.d., p. 1) in the study, "Contract farming in Central Plain: a case study of asparagus grower groups in Nakhon Pathom Province," Prof. Dr. Chatcharee Naritoo (n.d., p. 1) reflects on progress Thailand has demonstrated recently developing the agribusiness. "A key factor in support of the successful transformation from traditional to commercial agriculture," Naritoo (n.d.) notes, "has been the dynamic adjustment of Thai farmers and agribusiness entrepreneurs to the varying needs of world market."

Today, with or without support from the government, contract farming has reportedly spread its roots through each region of the country that is suitable for a given commodity. Depending on the commodity, farmers, agribusiness companies, and their binding agreement, contract farming posits several patterns. (Naritoo, n.d., p. 1)

Consequently, contract farming contributes greatly to agricultural development in the following issues.

The Potential of Agriculture Production": Farmers can produce new

Commodities, using new technologies and materials agribusiness. Farmers can also, contingent on high quality control, continuously produce for agribusiness firms.

The potential of marketing": Farmers do not experience marketing risks as agribusiness firms purchase all of the contract farmers' production year round.

The support from the government": Along with creating policies to support this type collaboration, the government implements infrastructure and input to drive the effort. As it ensures contracts are fair for both sides, when conflicts arise, the government intervenes.

The profits of contract farmers and agribusiness firms": Firms profit from the venture as they obtain technical expertise and input, along with high and stable prices. Agribusiness firms can also contract and sell the contract farmers' products prior to the world market, and in turn and produce higher profits. (Naritoo, n.d., p. 2 -3)

In 1972 the first drive to grow asparagus as a commercial crop began as part of the Hup-ka-pong King's Project in Phetchaburi province in southern Bangkok. (the Hup-kapong King's Project, a joint effort with the Israeli government, was designed to set up and promote a demonstration cooperative for project member farmers.

The initial crop of asparagus, produced as part of the King's project, was primarily transported directly from the fields, to the farmers' cooperative and sold to Thai Airways Cuisine. Surplus asparagus and was delivered to Bangkok markets for local consumption and export. After project members helped nearby farmers obtain the asparagus variety and the related cultivation techniques, they also began to grow the asparagus and sold it to middlemen. During the time Japan and European countries sought vegetable imports from tropical countries (like Thailand), which contributed to the peak of the asparagus export stage, a number of middlemen traveled to Hup-ka-pong and surrounding villages to purchase asparagus from farmers growing it outside the project outside project farmers. As these middle man paid higher prices than the peak local summer tariff, consequently their efforts ultimately ruined the Hup-kapong village's group system.

At one time, agricultural conditions in Hup-ka-pong, located 120 km south-east of its main market, Bangkok were poor. The problems included an inadequate irrigation system; infertile soil was infertile, disease episodes and plague of pests.

In addition, high input costs, along with an unstable marketing routinely contributed to the negative components. In 1987, albeit the Ministry of Agriculture and Cooperatives open the door for farmers to begin to grow asparagus.

The Ministry of Agriculture and Cooperatives appointed fifteen districts in nine Provinces: Phetchabun, Prachuap Khiri khan, Ratchaburi, Kanchanaburi, Phetchaburi, Nakhon Pathom, Nonthaburi, Rayong and Nakhon Ratchasima) for asparagus cultivation, which consequently enabled the ministry to predict and of manage asparagus production. (Naritoo, n.d., p. 11)

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