Contract Farming In Thailand

Contract farming in Thailand

Thai farmers have long been called the “backbone” of the nation, which implies that agriculture is one of the most important sectors in the economy.( fftc.agnet) The majority of people are working in the agricultural sector making farming the main source of food and income for Thais. Because of its importance, it is generally believed that the government of Thailand should take care of the agriculture sector to increase the welfare of the majority and maintain the prosperity of the nation. However, recently, there are intense problems in the agricultural sector in Thailand overlooked by the policy makers. This essay argues that the failure in agricultural sector has become a serious problem in Thailand and will

(ibid) It exacerbates poverty problems in farmers. While the contractors promised a fixed income, farmers have to burden more on other kinds of risk. The contract might require more investment in the permanent capital such as land and machinery. As a result, farmers generally have a large debt. They are also exposed to higher risk from the unexpected shocks such as natural disasters or climate change. Apart from the unfair risk distribution, the company might exploit them in many ways. For example, they occasionally change regulations and standards after the agreement was made, increase the price of factors of production they provide and pay farmers less by claiming that the products are sub-standard. The unfair contracts, in the end, makes farmers become victims of the immoral or even illegal actions by their contractors. Furthermore, farmers now also have little chances to avoid contract

Without the proper knowledge and sustainable way to grow plants, farmers normally clear forest for land to grow crops every year. According to the Forest Land Management Bureau, there is only 16% of the forest remaining in the north. This is mainly due to the expansion of agriculture in Thailand. In Nan province, deforestation in makes the local canals and streams shallow this can be observed by the change in water color. [Thaipublica.org/2015] Water in Nan River is important for Thailand as it contributes to 45% of Chao Phraya River, which is the main river in Thailand. Hence contract farming could affect the main country’s water supply. In the long run, Thailand might face severe drought problems and salinization of Chao Phraya River due to unsustainable farming. Nan, however, is an only one example. Contract farming in other areas can also result in similar