A WORLD BANK COUNTRY STUDY PUB4963 THAILAND Pricing and Marketing Policy Lt for Intensification of Rice Agriculture A WORLD BANK COUNTRY STUDY THAILAND Pricing and Marketing Policy for Intensification of Rice Agriculture The World Bank Washington, D.C., U.S.A. Copyright (© 1985 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing April 1985 World Bank Country Studies are reports originally prepared for internal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the governments. Some of the reports are published informally with the least possible delay for the use of govern- ments and the academic, business and financial, and development communities. 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Both booklets are updated annually; the most recent edition of each is available without charge from World Bank Publications in either Washington or Paris (see the back cover for addresses). Library of Congress Cataloging in Publication Data Main entry under title: Thailand : pricing and marketing policy for intensification of rice agriculture. (A World Bank country study) Bibliography: p. 1. Rice trade--Thailand. 2. Export duties on rice--Thailand. 3. Rice--Thailand--Price policy. I. International Bank for Reconstruction and Development. II. Series. HD9066.T52T43 1985 338.1'8 85-6413 ISBN 0-8213-0556-5 Table of Contents PART I: THE MAIN REPORT Page No. PREFACE . ........................................................ ix I. OBJECTIVES AND SUMMARY .1 II. THE ROLE OF RICE ..... 5 A. The Nature of the World Rice Market. 5 B. The Role of Rice Pricing in the Thai Economy 5 C. The Role of Thailand in the International Rice Market 8 D. Taxation as a Means of Extracting an Investible Agricultural Surplus.. 9 III. OBJECTIVES AND INSTITUTIONAL CONTEXT OF PRICE INTERVENTION IN RICE AGRICULTURE. . . ...... 11 A. Structure of Rice Taxation . 11 B. Rice Policy Objectives... 12 C. Rice Price Support Programs . 13 D. Rice Marketing Efficiency and Price Transmission .17 E. Comparing the Effectiveness of Past Policy Instruments 17 IV. POLICY TRADE-OFFS FOR INTENSIFICATION . . .18 A. Present Status of Intensification in Rice Production 18 B. Increasing Use of Fertilizer and Other Modern Inputs 20 Fertilizer ..20 Agro-Pesticide Use... 23 C. Effects of Rice Tax Reform on Rice Supply and Welfare 23 D. Combining Tax Reform with Price Stabilization .27 V. CONCLUSIONS AND RECOMMENDATIONS . . .31 A. Intensification and Government's Cheap Rice Policy ....................... . 31 B. Achieving Intensification while Preserving Stability in the Domestic Price of Rice. 32 C. Recommendations for Reform of Rice Export Taxation 32 D. The Need for Government Procurement ..................... 34 E. Promoting Greater Fertilizer Availability and Use 34 F. Institutional Implications. 35 G. Implications For Poverty Alleviation . . 36 REFERENCES .......... . ................ 37 iii - iv- Page No. APPENDICES 1. Rice Taxation in Relation to Other Pricing Distortions ...... 39 A. Taxes and Subsidies ......................................... 39 B. Distortion of Gross Margins ............. .. .............. 40 2. Government Procurement and Marketing Programs ............... 45 A. Introduction ............................................ 45 B. Rice Purchasing for Price Support and Stabilization ..... 45 C. Subsidized Fertilizer Distribution ........ .............. 53 3. The Efficiency of Marketing and Government's Role ........... 64 A. Introduction ............................................ 64 B. Price Determination and Transmission ............... ..... 65 C. Market Efficiency ................................................ 67 D. Market Information ...................................... 69 E. The Role for Government ................................. 69 4. Government Agricultural Price Policy Making and the Role of Rice ............................................ 75 A. General Price Policy Making ........................... .. 75 B. Rice Policy Making ................. .. ................... 77 PART II: SUPPORTING TABLES Page No. I. AGRICULTURE IN INTERNATIONAL PERSPECTIVE .................... 84 1.01 The Agricultural Economy of Thailand in Regional Perspective Changes 1970-1980 .... ................... 85 1.02 Growth of Cereal Production and Population in the 1970s and Cereals Self-Sufficiency Ratio (SSR) in Southeast Asia ...................................... 86 1.03 Cereals Productivity, Percentage Irrigated Land and Fertilizer Use in Southeast Asia .................... 87 1.04 Fertilizer Use and Rice Yields for Selected Countries in Asia ............................................. 88 1.05 Fertilizer Retail Prices for Selected Products, December 1981 ....................................... 89 1.06 Fertilizer Use by Product ....... ...................... 90 1.07 Estimated Fertilizer Use on Rice (DD mt NPK), from Chemical Sources, Selected Locations in Asia, 1960,1980 ........................................... 91 1.08 Producer Prices of Paddy (Rough Rice), Selected Locations in Asia, 1960 to 1981 ............................... 92 - v - Page No. 1.09 Area, Production and Yield of Paddy (Rough Rice) by Country - Asia, 1979 to 1981 ..................... 94 II. PRICES ...................................................... 95 2.01 Average Wholesale Prices (Bangkok) of Selected Agriculture Commodities, 1960-80 ................. ... 96 2.02 Development of Producer Prices of Major Commodities in Thailand, 1967-81 ................................ 97 2.03 Export and Domestic Prices of Rice and Paddy .... ...... 98 2.04 Fertilizer Nutrient Price and Selected Nutrient to Crop Price Ratios ................................... 99 2.05 CIF Price, Bangkok Price and Local Price of Ammonium Sulphate and 16-20-0 Fertilizer Formula, 1963-83 .... 100 2.06 CIF Prices for Ammonium Sulphate, Urea and Ammonium Phosphate, 1963-83 .................................. 101 2.07 Output/Fertilizer Price Ratios, Thailand, 1967-80 .... 102 2.08 Fertilizer and Paddy Prices ........................... 103 2.09 Comparison of Short Run and Long Run Elasticities of Area Planted in Rice with Respect to Price of Rice, 1937-1963 and 1963-1977 ....................... 104 FIGURES 2.10 Export and Wholesale Prices for 5% Rice .... ........... 105 2.11 Farm Paddy Price and Bangkok Wholesale Rice Price ..... 106 2.12 Rate of Price Appreciation and Storage Cost Rate Northest (Khon Kaen) ................. .............. . 107 2.13 Relationship between Paddy Prices, Yield and Fertilizer Use ................ ....................... 108 III. TAXES AND LEVIES ....... ................ ..................... 109 3.01 Rice Export Premium ................................... 110 3.02 Rice Reserve Requirement .............................. 111 3.03 Export Taxes and Central Government Revenue ........... 112 3.04 Proportion of Export Taxes to Total Government Revenues ........... . . . ....................... . 113 IV. RICE PRICE SUPPORT AGENCIES AND PROGRAMS .................... 114 4.01 MOF: Paddy Bought in Relation to Changwat Allocation and Market Surplus, 1982/83 ......................... 115 4.02 Estimates cf Extra Margins Accruing to Various Groups, by Source of Gain ................................... 117 4.03 Ratio of MOF Paddy Procurement in each Changwat to Output of Major Crop and Total Procurement, 1982/83.. 118 4.04 Financial Transfers under the MOF Paddy Procurement Program, 1982/83 . ............ ..... . ................... . 119 4.05 FAF's Allocation of All Projects by Agency Classifica- tion, FY75-82 ...... ................. ................ 120 4.06 FAF's Total Allocation, by Functional Classification, FY75-82 ............................................. 121 4.07 Total Amount Drawn from FAF by Functional Classifica- tion, FY75-82 ......................................................... 122 - vi - Page No. V. RICE PRODUCTION, EXPORTS AND FARM SURPLUSES ................ . 123 5.01 Paddy and Rice Supply by Glutinous and Nonglutinous Varieties ..... ......................... 124 5.02 Paddy Production and Rice Exports ......... .. .......... 125 5.03 Incidence of Agricultural and Rice Surpluses .......... 126 5.04 Proportion of Agricultural Households by Types and Income Groups, 1975/76 .............................. 127 5.05 Agricultural Sales from Rice Farms, by Subregion, 1975/76 ............................................. 128 VI. GROSS MARGINS FOR RICE AND RELATED CROPS .................... 129 6.01 Financial and Economic Costs and Returns: Model Al - Paddy for the Northern Region, 1980/81 ............ .. 130 6.02 Financial and Economic Costs and Returns: Model A2 - Non-Glutinous Paddy for the Northeast Region, 1980/81 131 6.03 Financial and Economic Costs and Returns: Model A3 - Paddy for the Central and Western Central Region, 1980/81 ............................................. . 132 6.04 Financial and Economic Costs and Returns: Model A4 - Paddy for the Southern Region, 1980/81 .............. 133 6.05 Financial and Economic Costs and Returns: Model B1 - Glutinous Paddy for the Northern Region, 1980/81 .... 134 6.06 Financial and Economic Costs and Returns: Model B2 - Glutinous Paddy for the Northeast Region, 1980/81 ... 135 6.07 Financial and Economic Costs and Returns: Models Cl and C2 - Corn and Mungbean ............... 136 6.08 Financial and Economic Costs and Returns: Models C3, C5, C6 - Cassava, Peanut and Kenaf Production 1980/81 ...... ....................... ..... 137 6.09 Financial and Economic Costs and Returns: Model C4 - Sugarcane Production 1980/81 .. ........... 138 6.10 Details on Financial Cost: Model Al - Paddy for the Northern Region, 1980/81 ............ 139 6.11 Details on Financial Cost: Model A2 - Paddy for the Northern Region, 1980/81 .............. .. ..... 140 6.12 Details on Financial Cost: Model A3 - Paddy for the Western Central Region, 1980/81 ............... ...... 141 6.13 Details on Financial Cost: Model B1 - Paddy (Glutinous) for the Northern Region, 1980/81 .............. ...... 142 6.14 Details on Financial Cost: Model B2 - Paddy (Glutinous) for the Northern Region, 1980/81 ............... .. .... 143 6.15 Details on Financial Cost: Model Cl - Corn for the Lower North Region, 1980/81 ......................... 144 6.16 Details on Financial Cost: Model C2 - Mungbean for the Lower Northeast Region, 1980/81 ................ ...... 145 6.17 Details on Financial Cost: Model C3 - Cassava for the Northeast Region, 1980/81 ........................... 146 6.18 Details on Financial Cost: Model C4 - Sugarcane for the Western Central Region, 1980/81 ..................... 147 6.19 Details on Financial Cost: Model C5 - Peanut for the Lower Northeast Region, 1980/81 .................... 148 6.20 Details on Financial Cost: Model C6 - Kenaf for the Northeast Region, 1980/81 ............ ............... 149 - vii - Page No. VII. FERTILIZER AND AGRO-PESTICIDE USE AND FINANCE . .............. 150 7.01 Quantity of Fertilizer Used by Crops, 1976-82 .151 7.02 Average Fertilizer Application Rate, Thailand, 1973/74 and 1978/79 Crop Years ................ 152 7.03 Fertilizer Consumption by Crop and by Region. 1981 153 7.04 Fertilizer Used in Thailand, 1969-83 .. 154 7.05 Projection of Thailand's Fertilizer Demand - By Nutrient, 1982-92 . ............... ... .. 155 7.06 Use of Farm Pesticides Classified by Type of Use, 1973-81. .. .. .. .... 156 7.07 Estimated Fertilizer Use on Rice, 1981 ............... 157 7.08 Use of Fertilizer on Paddy, 1981 ...................... 158 7.09 The Use of Fertilizer under BAAC Credit-in-Kind Program, 1980/83 .................................... 159 7.10 Fertilizer Quantitites Financed through Institutional Credit in Thailand, 1975-79 ......................... 160 7.11 MOF Fertilizer Distribution by Province and Agro- Economic Zone, 1977-82 .. ................. 161 7.12 Components of Short-Term Production Loans to Individual Farmers by Bank of Bangkok 1970-82 ...* .............. 163 7.13 Accumulated Irrigable Crop Area in Thailand, 1968/69- 1985/86 ...... ....................................... 164 MAP Sub-Regions, Agro-Ecological Zones and Per Capita Income CHART No. 23075 Organization Chart of Organizational Agencies Involved in Agricultural Development in Thailand - viii - BACKGROUND PAPERS *Financial and Economic Analysis of Farm Enterprise Models by Hyung Kim *Institutional Basis of Thai Rice Price Policies by Ammar Siamwalla and Kanok Wongtrangan *A Study of Price Transmission, Market Distortions and Subregional Effects for Selected Agricultural Commodities by Chaiwat Konjing *Pricing Policy and Resource Use in Paddy Farming - Case Study of the Northern Chao Phya Area by John Weatherhogg and Phillip Judd **A Study of the Supply and Welfare Effects of Rice Price Policy, Selected Farm Households, Northeast and Upper North Regions of Thailand by Gerald O'Mara and Vinh Le-Si *Evaluation of Governments Rice Procurement Policy in 1982/83 - The Operation of the Marketing Organization of Farmers by Chirmsak Pinthong *Increasing Fertilizer Use - The Effects of Market Imperfections and Government Interventions by Ebhard Reusse and Choeng-Hoy Chung * Available free on request from East Asia Projects Department, World Bank, Washington, D.C. 209433, U.S.A. ** Available at US$8.00 as The Supply and Welfare Effects of Rice-Pricing Policy in Thailand, World Bank Staff Working Paper No. 714, from World Bank Publications, P.O. Box 37525, Washington, D.C. 20013, U.S.A., or from World Bank distributors throughout the world. - ix - PREFACE This report presents the findings of a mission which visited Thailand in July 1983. This mission comprised: Choeng-Hoy Chung (Chief), Gerald O'Mara, Hyung Kim, Enrique Rueda-Sabater (Bank) and John Weatherhogg and Ebhard Reusse (FAO/CP). Studies were also undertaken for the mission by Phillip Judd, Chirmsak Pinthong, Chaiwat Konjing and Ammar Siamwalla. Back- ground papers (available on request) are listed at the end of the Table of Contents. Government's comments have been incorporated following discussions of the report with Government on July 16-18, 1984. The objective of this study is to evaluate the impact of pricing and marketing policy for rice with emphasis on intensification and input use and the welfare and efficiency effects on various categories of rice farmers in Thailand. It also evaluates the financial implications of key pricing and marketing policies and programs affecting rice agriculture. A number of the mission's recommendations have been adopted by Government. It has, for example, scaled down its rice and paddy purchase programs and has initiated measures to make more urea fertilizer available at lower cost. Government has also agreed to reduce its costly program for subsidized rice fertilizer and would further re-examine the feasibility of introducing a more automatic system of taxes and subsidies to stabilize rice prices. The mission is particularly indebted to NESDB for their support and to the Office of Agricultural Economics, Land Development Department, Khon Kaen University and Chiangmai University for data assistance. - x - CURRENCY EQUIVALENTS* $1 = B (Baht) 23 B 1 = $0.04 METRIC EQUIVALENTS 1 hectare (ha) - 2.47 acres = 6.25 rai 1 meter (m) - 3.28 feet 1 kilometer (km) - 0.62 mile 1 kilogram (kg) - 2.2. pounds THAI FISCAL YEAR October 1 - September 30 ABBREVIATIONS AFCT - Agricultural Federation of Cooperatives of Thailand BAAC - Bank for Agriculture and Agricultural Cooperatives DFT - Department of Foreign Trade, Ministry of Commerce DIT - Department of Internal Trade, Ministry of Commerce ETO - Express Transport Organization FAF - Farmers Aid Fund GOT - Government of Thailand MOAC - Ministry of Agriculture and Cooperatives MOF - Marketing Organization of Farmers NESDB - National Economic and Social Development Board NFC - National Fertilizer Corporation OAE - Office of Agricultural Economics, MOAC PWO - Public Warehouse Organization RPC - Rice Policy Committee *Since the report was initially published, the baht has been devalued to a floating rate of about 27 baht to the dollar. P A R T I T H E M A I N R E P O R T - 1 - THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE I. OBJECTIVES AND SUMMARY Study Objectives 1.01 lTis study focusses on the rice pricing policy of Thailand broadly conceived.- We shall show that this policy has been important to the success of Thailand's development policy of the past 30 years, but that changed relative resource availabilities threaten the viability of the present policy and a shift to a new development strategy for agriculture emerges as an impor- tant condition for continued development. Some Difficulties with Present Rice Policy 1.02 Thailand's agricultural sector accounts for a quarter of total GDP, 60% of all exports and 70% of employment. During 1960-75, the sector per- formed exceptionally well and was able to achieve a growth rate exceeding 5% annually. Since 1975, however, growth has slowed to about 3.5% annually. This deterioration resulted primarily from an increasing shortage of land suitable for agriculture. Earlier growth had been achieved mostly through expansion of the cultivated area, but when good accessible land became scarce, poorer quality land came under cultivation and yields at the extensive margin on farm2holdings decreased to the point of nonprofitability, given prevailing prices - If Thailand's agricultural sector is to regain some of its previous growth momentum, crop production must be both intensified through greater use of purchased inputs and diversified into higher value products. 1.03 Our focus is on rice for several important reasons: (a) it is the heart of the agricultural sector, accounting for 40% of agricultural GDP and 30% of agricultural exports; (b) rice accounts for over one half of the calories in the Thai diet, and is therefore the wage good most affecting the cost of living for the Thai consumer; and (c) rice-growing households consti- tute 98% of the 4 million farming families in Thailand, accounting for 55% of the national population and 66% of the labor force. 1.04 Pricing and marketing policy for rice is particularly important when viewed in an historical policy context. Since World War II, rice export taxation has performed a number of critical functions: (a) it served to transfer income from the farmer to urban employers and government; (b) it kept prices low to urban consumers; (c) it functioned as an important source of I/ Interventions on rubber are being studied in another World Bank report. See Bertrand (1983). 2/ See World Bank Report No. 3705a-TH, 1982. 11~~~~~~~~~~ - I - 2 - development financing; (d) it kept wages low; and (e) it has buffered domestic rice prices from international price shocks. However, decades of such taxa- tion and, as a consequence, the lower price for rice received by farmers have inevitably kept the intensity of input use (and thus paddy yield) at a low level. Such a disincentive to intensification was an acceptable trade-off because exportable surpluses could still be generated from new lands and, coincidentally, when surpluses began to contract in the mid-70s, irrigation development came to fruition in the Central (Chao Phya) Region. 1.05 Now that suitable new rice land is essentially exhausted, new irri- gation development has slowed, rice revenues are no longer an important source of government revenues, and with a softening of the world rice market antici- pated in the longer term, Thailand can no longer afford the efficiency losses from rice taxation. 1.06 Our analysis indicates that: (a) The export taxation of rice constitutes an important disincentive to intensification; (b) In relation to the limited benefit (in terms of income improvement for farmers), government price support programs (especially the pur- chase of rice or paddy to maintain target farm prices above world market levels) have been both ineffective and very costly, with sub- sidies amounting to nearly $100 million/year or about 30% of the procurement price; and (c) Government's distribution of fertilizer has not only been costly (with subsidies equivalent to $10 million/year or about 35% of the wholesale price) but it has not substantially increased the inten- sity of fertilizer use. Instead, it has seriously jeopardized the viability of many private dealers and, consequently, the ready availability of fertilizers to farmers at a competitive price. Urea, the most cost-effective source of nitrogenous fertilizer, has been discriminated against through past protection of the fertilizer production industry and import duties of about 17%. An added factor, the appreciation of the Thai baht, compounds the problem since an overvalued baht may be viewed as a tax on exports. The surplus rice farmer has also been implicitly subjected to an income tax , especially over the past two years (when the baht's link to the strong US dollar has been particularly disadvantageous). Recommendations 1.07 Changed relative resource availabilities dictate a new strategy for agricultural development which emphasizes intensification. Present rice pricing policy is inconsistent with this strategy, and to rectify the situation, the following pricing and marketing initiatives are submitted for consideration. - 3 - (a) Government should abandon its present system of rice export taxes which has already been substantially reduced. The export taxes have increased domestic rice availability and kept prices at a lower level than would otherwise prevail. They have, therefore, been an important disincentive to intensification. Rice export taxes include the 2.5% ad valorem export tax, the rice premium (a specific levy which is frequently changed), and the rice reserve ratio requirement (which was eliminated in May 1982 but could be reimposed when world prices return to more normal levels). Since world prices are currently at very low levels and export taxes have been simi- larly reduced to low levels (currently about 5% of the FOB price or 9% of the farm price), eliminating these taxes now would not intro- duce a serious price shock to the cost of living in Thailand. (b) In order to buffer domestic rice prices against large fluctuations in world prices, the following automatic and symmetrical system of temporary taxes and subsidies should be introduced in place of the present system of export taxes: (i) Impose a temporary specific export tax when the world price exceeds a certain threshold above the long-run trend. The tax should prevent domestic prices from rising above the threshold, and the tax should be eliminated when world prices drop below the threshold; (ii) Pay a temporary export subsidy when the world price drops below a certain threshold determined symmetrically with the upper threshold with respect to the long-run trend price. The subsidy should prevent domestic prices from dropping below the threshold, and the subsidy should be eliminated when world prices rise above the lower threshold; (iii) Neither impose an export tax nor pay an export subsidy when world prices do not exceed the upper threshold nor drop below the lower threshold. Both the export tax and the export subsidy should be administered at the level of the exporter for ease of implementation and administra- tive efficiency. Both our analysis and the analyses of other students of rice markets in Thailand indicate that rice marketing is efficient and the effects of both taxes and subsidies would be transmitted to farmers. Our calculations for the 1970-82 period show that the policy of automatic taxes and subsidies (when the thresholds are set at one standard error of estimate from the long- run trend price) would have resulted in average prices to the farmer that were 56% higher, while the coefficient of variation of domestic wholesale prices would have been little different (12.8%, as compared with 11.5% under the historic policy). The implementation of this system under more pessimistic scenarios in the short- and longer-term still shows significant improvements in export earnings for rice and sustained price incentives for Thai rice farmers. Most important, the automaticity of the stabilization process would have reduced the disruptive interplay of vested interests involved. - 4 - (c) To be consistent with the above recommendations and to rectify the unfair advantage and its compromising effect on export cost effi- ciency, exemptions from payment of the rice premium (for government- to-government trade through the Department of Foreign Trade) should be eliminated. (d) Because of the high cost relative to the nominal benefits to farmers: (i) the Public Warehouse Organization (PWO) and the Marketing Organization of Farmers (MOF) should cease their rice or paddy purchasing and distribution operations under the present Price Support Program; and (ii) the MOF should phase out its distribution of subsidized fertilizer. The experience of the rice procurement program, in particular, shows that any attempt to raise prices against the world price trend is futile and wasteful and should not be attempted in the future. 1.08 The above measures will play a critical role in encouraging agricul- tural intensification for rice. Other key complementary measures require: (a) the removal of the 17% import duty on urea fertilizer; (b) government promotion of fertilizer use (particularly urea) as an integral part of production packages jointly with the private sector; (c) the improvement of quality control services for fertilizer, agro- pesticides and improved seeds. 1.09 These initiatives, while likely to have a major impact on directly improving incentives to and the income status of surplus-producing farmers, are not expected to be critical in improving productivity in areas of more limited agricultural endowment (e.g., the less fertile and drought-prone areas of the Northeast). In such areas, the amount of rice sold by most farmers constitutes only a small proportion of total production. Hence, pricing policy cannot be relied upon as a direct income enhancement tool in the poverty areas. Other measures, like those being pursued under Government's Poverty Areas Development Program, will be more directly relevant. In the longer term, with the rise of urban real wage rates, income would also increase for the barely subsistence farmers on marginal lands who constitute the incremental labor force migrating to urban or more commercialized areas. In the meantime, programs which can enhance nonfarm employment opportunities, reduce family size and increase potential surpluses on the farm should be pur- sued as a matter of top priority. 1.10 The next chapter provides an account of the role of rice pricing policy in the development strategy and political economy of Thailand. Chapter III sets in proper perspective the primary objectives and role of price interventions and the institutional and economic environment under which pricing and marketing of key commodities have taken place in Thailand. Chapter IV examines the following: (a) the lag in intensification of rice cultivation in Thailand; (b) the pricing and marketing options for increasing fertilizer and agro-pesticide use; (c) the efficiency and distributive effects of rice tax reform; and (d) the consequence of combining tax reform with domestic price stabilization. Finally, Chapter V outlines our conclusions and recommendations. II. THE ROLE OF RICE A. The Nature of the World Rice Market 2.01 Rice is the world's single most important food grain, providing over 50% of the calories in the diets of 1.6 billion people and over 25% of the calories for another 400 million. The focus of production and consumption is in Asia, which accounts for 90% of each. World rice production increased from 215 to 411 million metric tons between 1961/62 and 1981/82. However, only 3 to 5% of production enters international trade, with most of the Asian crop either consumed on farms or within a short distance of where it is produced. World trade in rice increased from 6.5 to only 13 million tons between 1962 and 1982, just maintaining its share of world production. The export side of the world market is highly concentrated, with Thailand and the United States accounting for 45% in recent years. These two countries plus China, Pakistan and Burma normally account for about 70% of world exports. The import side of the market is less 3oncentrated, with many countries importing relatively minor quantities. - 2.02 Since an estimated 35% of Asian rice production is from rainfed land, international price levels and the volume of world trade depend cri- tically on the vagaries of the Asian monsoon. Consequently, international prices exhibit wide short-term fluctuations, as Figure 1 shows. Given the importance of rice as a wage good in many Asian countries, many governments find it undesirable to transmit the large fluctuations in world prices to domestic markets, and efforts to buffer domestic prices from international price shocks are widespread in both importing and exporting countries. For this reason, the international market is difficult to analyze, since both buying and selling are constrained by national policies which often exacerbate the very instability they seek to buffer. B. The Role of Rice Pricing in the Thai Economy 2.03 The history of rice policy in Thailand has been summarized superbly by Siamwalla and Bertrand (1980) and the interested reader is referred to their papers. However, several important aspects of policy do deserve empha- sis. First, although Thailand has exported rice for well over a century, sig- nificant export taxation of rice is relatively recent - since World War II. 3/ Sources for these data are M. Swaminathan, "Rice", Scientific American, v. 250, No. 7 (January 1984), 80-93, and Reference Tables on Rice Supply- Utilization for Individual Countries, Foreign Agriculture Circular FG-22- 82, U.S. Department of Agriculture, Washington, D.C., September 1982. Figure 1 -6- THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE RICE (Yearly Average) 1,000| Current Constant 90.0 ~ -Italian ' ' ' ._ Thai * * * ** T k 80.0 700 600 N.- x 150 195 190 19517017518 400 ~ ~ 4f 300 I 40 2400 / 3001IIIII II YEAR Source: World Bank, Commodity Tradje and Price Trends Baltimore Johns Hopkins University Press, 1983, page 59 World Bank-26065 -7- Second, while the objectives of rice taxation appear to have received dif- fering priorities over time, e.g., the revenue obiective has diminished in relative importance, the policy has normally aimed at both stabilizing prices and keeping prices down. Thai rice prices have consistently been among the lowest in Asia. Third, apart from early use of multiple exchange rates and sporadic use of quantitative controls, the policy has operated by driving a tax wedge between domestic and world prices. 2.04 The key to understanding Thai rice policy is a firm grasp of the implications of the dual role of rice as a commodity. As the source of over half the calories in the Thai diet, it is the pre-eminent wage good. As the largest source of export earnings, it is the cornerstone of trade and develop- ment policy. Thus, it is the principal commodity price used in simultaneously determining both the internal and external terms of trade. Put differently, the price of rice is an important determinant of the urban real wage, the direction and magnitude of intersectoral transfer of savings, the rate of agricultural development and level of rural welfare, intersectoral labor migration and foreign exchange earnings. 2.05 Rice price changes have various effects both within the rice sector as well as on other markets. In terms of the direct effect at the household consumption level, the increase in the rice price would normally not cause more than a slight shift in consumption to other substitutes, i.e., its substitution effect as a staple is usually limited. The income effect on rice demand is usually negative and low. Estimates of the price elasticity of demand (the percentage change in consumption arising from a 1% change in price) range from -0.3 to -0.6. 2.06 At the household supply level, the income effect is the increase in net revenue per unit of rice produced. For the subsistence producer, the income effects for supply and demand cancel each other out. Hence, only farmers who either sell or buy rice will have an overall nonzero income effect. Rice producers will however have a positive substitution effect which can be short run or long run in nature, the latter being characterized by shifts from other land use only after long delay (because of the need, for example, to establish bunds). Existing supply price elasticities for Thailand (measured by econometric methods) range from 0.2 to 0.4. 2.07 A corollary to the income effect is the wealth effect, which affects landowning farmers. This effect corresponds to the capitalized value of the increase in land rent on paddy land due to the price increase. The wealth effect will only be significant for price increases which are expected to be permanent. For this reason, the rise in the land prices may occur with a lag after a permanent increase in the price of rice. The wealth effect occurs for all owners of paddy land, irrespective of whether they are net sellers, net purchasers or pure subsistence farmers. However, net purchasing or subsis- tence farmers can only realize the wealth increment by selling their land. Thus, significant increases in the price of rice may result in some tendencies toward consolidation of land into larger units. Small farmers who are net purchasers on average would clearly have the strongest incentive to sell land. 2.08 Turning to the multi-market and macroeconomic effects of an increase in rice prices, the most interesting spillovers occur via the labor market. The existing literature is quite clear with respect to the responsiveness of Thai labor markets to real wage differentials -- see Bertrand; Bertrand and Squire; and World Bank (1983). The decrease in the urban real wage for unskilled labor due to an increase in the price of rice will induce an intersectoral reallocation of labor by means of reduced rural-to-urban migra- tion (or even a possible reverse flow for a large price increase). The induced decrease in additions to the urban labor supply will tend to drive up nominal urban wages for unskilled labor until equilibrium is reached between the urban and rural markets. The net long-run effect of the price increase on urban real wages is not clear since theoretically it depends on relative intensities of factor substitution and the extent of resource reallocation in a number of markets. However, the problem can be assessed by quantitative simulation with a price endogenous, multi-sector, macroeconomic model. Since the construction of such a model is not a trivial task, it is fortunate that one already exists - the Siam II model built by the National Economic and Social Development Board (NESDB) in collaboration with the World Bank. Dr. Piyawasti Amranand (1983) has reported the results of rice price policy expe- riments using Siam II for a range of assumptions regarding the elasticity of export demand for Thai rice, and finds that the short-run impact of a 5% reduction in ad valorem export duty reduced the urban real wage of casual labor by only 0.8%. Even when time for labor reallocation was taken into account, the urban real wage of casual labor increased by only 0.2%. The net effect on GDP and overall consumption was also positive, as was the impact on investment. The Siam II simulation experiments suggest that urban real wages are invariant to an increase in the rice price, and the mechanism of adjust- ment is a reallocation of labor such that nominal wages adjust upward to hold real wages constant. Also, the increase in nominal wages means decreased returns to capital for urban employers, which suggests that the real urban beneficiaries of rice export taxation are employers. C. The Role of Thailand in the International Rice Market 2.09 The issue of the degree of power, if any, that Thailand can command in the world rice market has been central to the policy debate over rice export taxation. There is some evidence that the motives for export taxation were initially (a) stabilization of the domestic price at a low level (to keep the real cost of public employment low) and (b) revenue generation. Subse- quently, because it was felt by some that Thailand had significant market power, concern over the optimal tariff level arose in the 1960s. Kridakara and Usher asserted that the internal rice trade was competitive and the export elasticity of demand was very high in the long run (approximating the infinite elasticity of the competitive model). This claim was derived from the argu- ment that the world market is essentially competitive and Thailand has a very small share (i.e., about 3%) of world production. Given such a premise, it is easily shown that the incidence of export taxation is borne by the farmers. Critics of this position argue that the wide variability of national rice prices demonstrates that national policy measures are keeping the inter- national rice market from behaving competitively. Rather, they argue, a better indicator of Thailand's market power is its share of total world export - see Siamwalla and Bertrand (1980). 2.10 The econometric evidence with respect to the export price elasticity of rice for Thailand is mixed. Tsujii reported an export elasticity of one, which implies that marginal revenue has been driven to zero. Wong estimated an elasticity of four and computed an optimal export tax of 25%.4 However, both of these estimates were derived from short-run models that assumed no countervailing response to export taxation by importing countries. This turn- the-other-cheek response by purchasers is a necessary assumption of the usual argument for an optimal tariff, and its empirical relevance is open to question in a market dominated by national policy restrictions on both sides of the market. In particular, 26 to 50% of Thai exports have been government- to-government (G-to-G) sales and the negotiating environment for bilateral bargaining may likely shift adversely against a seller who consistently drives a hard bargain. The obvious response of the rice importer to exploitative market power is the establishment of policy measures to expand domestic pro- duction and reduce dependence on imports. The emergence of high yielding dwarf varieties in the late 1960s certainly facilitated such a strategy. The evidence on the Thai share of world rice exports, which declined from an average of 25% in the 1950s to 10% in the mid-1970s and slightly less than 20% in recent years, may be partly consistent with this conjecture on the counter- vailing response. These factors indicate that Thailand does not necessarily have strong market power in the world rice market. This is also partly vali- dated by actual rice trade practices (especially the tendency for exporters to hold proportionately larger stocks than average when export taxation is high followed by proportionately smaller stocks when taxes are low). 2.11 Probably a more important long-run effect of export taxation has been the disincentive to invest in new technology and/or new productive capacity that a large tax wedge creates. This is true at all levels - the farmer confronted with risky and expensive new techniques, fertilizer producers and/or importers considering capacity increases, and so on. Thus, a large tax tends to create dynamic comparative disadvantage. The international evidence with respect to rice yields shows Thailand lagging significantly behind other Asian producers. Due to high yielding new varieties derived from application of methods from modern genetic and molecular biology, rice yields outside Thailand have increased more in the past two decades than in the pre- ceding seven thousand years. Although it may not be the whole story, a strong case can be made that Thai public policy has minimized the impact of this unprecedented technical change on Thai farmers (see paras. 4.02-4.03 below). While Thailand has not unduly suffered from this technology transfer lag because it has relied on expansion of land under cultivation to achieve growth in production, this strategy will be increasingly difficult to implement. D. Taxation as a Means of Extracting an Investible Agricultural Surplus 2.12 In the early stages of development, an economy is primarily agrarian. It follows from this that the agricultural sector must be the major source of domestic savings for investment in infrastructure and non-agri- 4/ The optimal export tax rate is that which will maximize revenues for Thailand. - 10 - cultural production facilities necessary to achieve economic development. That is, an investible surplus must be transferred from the agricultural sector. One common means of achieving this objective is taxation (either explicit or implicit). If the agricultural sector is producing an exportable surplus, then export taxation is often preferred for administrative efficiency and convenience. By depressing the domestic price through a tax wedge, the terms of trade are turned against agriculture; and if the agriculture export is the wage good (rice), this may reduce the wage bill of employers in the nonagricultural sector, and thus increase profits (and presumably invest- ment). In addition, the revenue from the tax will put resources at the dis- posal of government, and these may be used for investment in much needed basic infrastructure. 2.13 In addition to direct taxation, agricultural exports may be taxed indirectly by any policy measure that depresses the foreign exchange rate from the rate that would otherwise prevail. During the early post-World War II years, a system of multiple exchange rates was used to accomplish most of the export taxation in Thailand. The policy of multiple exchange rates was abandoned in 1955, and the present system of export taxes was erected. However, over the years a variety of tariffs on non-agricultural imports have been imposed to protect an import substituting industrialization. In the absence of these tariffs, non-agricultural imports would have been signi- ficantly greater and, consequently, so would the equilibrium foreign exchange rate. The difference between the equilibrium foreign exchange rates with and without the import tariffs on non-agricultural goods is a measure of the implicit taxation on agricultural exports. 2.14 Turning to the historical evidence, in the early post-World War II period, revenue from rice export taxation averaged about 25% of total govern- ment revenue. By the late 1970s, the share of rice taxation in revenues had dropped to less than 4%. Throughout the period from 1947 to 1981, taxation of rice through multiple foreign exchange rates and direct taxation has ranged from 22 to 66% of the world (FOB Bangkok) price. This has kept domestic prices substantially below world prices, significantly reducing real wage costs to non-agricultural employers. Thus, both the direct taxation of rice and the implicit taxation through import tariffs have stimulated import substituting industrialization, and constitute the principal mechanism by which an agricultural surplus was transferred to non-agricultural development purposes. Some evidence with respect to the effect of import tariffs on Thai industrialization is provided by some experiments by Faber and Kennes, using THAM-I, a price endogenous, multi-sector, macroeconomic model of Thailand with a fully developed agricultural sector. The experiments simulated the response of the Thai economy to a reduction of import tariffs on non-agricultural commodities from an average of 50% in 1980 to zero in 1989. When compared with a base case experiment in which no policy changes were assumed, the growth rate of GDP remained the same, but the share of agriculture in GDP increased to 31% (compared with 18% in the base case). The large increase in agriculture's share when tariffs are reduced signals a significant resource reallocation. Over the 1980-89 period, the growth rate of agriculture was 8.6% a year in the tariff reduction case as compared to 3.9% in the base case, and non-agricultural growth was 5.5% compared to 6.9% in the base case. While the dramatic resource reallocation indicated by these experiments may well be - 11 - exaggerated (the non-agriculture sector in the model is quite simple), they nevertheless imply significant implicit taxation of agriculture by means of import tariffs. 2.15 Considering the quite heavy taxation of rice in Thailand (both explicit and implicit) that has characterized recent decades, the magnitude and nature of the supply response of farmers is of some interest. During 1960-80, the area planted to paddy increased from 37 million rai to 60 million rai, while overall yield barely showed an upward trend. Over the same two decades, rice yields more than doubled in many countries in the most explosive technical advance in the seven thousand year history of rice cultivation in Asia (para. 2.11). Thus, the increase in Thailand's paddy production from 10 million tons in 1962 to 17.8 million tons in 1982 was generated almost entirely by expanding the area under cultivation, in sharp contrast with the increase in intensity that occurred in almost all other producing nations. While conditions were somewhat less favorable to intensification in Thailand than in some other countries, the disincentive created by the heavy burden of taxation clearly accounts in significant part for the failure of Thai yields to increase in an era of extraordinary technical advance. Since the increase in cultivated acreage was due very largely to bringing new lands under culti- vation, Thailand was most fortunate in possessing unutilized land resources. The existence of these resources made feasible several decades of heavy taxa- tion of agriculture, especially rice production, that permitted transfer of a significant agricultural surplus to the development process. Now that the era of area expansion in Thailand is drawing to a close, a dramatic shift in agri- cultural policy looms as an emerging necessity. III. OBJECTIVES AND INSTITUTIONAL CONTEXT OF PRICE INTERVENTION IN RICE AGRICULTURE A. Structure of Rice Taxation 5 3.01 Significant export taxation of rice in Thailand is a post-World War II phenomenon. In the immediate postwar period (i.e., 1947-55), rice exports were taxed implicitly via a multiple foreign exchange rate system. This approach was abandoned in 1955, and two taxes (that remain to this day the basis for rice export taxation) were introduced: (a) an ad valorem tax on the FOB price (presently 2.5%) administered by the Ministry of Finance, and (b) a specific tax, the rice premium, administered by the Ministry of Commerce. Before 1975, revenue from the rice premium went to the Ministry of Finance for inclusion in the general government budget, but since 1975, all revenue from this tax goes to the Farmer's Aid'Fund (FAF). In practice, the rice premium has been varied to stabilize domestic prices at a low level and, therefore has been the heaviest tax. In addition to the ad valorem and speci- fic taxes, a rather complicated tax called the reserve ratio requirement was introduced in 1962 to provide supplies of cheap rice to special groups, e.g., 5/ For an overview of rice taxation in relation to other taxes and subsi- dies, see Appendix 1. - 12 - civil servants. This tax, which is administered by the Ministry of Commerce, specifies that for every ton of rice exported, the exporter has to supply to the government a certain amount of rice of a given quality at a price below the domestic market price. The reserve ratio (or "cheap") rice was made more widely available (but still in limited quantities) in a period of rising prices (1966-68) to urban consumers primarily in Bangkok via special shops. The cheap rice distribution to urban consumers was significantly expanded in the 1970s, although in a period of market stress (1973-74) mismanagement led to stockouts and the brief imposition of a ban on rice exports. Siamwalla et al. (1981) report that Bangkok received two thirds of the total reserve ratio rice distributed by the Public Warehouse Organization (PWO) through the Internal Trade Department (DIT) to special shops between 1974 and 1980, and that rice distributed by PWO represented 60 to 75% of the rice consumed in Bangkok. Outside of Bangkok, cheap rice distribution was less than 6% of urban consumption. 3.02 When world rice prices dropped sharply in 1982, the reserve ratio requirement was abolished, but history suggests that a return to more normal rice prices may induce political agitation in Bangkok and result in a revival of this tax. The depressed condition of the world market has also prompted the Government of Thailand to significantly decrease the rice premium tax - current export taxation of rice is about 5% of the FOB price - but this reduc- tion is in line with a long-standing policy of stabilizing domestic prices, albeit at a low level. Note that the combination of the reserve ratio requirement and cheap rice distribution in urban areas provides a price instrument for varying urban rice consumption. The difference between the government-designated price and the free market price is a consumption subsidy that may be varied to control urban demand, at least in Bangkok, while varying the reserve ratio provides the finance for cheap rice distribution. B. Rice Policy Objectives 3.03 In accordance with the logic of revealed preference, Government's actual policy performance regarding rice will be taken as the de facto objectives of the policy instruments. Thus, it is clear that the decline in the share of rice taxation in total government revenues from around 25% just after World War II to 14% in 1960 and currently less than 2% reflects a similar decline in the importance of rice taxation in mobilizing public savings. 3.04 In contrast, the remarkable stability of domestic rice prices in real terms argues for the continued importance to Government of price stabi- lity for the wage good. Table 1 presents data on real domestic prices over the turbulent years for rice prices from 1970 to 1982. Note that all prices are within 20% of the mean, and in 8 out of 13 years, prices were within 10% of the mean. This is a no mean achievement in an era of large price shocks and rampant, worldwide inflation. - 13 - Table 1: AVERAGE DOMESTIC WHOLESALE PRICE Current Prices Constant 1982 Prices /a Year (Baht/kg) (Baht/kg) 1970 2.10 6.31 1971 1.75 5.22 1972 1.90 5.41 1973 2.74 6.77 1974 3.76 7.46 1975 3.78 7.13 1976 4.06 7.36 1977 4.05 6.82 1978 4.46 6.96 1979 4.57 6.48 1980 5.74 6.81 1981 6.71 7.06 1982 5.45 5.45 Mean 6.557 Standard deviation 0.752 Coefficient of variation 0.115 /a Deflating with Consumer Price Index, Urban Areas, Whole Kingdom. 3.05 The evidence of a policy preference for low rice prices is supported by the prevalence of export taxation which averaged almost 40% of the FOB price for a period of 35 years. Less obvious is the revealed preference for a special consumption subsidy for Bangkok consumers, in addition to that pro- vided by export taxation and the tariff structure. This is difficult to defend on either equity or efficiency grounds, and remains an anomaly probably due to the heavy concentration of civil servants in Bangkok. There is also evidence of a political constituency for a policy of supporting farm-level rice prices, which is examined below. This shift is relatively recent (initially in 1973/74 and, particularly, after 1979/80) and it reflects a real shift in the strength of the rural polity versus the urban one. However, the price support policy objective and interventions aimed at supporting farm- level prices have been conspicuous failures. C. Rice Price Support Programs 6/ 3.06 Price support at the farm level for paddy was initiated in 1966/67 at below market prices. It was only in 1969 that Government began its attempts to influence farm level prices through purchases of paddy at above market prices. Since the volume of purchases has been and remains a small 6/ Details are in Appendix 2. - 14 - fraction of total production, all attempts in the intervening years have been failures. Table 2 summarizes the evidence with respect to market prices, support prices and government procurement since 1969. Note that even the relatively large combined purchases by the Marketing Organization of Farmers (MOF), the Public Warehouse Organization (PWO) and the Agricultural Federation of Cooperatives of Thailand (AFCT) in recent years have been too small to significantly affect market prices. 3.07 The apparent hidden premise behind these efforts at raising farm- level prices (while simultaneously depressing domestic wholesale prices by means of export taxation) is that rice marketing is inefficient and monopolis- tic, and that government intervention by means of rice purchases will raise farm level prices by squeezing profit-laden marketing margins. This premise is contrary to the substantial evidence that rice marketing in Thailand is efficient and that it is precisely the reduction of the export tax which has a greater price-raising effect at the farm level than the price support program (see paras. 3.17-3.19 below). 3.08 Price support programs through crop procurement became important only recently when the Thai Government launched their "target price" program for paddy in 1980/81. The primary objective was to increase prices to farmers earlier in the marketing season and thus stabilize as well as increase their overall incomes. Our assessment is that the cost of these programs (especially those administered through the PWO and MOF) do not justify the rather nominal benefits to the rice farmer. 3.09 The most important of the price support programs was the purchase of rice by the PWO through bids at the mill level (mainly in the early marketing months of December through March) so that target farm prices for paddy could be achieved. Complementary measures were taken in terms of an export quota (later rescinded) and G-to-G export contracts geared for delivery in early harvest months to create an "artificial demand" for rice. Private exporters were also "required" to have extra stocks on hand in the early harvesting months. The MOF, which used to be the agency involved in price support operations, resumed their direct purchase of paddy from farmers in the second year (1981/82). The Agricultural Federation of Cooperatives, partly in con- junction with BAAC, also initiated schemes to store farmers' paddy and sell to the PWO or the Foreign Trade Department (DFT) on their behalf. 3.10 Preliminary analysis of the PWO program indicates that losses (revenues minus costs) over the three years ending October 1983 are likely to be in the order of B 6 billion ($262 million). This is equivalent to a loss of about $88/ton of rice procured (about 32% of the average procurement price), most of which represented inordinate carrying costs. The main benefi- ciaries of this $88/ton subsidy are essentially the rice millers and warehouse owners who store the rice on behalf of PWO. Our assessment of the farm impact shows that the PWO price support program per se has had little effect in improving farm prices compared with world market factors and government reduction of export taxes. Similarly, the MOF program (which became parti- cularly large in 1982/83) has essentially reached the same types of bene- ficiaries because MOF also had most of its purchases primarily in rented private storage; field surveys and analyses showed that less than 30% of the - 15 - Table 2: PRICES RECEIVED BY FARMERS, MINIMUM GUARANTEED PRICE AND GOVERNMENT PROCUREMENT OF PADDY Ratio of Deflated Procurement Farm Support farm to farm Procurement by: as percent price price support prices MOF PWO AFCT Total production /a /b prices /c /d -- (US$/ton) -- (baht/t) ---- (000' ton) ---- 1969/70 45 63 72 933 - - - 69 1 1970/71 36 63 57 728 - - - 117 1 1971/72 47 54 87 927 - - - 200 1 1972/73 76 - - 1,316 - - - - - 1973/74 105 - - 1,473 - - - - - 1974/75 109 137 79 1,460 249 - - 249 2 1975/76 100 130 77 1,282 37 - - 156 1 1976/77 104 110 94 1,228 15 - - 15 - 1977/78 118 118 100 1,277 4 - - 5 - 1978/79 123 132 93 1,205 187 - - 213 1 1979/80 145 167 88 1,203 1,084 - - 1,146 7 1980/81 167 170 98 1,217 - 1,807 94 1,901 11 1981/82 140 182 77 n.a. 139 1,840 233 2,212 12 1982/83 145 160 91 n.a. 525 640 155 1,320 8 /a Average farm price 1st grade paddy calendar year (second year shown). /b Minimum guaranteed price 100%, 1st grade. /c Deflated by Cost of Living Index, Bangkok, 1970 = 100. /d Including purchase made directly by the Government in earlier years. Source: FAO Committee Commodity Problems, Intergovernmental Group on Rice, "The Rice Policy of Thailand", Item V.6 (iii) of Provisional Agenda, Vercelli, March 14-18, 1983 and Bank of Thailand (updates). - 16 - benefits accrued to the farmer. With almost no means of monitoring the stocks, the private sector could use MOF's paddy stocks as part of their working stocks (as was the case with POW rice). Thus the "artificial demand" effects were negated. The publicized price increase in the 1980/81 program came essentially from external market effects. The AFCT program has not been assessed in much depth, but primary beneficiaries have been cooperative members and cooperative mills; beneficiaries also tend to be in less accessible areas compared with the MOF program. 3.11 The sources of funds for the PWO program are: (a) a $262.0 million loan (25% from the Bank of Thailand at 5% annual interest and 75% from commercial banks at the prime rate); and (b) the Farmers Aid Fund, which is mainly derived from the rice premium. The MOF and AFCT price support buying operations are primarily from the Farmers Aid Fund - the former being given B 550/ton and the latter B 374/ton (through the Cooperative Promotion Department). In the case of MOF, its actual costs are B 350/ton. Thus, for every ton it "handles" under the program, MOF makes a "profit" of B 200. In effect, MOF functions more as a financial intermediary than as a marketing organization. If indirect subsidies (like interest-free working capital for MOF and premium exemptions for its exports) were to be taken into account, the total procurement subsidy would be at least B 1,000 or $44 per ton of paddy (equivalent to 30% of the procurement price). 3.12 Hence the price support programs essentially subsidized the trader/millers' working capital and resulted in dubious transfer payments. In the case of the MOF, because it undertook negligible stocking of the procured paddy but funneled it straight into the market system, large losses through deterioration and pilferage were avoided (unlike PWO which also undertook its marketing and storage operations). In terms of farm price impact (as dis- cussed in Appendix 2), if export tax distortions were discounted, these pro- grams did not achieve their objective of significantly influencing the farm price early in the marketing season compared with the world market (FOB price). Hence world market conditions have been the overwhelming determinant of farm prices and the apparent success of the 1980/81 PWO program is essen- tially due to this reason. 3.13 In conclusion, our analysis indicates that the price support pro- grams, especially that of the PWO, exact too high a cost from Government to justify the rather nominal benefits to the farm sector. The rationale of the price support system (i.e., creating artificial demand early in the marketing season) has generally not worked because the marketing system is by and large efficient. Intraseasonal price differentials, for example, are generally not sufficient to generate large profits. Hence substitute mechanisms (government purchase and distribution) have not and are unlikely to do better. Emphasis should be on removing obstacles to free competition at both the export and domestic marketing levels. - 17 - 7/ D. Rice Marketing Efficiency and Price Transmission - 3.14 By and large, agricultural marketing in Thailand (especially for the major export crops of rice, maize, cassava and rubber) is competitive and efficiently managed by the private sector. Competition at the central and terminal market levels of the major export commodities in Thailand is generally sufficient to keep margins at a reasonable level. Access to market towns or mills and the extent of farm surpluses are also important in deter- mining the farm-gate price. With more than 25,000 rice mills scattered throughout Thailand and a widely dispersed network of traders, rice marketing is generally competitive. 3.15 Differences in marketing margins and farm-level prices occur mainly because of cost factors. In rice, for example, the higher margins in the North and Northeast compared with the Central Region reflect (a) higher transport costs resulting from relative location from the main retail and export market (Bangkok) and (b) the relative density of rice mills. 3.16 While margins may differ among regions, differences also occur among commodities, with the efficiency with which commodity prices are transmitted from the export level to the farm level being related to the extent of Govern- ment intervention in pricing policy (see Appendix 3). In general, high price transmission coefficients and smaller profit margins have been observed among the commodities facing fewer pricing and marketing interventions (e.g., maize, cassava) compared with those which have been traditionally well regulated (especially rice and sugar). These results point to the fact that movement towards a freer trade regime provides for better marketing efficiency and more effective participation in world markets. E. Comparing the Effectiveness of Past Policy Instruments 3.17 In terms of achieving price stabilization, we have demonstrated that variation of export taxes has been a more effective instrument than direct price support. Manipulating the export tax (specifically its reduction as a price wedge) has also proven to be more successful in raising farmers prices than the price support program. This has been confirmed by simulations of the SIAM II model which showed that benefits from the removal of the export tax far outweigh the costs when compared with rice purchase programs. Such a result is not surprising because, as can be shown by analyzing the link between export taxes and farm prices, the effect of an export tax reduction is likely to be multiplicative. 3.18 Historical evidence (1977-82) of the direct link between rice export tax changes and wholesale prices (Appendix 3) indicates this multiplicative effect; a one baht reduction in the tax, on average, resulted in a nearly three baht increase in the wholesale price. According to Chirmsak (1977), the middlemen seem to charge only in terms of absolute margin, which means that 7/ See Appendix 3 for a more detailed discussion and for references to past analyses on this topic. - 18 - marginal changes in the Bangkok price are transferred in a more than propor- tionate amount to the farm price level. 3.19 Currently, from an average paddy production of 18 million tons, the surplus over farmers' own consumption is about 11 million tons. Of this surplus, an estimated 10 million tons is non-glutinous paddy with approxi- mately 5 million tons being exported and 5 million tons being consumed by deficit households. Since it is the total surplus production which gains from an export tax reduction, a 1 baht reduction for a ton of non-glutinous rice exported directly benefits another ton of rice surplus consumed domesti- cally. Hence a one baht per ton reduction of the export tax, given the nature of its transmission, is associated with more than two bahts of improvement in value for rice. IV. POLICY TRADE-OFFS FOR INTENSIFICATION A. Present Status of Intensification in Rice Production 4.01 In Chapter II, we argued that the policy of keeping domestic rice prices low has suppressed normal price incentives for intensification. In consequence, the remarkable international transformation of rice production technology induced by the new high-yielding varieties had only a minimal impact on rice cultivation in Thailand. The policy of cheap rice made good sense when Thailand had surplus land available since increasing land under rice cultivation, rather than increasing output per unit of land, was an efficient strategy for both increasing rice production and diverting an agri- cultural surplus to development purposes. However, now that good cultivable land has become scarce, increasing rice production to feed Thailand's growing population and to generate export earnings will require a change of strategy. 4.02 In order to assess the present status of intensification in rice cultivation in Thailand, a comparison with other rice producing nations in Asia is instructive (See Table 3). The most important indicators of inten- sification are the level and rate of change in paddy yields. Table 3 indi- cates that by 1979-81, paddy yields in Thailand were the lowest among major rice producing nations of Asia. This yield was associated with one of the lowest fertilizer uses, the lowest area planted to modern rice varieties and the most unfavorable fertilizer/paddy price ratios. Furthermore, Thailand had the lowest increase in paddy yields during the 1960s and 1970s. Since the nations compared include several with agroclimatic conditions very similar to those of Thailand (e.g., Bangladesh, Burma, Malaysia, Indonesia), the pronounced lag in intensification in Thailand is clearly not due in signifi- cant part to special environmental conditions. Bangladesh and Burma, for example, have flood plain conditions like Thailand's but despite their lower irrigation rate, their yields are higher than Thailand's because fertilizer/paddy prices are substantially more favorable and a greater proportion of area appears to be under improved seeds. 4.03 The evidence of Table 3 is clear. The price ratio of nitrogen to paddy in Thailand is among the lowest of the countries compared. Hence, price incentives for using chemical fertilizer have been weak in Thailand. By Table 3: INTENSIFICATION INDICATORS, MAJOR ASIAN RICE-PRODUCING NATIONS I' Chemical x area Rice % change x change fertilizer use Price planted to irri- Average Paddy paddy yields paddy acreage (kg NPK per ha ratio (kg modern rice gation yield (tons/ha) (1961-63 to (1961-63 paddy area) N/kg paddy) varieties rate /a Country (1961-63) (1979-81) 1979-81) to 1979-81) (1980) (1977/78) (1979/80) (1975) Bangladesh 1.67 1.95 17 19 13 1.58 21 13 Burma 1.59 2.61 64 0 18 1.80 29 17 China 2.67 4.25 59 13 n.a. /b n.a. n.a. 46 India 1.50 1.88 25 12 58 3.65 47 43 Indonesia 2.05 3.26 59 30 102 2.04 60 76 Japan 4.85 5.58 15 -27 330 v 0.46 ' n.a. n.a. Korea (So.) 4.07 5.55 36 8 228 0.74 56 n.a. Malaysia 2.15 2.82 31 44 n.a. 1.84 n.a. 84 Pakistan 1.39 2.43 75 62 62 3.00 50 75 Philippines 1.24 2.20 77 13 42 3.25 78 54 Sri Lanka 1.62 2.48 53 42 112 1.20 71 92 Taiwan 3.64 4.62 27 -12 304 1.34 n.a. n.a. Thailand 1.67 1.85 11 58 18 " 3.35 ' 9 /c 35 /a Rice irrigation rate = irrigated harvested area - total harvested area x 100. /b n.a. = Not available. /c Based on IRRI compilation. It is probably underestimated since a large proportion of farmers keep their improved seeds and sell them to their neighbors (see World Bank Report No. 3705a-TH, Annex 6). Source: A.C. Palacpac, World Rice Statistics, International Rice Research Institute (IRRI), Los Banos, Philippines, 1982; Foreign Agricultural Service, U.S. Department of Agriculture, Reference Tables on Rice Supply-Utilization for Individual Countries, Foreign Agricultural Circular No. FG-22-82, Washington, D.C., 1982; The World Bank, China: Socialist Economic Development, 3 Vols., Washington, D.C., 1983; Rober Herdt and A.C. Palacpac, World Rice Facts and Trends, IRRI, April 1983. - 20 - eliminating the export taxation on rice (about 40% for the period given in Table 3) and the import taxation on urea (17%), the nitrogen-paddy price ratio would drop from 3.35 to 1.99, a level which would make intensification much more profitable and paddy production costs more competitive. B. Increasing the Use of Fertilizer and Other Modern Inputs Fertilizer 4.04 Increasing fertilizer use constitutes one of the most promising avenues to increase rice yields in Thailand. The most popular fertilizer now in use is ammonium phosphate (i.e., 16-20-0 fertilizer) which is applied almost exclusively to rice. Ammonium sulphate is applied mainly to sugar and rice while various other compound mixtures are used for tree crops (especially rubber). Unlike other Asian countries, urea is little ug7d in rice farming compared with ammonium sulphate and compound fertilizer.- Table 4: APPARENT FERTILIZER CONSUMPTION, 1969-83 Year Annual fertilizer use Average annual growth /a (thousand tons) (%) Average 1969-71 271.8 Average 1972-74 405.5 14.3 Average 1975-77 646.0 16.8 Average 1978-80 763.3 5.7 Average 1981-83 800.0 1.6 1992 (Fertilizer complex 1,200.0 4.1 projection) Source: Background Paper No. 7 4.05 In comparing three-year average periods from 1970 (av. 1969-71) to 1982 (av. 1981-83), the growth rate in fertilizer use has slowed considerably since the early to mid-1970s. With planted area growing at nearly 2% annually since 1978, the intensity of fertilizer use has apparently declined. Given the importance of intensification in Thailand, such a trend is worrying. At the same time Government, through the newly formed National Fertilizer Corporation (NFC), is finalizing plans to build a fertilizer complex (based on natural gas) with an annual production of 990,000 tons of fertilizer (450,000 tons in nutrient equivalent) by the early 1990s. This production will represent about 83% of projected national fertilizer requirements, 8/ In Asia, the average ratio of ammonium sulphate to urea used is 1:10, but in Thailand it is 10:1. - 21 - implying a growth in total fertilizer consumption of 4.1% annually from 1982 to 1992. For urea, the most important output of the proposed complex, the implied increase in direct consumption is nearly five-fold. If the recent slowdown in fertilizer use continues and given that the fertilizer produced will likely not be sufficiently competitive for export, significant capacity underutilization could well be in prospect. 4.06 The recent stagnation of fertilizer use may be traced to three important developments: (a) the limitation of water availability for dry season irrigation in the Chao Phya Basin (the primary user of rice fertili- zer); (b) unfavorable rice/fertilizer price ratios and (c) discouragement of private-dealer stocking and their fertilizer promotion. In assessing the overall constraints to fertilizer use on paddy, we found that improvement in the fertilizer-paddy price ratio (while very important) is not the most critical constraint to fertilizer use; cropping risks are. Farmers adapt their cropping behavior according to the risks they face. Under conditions of irregular and insufficient rainfall (commonly found in the Northeast) and in frequently flooded or deep water areas (the lower Central Region), fertilizer use is largely restrained because of difficult growing conditions for rice. However, mosb rice surplus farmers respond to changes in the fertilizer-paddy price ratio.- 4.07 Urea is the cheapest source of nitrogen nutrient for plant growth. It is also the only fertilizer subject to significant import duty in Thailand. Because Government intends to tax the industrial use of urea, but is yet unable to separate its use as fertilizer from that used by industry (essentially the production of monosodium glutamate or MSG), it has decided to tax all urea imports at nearly 17%, except for those of the Thai Central Chemicao 7ompany which has a large fertilizer mixing plant. For a number of areas, - by switching from ammonium phosphate (ammophos) to urea (even with- out removing the 17% import duty), farmers' incremental benefit/cost ratios could be more than doubled. More importantly, the use of urea as top dressing is not very widespread even in the more favorable areas. Despite the s/oppor- tunities, urea consumption is estimated to be only about 10,000 tons compared with the present fertilizer use of 800,000 tons. 9/ Nonprice factors are important even for surplus farmers under irrigated conditions. The monitoring studies of the Chao Phya Irrigation Project area (see Background Paper No. 4) show substantial differences in the level of fertilizer application arising from differences in the stage of irrigation development, disease/pest incidence and the lag in new techno- logy adoption. 10/ For example, in many areas of the Central Plain which show low probabi- lities of response for P and K. 11/ Of a total urea consumption of 30,000 tons (all imported), about two- thirds is being used for manufacturing of MSG. Of the estimated 10,000 tons used for agriculture nearly 80% is probably used for vegetables. - 22 - 4.08 The promotion of greater urea use is handicapped by two other important obstacles. Firstly, the heritage of past protection of nitrogenous fertilizer plants (which began production in 1966) gave rise to the subsequent monopoly control of straight N fertilizer imports from 1968-1974. This action also resulted in the promotion of compound fertilizers (particularly ammophos) by importers to get around the ban and, with the build-up of ammophos demand, an ammophos mixing plant was built in 1975. Hence, at the time when use of low-cost straight fertilizers like urea became important in other countries, their use in Thailand was artificially restrained to such an extent that, when protectionist measures were removed in the mid-1970s, private vested interest in promoting compounds and established compound brand loyalties meant that there would have been little gain in promoting urea. Secondly, there was little experimentation and promotion of urea use on farmers fields by Govern- ment until about four years ago. Except for the rigidities implied by the established brand loyalties for ammophos, another widely touted constraint - market control and manipulation of fertilizer prices by fertilizer firms - has not been a significant problem since the mid-1970s. 4.09 Government's fertilizer distribution operations, through MOF, were set up to: (a) moderate the tendency of firms (in the late 1960s and early 1970s) to manipulate prices; and (b) provide subsidized fertilizer to encourage greater input use. MOF presently distributes fertilizer at its Bangkok wholesale cost and provides subsidized credit for its "target" benefi- ciaries (farmer groups and individual small farmers). Its "moderating function" has essentially become "unfair competition" in that, by assuming a 55% share of all ammophos distributed and by subsidizing ammophos by as much as 50% in some locations in recent years, private sector profits have been seriously squeezed. With numerous firms already "dropped out," there is a real danger that they could all be out of business except for one or two large firms. Since these firms would also be the main suppliers of MOF, an oligo- poly situation could become a reality. Uncertainty regarding Government's fertilizer policy will lead to unstable stocking, pricing and delivery posi- tions - all detrimental to increasing fertilizer use. Furthermore, as many fertilizer dealers are also agro-chemical dealers, compensatory pricing of agro-chemicals (to reduce their losses from fertilizer) will likely worsen. Such unhealthy trends cast strong doubts on the usefulness of MOF's distri- bution role. 4.10 Our assessments indicate that MOF's distribution program is directly costing Government (i.e., the Farmers Aid Fund) about B 46 million ($15/ton) for approximately 130,000 tons distributed yearly. If indirect subsidies (in terms of interest-free working capital for MOF and efficiency losses) are taken into account, MOF's fertilizer subsidy would be closer to $75/ton (nearly 35% of the wholesale price), no more than half of which would, in any case, reach the farmer. Preliminary analysis also indicates that, of the subsidies which reach the farmer, more than 85% flow to provinces with a higher concentration of irrigation projects. The farm beneficiaries have - 23 - predominantly been the larger (more well-off) farmers.-21 Furthermore, while the quality of MOF fertilizer distributed (virtually all ammophos) is good, deliveries were often delayed because of a requirement to use the Government's Express Transport Organization (ETO). Finally, because the subsidized fertilizer distributed is not closely tied to specific extension programs, yield improvements have not been substantial. Details are given in Appendix 2. Agro-Pesticide Use 4.11 Farm insecticide and fungicide use, like fertilizer, have also stagnated since 1978. Only herbicides appear to have experienced increased usage, especially in 1980 and 1981. The former trend may be attributed to similar reasons as in the case of fertilizer (i.e., the slowing down in the growth of /dry season irrigation areas and adverse rice/pesticide price ratios). 3 While accelerating import prices have impinged on profit margins for the formulators and distributors, unlike fertilizer, there has been compa- ratively little government intervention compounding the problem. The rising trend in herbicide use, in sharp contrast, provides an interesting lesson for encouraging the use of other cash inputs. 4.12 Despite higher prices, herbicide use has substantially increased because of expansion in rubber cultivation and the successful introduction of a new rice technology - broadcasting of pregerminated seeds (instead of trans- planting) - in advanced irrigated areas in the Central Region. This techno- logy increases gross margins over those of transplanted rice by about 20% (essentially through savings in the labor costs) but it requires a substantial increase in the use of herbicides, since mechanical and hand weeding are not feasible. With sufficient demand from farmers, private companies have res- ponded with timely stocking and promotion. C. Effects of Rice Tax Reform on Rice Supply and Welfare 4.13 In appraising the effects of existing price policy it is important to base the comparison on a period in which world prices were close to their long-run trend level. As we have seen, the policy objectives of low and stable prices have dictated that the level of export taxation be adjusted, especially the rice premium, with changes in world prices to achieve these ends. Currently, world prices are at very low levels; and, accordingly, export taxes have been adjusted downward to low levels by historical standards. However, unless the underlying policy objectives are changed, when world prices return to more normal levels, so will the level of export taxa- tion. Thus, rice tax policy reform must be considered in the context of normal world market conditions when estimating its effects. For this reason, 12/ From field surveys, we found that beneficiaries were mainly members of farmer associations and better-off farmers. 13/ This was due to accelerating import prices (especially in 1979 and 1980) and lower rice prices (since 1981). - 24 - our analysis is based on data from the 1976-78 period when world prices were relatively close to the long-run trend. 4.14 Our analysis of efficiency effects indicate that changes in prices resulting from changes in the rate of export taxes are, by and large, effi- ciently translated to the farm level. The relevant question is what is the likely effect on the production response of paddy farmers? The evidence from past analyses, our assessment of monitoring studies in the Chao Phya area and farm model simulations for the Upper North and the Northeast may be summarized as follows: - Significant area response and intensification may be expected in wet season rice areas of the Upper Central and North Regions where farmers tend to b 4yery commercialized and grow more than one major crop on the farm.- - Dry season yield and corresponding fertilizer use hmae been found to be highly correlated with changes in paddy prices.- A significant intensification jg7ponse will therefore be likely in all dry season irrigated areas.- - A lesser but still significant supply response (primarily through area planted) may also be forthcoming from the more risky rainfed areas. Calculations based on farm model simulations for the Northeast indicate a supply elasticity of 0.3 - i.e., a 10% increase in paddy price will induce a 3% increase in average production for the whole region. - A positive macroeconomic impact on both agricultural sector output and GDP can be expected, as shown by a simulation of the SIAM II macroeconomic model of Thailand (discussed in Chapter II). This result holds for all plausible values of the price elasticity of export demand for Thai rice. - The broad income distributional implications of rice pricing intervention (as indicated by a Siam II simulation of elimination of the 5% ad valorem tax) show rice surplus farmers gaining and net rice consumers losing in the short run. However, given time for resource reallocation, unskilled labor in both urban and rural 14/ See Dowling and Krongkaew (1983). 15/ See Background Paper No. 4. 16/ The Chao Phya Project monitoring studies (ibid) show that, as irrigation development phases in new areas under dry season rice, farmers use greater quantities of improved seeds and fertilizers, often irrespective of changes in paddy/fertilizer price ratios. This illustrates the fact that the reduction of cropping risks alone, through irrigation, could also provide the incentive to use more purchased inputs. - 25 - locations recovers their original purchasing power via increase in the nominal wage. - An additional long-term gain would be a decreased rate of growth in the urbanization of the Bangkok metropolitan area, with corollary benefits of decreased congestion costs and less investment required in urban infrastructure as compared with the growth expected under present policies. 4.15 Income transfer burdens from government intervention in rice markets have different implications for producers in various regions or subregions. The extent of benefits would depend on farm endowment, family size, location of opportunities for off-farm employment; but, by and large, it will be the surplus farmer who will directly benefit most. 4.16 The impact of rice taxation on family welfare and rice production for selected farm household types in the Northeast and Upper North Regions was analyzed using programming models of household production-consumption deci- sions (see Background Paper No. 5). These regions/subregions were selected because they comprise rice farmers who form the bulk of the rural poor in Thailand. The objective was to assess the effect of variation in land quality, farm size and family size on the welfare impact of, and the supply response to, rice policy. The analysis specified three farm sizes and three family sizes, though these differed between regions, with land quality remaining a regional variable. Price effects were simulated over six price intervals. Many experiments were done for households specific to individual provinces (changwats), but variation within regions is sufficiently small to discuss the results in terms of representative regional farm and household types. 4.17 Welfare Impact. It is important to distinguish between short-run and long-run impacts, where the long run allows sufficient time for full adjustment of labor markets. Short-run welfare impacts were determined by calculating Laspeyres and Paasch price indices, which in most instances were sufficient to establish whether the change in nominal income was a welfare improvement or not. For the Northeast, the calculations on welfare impact were clear-cut. For all family sizes and price intervals, small farmers are worse off with an increase in the rice price. For almost all family sizes and price intervals, large farmers are better off with the price increase. For medium sized farms, small- and median-sized families are better off, while large families are worse off. The reason for this pattern of welfare change is quite simple - farm households which are net purchasers of rice are worse off, and farm households which are net sellers of rice are better off. Thus, for medium-sized farms, small- and median-sized families are net sellers, while large families are net purchasers. 4.18 For the Upper North, the calculations on welfare impact are more varied, reflecting the increased opportunities for profitable resource reallo- cation due to rice price change in this Region, but the underlying reasons for the pattern of welfare changes are the same. Thus, small-sized families on small farms can become net sellers over some price intervals, while median- and large-size families on small farms remain net purchasers, and this circum- - 26 - stance explains the pattern of welfare impacts on small farms. For medium- and large-sized farms, the welfare impact is usually positive (i.e., they are or become net sellers) for all family sizes over most price intervals. One distinct difference between the patterns of the two regions is that all farm and household sizes in the Upper North have a welfare loss over the lowest price interval. The reason is that at such low prices, rice cannot compete effectively with other alternative crops and all families become net purchasers of rice. 4.19 In summary, for both regions, approximately 40% of farm households would suffer a short-run welfare loss due to an increase in the price of rice. For the longer run, evidence from multi-sector macroeconomic analyses suggests that the real' wage for unskilled labor is invariant to the price of rice (para. 2.08). This implies that short-run welfare losses by net purchasing small farm households will diminish toward zero in the longer run. 4.20 Supply response was measured in terms of arc elasticities over the same set of price intervals. For the Northeast, the supply response of small farms is zero everywhere, and medium-sized farms have positive elasticities only over the two lowest price intervals. Only small- and median-sized families on large farms have positive elasticities over a significant range of prices. This pattern makes sense when the context of the Northeast is considered - overwhelmingly rainfed farming, with 70% of land in the wet season devoted to rainfed paddy, confronted with a highly variable rainfall pattern that makes intensifitation risky. In contrast to the Northeast, small farmers in the Upper North have positive elasticities at low and very high prices for all family sizes. A similar pattern holds for all family sizes on medium sized farms, while families on large farms have positive elasticities over virtually all price intervals. This sharp behavioral contrast with that of farmers in the Northeast is due to the richer set of production possibilities that a significant irrigation capacity provides for farmers of the Upper North. 4.21 Overall supply elasticities can be calculated from the estimates for farm and household sizes using an appropriate set of weights, and this was done. These calculations indicated for the Northeast an average elasticity of about 0.9 for the three lower price intervals and 0.3 for the upper three price intervals. Similar calculations for the Upper North yield an average elasticity of 2.0 for the lower three and 0.3 for the upper three price intervals. 4.22 These results point out not only the importance of farm endowment but also the often critical effect of family size in determining the status of surpluses/deficits and thus the welfare and supply response characteristics. Besides population control, off-farm income and migration opportunities which permit the reduction of family size from large (7) to medium (6) in the Northeast can generate greater supply response on the larger farm. 4.23 Given the importance of surplus generation on welfare and supply response, the extent of net surplus or sales is a critical indicator of the primary short-run benefits of export price changes. Based on the 1975-76 Socio-Economic Survey, the Central Region and Lower North Subregions, both of - 27 - which account for nearly 70% of rice sold in Thailand, are likely to be the main gainers. Only the Mid-Central and East Central Subregions have surplus rice households constituting 70% or more among their rice growing families. In the poverty regions of the Northeast and Upper North 70-80% of farm house- holds suffer a short-term loss because they are not normally surplus. However, these households may recover the loss in the longer run if labor markets become fully adjusted. D. Combining Tax Reform with Price Stabilization 4.24 Since the cheap rice policy (at least in the short run) is incon- sistent with a policy of price incentives for intensification, Government may opt for either one but not both of these objectives. We have argued that Thailand's changing relative resource endowment will sooner or later induce the Government to adopt a strategy of intensification. However, the policy preference for stability in the domestic price of rice, the major source of calories in the Thai diet, clearly remains as strong as ever. Therefore, the question of the compatibility of rice tax reform with rice price stability naturally arises. 4.25 It is our contention that significant rice tax reform is quite consistent with reasonable stability in the domestic price of rice. However, we realize that this proposition will be questioned and a demonstration is clearly in order. Now, a tax reform will be ineffectual in improving the incentive for intensification unless it results in an increase in the average farm-gate price for paddy - i.e., it decreases the average level of export taxation. On the other hand, given the wide fluctuations in the world price of rice shown in Figure 1 (page 6), domestic price stability will not be possible in the absence of export taxation (or its equivalent with other instruments) designed to buffer domestic prices from international price shocks. The question is how can the two objectives be combined in a policy which achieves both at satisfactory levels? 4.26 We will now show that the objectives of improved incentives for intensification and domestic price stability can be combined in a policy which introduces taxes or subsidies in an automatic way only when the world price exceeds or falls short of certain thresholds and only for so long as the world price continues to remain beyond these thresholds. The decision rule we propose is as follows: 1. Determine the expected or long-run trend price by means of an ordinary least squares regression that estimates the expected world price (5% broken white rice, FOB Bangkok) as a function of a low order polynomial of time (say of order 1 to 3). 2. Let PWt and Pnt denote respectively the deflated dollar values in a perio t of the observed world price and the long-run trend price estimate obtained from the fitted polynomial function of time obtained in step 1. Define the threshold variables as - 28 - Pnt = Pnt + a SEE Pnt = Pnt - a SEE where SEE is the standard error of estimate of the least squares estimator of the long-run trend price obtained in step 1 and "a" is a policy parameter. 3. Then, letting et denote the current foreign exchange rate (in terms of US dollars) and ovt be an estimate of the degree of overvaluation (which may be negative) of the exchange rate, the export tax policy rule is: i) Impose taxt = (P - nt )e ( - ov ) if p > p wt nt t t wt nt ii) Pay subsidyt = (Pnt - Pwt)et(1 + ovt) if Pnt > pwt iii) Neither impose a tax or pay a subsidy if P < P < p + nt- wt - nt 4.27 Given the potential volatility of world prices, the time periods used in the rule ought to be at least as small as a quarter year and might well be months. The rule is completely automatic and is deliberately symmetrical so that policymakers will show prudence and restraint in setting the policy parameter "a". Note that if a policymaker makes "a" very small so as to generate more tax revenues from above trend prices, he incurs a corres- ponding liability for subsidy payments when world prices are below trend. It was necessary to include an adjustment for overvaluation of the exchange rate since an overvalued currency is a common way of implicitly taxing exports. Without the adjustment, the intent of the policy rule could easily be defeated by failure of macroeconomic management. In practice, the inclusion of this adjustment will not be overt but would be built into the decision rule automatically. Similarly, in terms of the actual export price level (i.e., Pw or Pn) f91use, because the Bangkok wholesale price is technically a better series - , the threshold values can be calculated by adding a standardized marketing margin to the Bangkok wholesale price. 4.28 In order to test the working of the rice tax policy rule, 1982 constant dollar world prices for the period 1950-82 (plotted in Figure 1 oi8 Chapter II) were used to derive an estimator for the long-run trend price. -f/ The policy parameter "a" was set equal to one; and lacking a time series for the degree of overvaluation of the baht, this estimate was arbitrarily set to zero for all years. Then using the export tax policy rule, the domestic wholesale prices that would have prevailed over the years 1970-82 had the Government been following the automatic policy rule were calculated. These 7: 2Z/ See Ammar Siamwalla, et al., 1981. 18/ The estimator so derived is Pnt = 762.665 - 3.947t, t=50,...,82, with SEE = 123.4. -29- calculations necessarily assumed that the actions of Government had no effect on the prevailing world price - a harmless assumption whatever the true export elasticity of demand for Thai rice might be since the rule called for taxes in only two years. The results from these calculations are presented in Table 5. Note that the automatic policy rule calls for export taxes on 18% and 34% in Table 5: COMPARISON OF PROPOSED POLICY WITH HISTORICAL POLICY (CONSTANT 1982 PRICES) /a Observed Automatic policy rule Indicated tax or domestic domestic wholesale subsidy (-) wholesale price price Year (percent) (Baht/kg) (Baht/kg) 1970 0.0 6.31 10.75 1971 -1.8 5.22 9.70 1972 0.0 5.41 10.20 1973 18.2 6.77 9.58 1974 34.1 7.46 14.48 1975 0.0 7.13 14.02 1976 0.0 7.36 9.37 1977 0.0 6.82 9.28 1978 0.0 6.96 11.64 1979 0.0 6.48 9.62 1980 0.0 6.81 11.80 1981 0.0 7.06 11.00 1982 -7.8 5.45 7.27 Average (1970-82) 6.557 10.670 Standard Deviation (1970-82) 0.752 1.973 Coefficient of Variation (1978-82) 0.115 0.185 Average (excluding 1973-74) 6.423 10.019 Standard Deviation (excl. 1973-74) 0.737 1.277 Coefficient of Variation (excl. 1973-74) 0.115 0.128 /a Deflated using Consumer Price Index, Whole Kingdom. 1973 and 1974, respectively; and export subsidies of 2 and 8% in 1971 and 1982, respectively. Historically the years 1973-74 were quite exceptional in Thailand. What happened in those years is succinctly described in Siamwalla (1975), and it is sufficient here to note that the existing policy broke down and a ban on rice exports was imposed between August 1973 and November 1973. For this reason, the averages and standard deviations under the two policies being compared were also computed excluding those years, as these are the relevant statistics for a fair comparison of policies. 4.29 The results with the years 1973-74 excluded show that the automatic policy rule yields an average price of 10.02 baht/kg, or 56% greater than the - 30 - 6.42 baht/kg yielded by the historic policy. Similarly, the standard devia- tion of prices under the automatic policy rule of 1.28 baht/kg is 12.8% of the average price under this policy, while the standard deviation of 0.74 baht/kg of the historic policy is 11.5% of the average price under that policy. Thus, the proposed automatic policy rule yields an average price that is at least one-half greater while keeping the variation in prices acceptably close to the variation under the historic policy. Moreover, this example is only illustra- tive. By varying the policy parameter "a", the variation in domestic prices can be reduced, although at the cost of decreased incentive for intensifica- tion. While this enables the policymaker to set the trade-offs, it should be remembered that the purpose of the decision rule is to ensure automaticity of the policy process and thus reduce the disruptive interplay of strong vested interests as can be seen from the overview of Government's pricing policy given in Appendix 4. 4.30 The calculations presented in Table 5 and discussed in the preceding paragraph indicate that subsidies would have been paid in only two out of the past 13 years. Since these were a relatively small proportion of export value, the resulting increases in government expenditure would have been less than one percent of historic expenditures. While this indicates that finan- cing subsidy payments would have required only marginal adjustments in govern- ment budgets, there remains some concern that an exceptional disturbance in the world rice market (of significantly greater magnitude than those occurring in the past decade) might require a fiscally onerous level of subsidy payments. To analyze this question, we distinguish between short-run (i.e., transitory) and long-run (i.e., many years) disturbances. Short-run shifts in world export supply are largely due to exceptionally good or bad harvests in major producing countries. When such events occur, supplies offered or demanded in the world market can shift abruptly by several millions of tons. When world export supply increases for this reason, the automatic price stabilization policy requires government to pay what could conceivably be quite large subsidies. However, if the disturbance is seen to be temporary (through a season), there is nothing to prevent Government from buying up domestic supply and holding it as stocks. This action will reduce the total supply offered on the world market and choke off the decrease in world price. As the world price level recovers from the temporary disturbance, Government can dispose of the stocks on the world market. In this way, Government can substantially reduce subsidy costs under an exceptional but temporary disturbance. While accumulating stocks require finance, if the stocks are sold after the world price recovers, the investment is largely self-liquidating. 4.31 A long-run disturbance, which is highly unlikely, should not require exceptionally large subsidy payments since the trend price itself is decreased by sustained low world prices. However, such a disturbance would require a relatively low level of subsidy payments over a number of years. Such a scenario can only occur if (a) there was a technical breakthrough (e.g., a super HYV) which is widely adopted and can significantly reduce costs in many producing countries, and (b) supply shortfalls due to bad harvests in major - 31 - producing countries failed to occur1,4r a series of years. This case has a very low probability of occurrence.- 4.32 However, there remains the issue of the long-run impact on the world export market of the increase in rice supply due to elimination of rice export taxation in Thailand. For simplicity, we assume zero export taxes or sub- sidies on rice due to the automatic price stabilization rule. This assumption should have no effect on a calculation of long-run effect. Given an estimated 50% increase in the farmgate price for rice and accepting the econometric estimates of 0.3 to 0.4 for the price elasticity of supply, the increase in domestic rice supply would be 15 to 20% on average. Assuming a similar increase in retail prices and price elasticities of domestic demand of -0.4 and an existing ratio of domestic demand to domestic production of 0.75, the increase in price will release 15% of existing production for export. Thus, exportable supply increases by 30 to 35%. Given an ex post estimate of the world export market share to Thailand of 25 to 30%, and holding constant the average export supply of other countries, the increase in the long-run world export supply is 7 to 10%. Assuming a long-run elasticity of world export demand of -0.4 implies a decrease in average world price of 17 to 25%. These calculations have necessarily been rough, but they have conservatively neglected the effect of lower prices on the supply from higher-cost producers and the effect of growth in population, income and domestic demand. However, they clearly indicate (a) a significant increase in Thai export earnings from rice and (b) sustained price incentives to Thai rice farmers for intensifi- cation, given substitution of the proposed automatic price stabilization rule for existing rice export tax policy. V. CONCLUSIONS AND RECOMMENDATIONS A. Intensification and Government's Cheap Rice Policy 5.01 In Chapters II and IV we discussed the obstacle to intensification brought about by government's traditional "cheap rice" policy. Unless paddy prices to the farmer can be increased to levels which will make it profitable to use additional inputs, intensification is unlikely to take place. The rice export tax reduction, the price stabilization measures for rice, and the elimination of the urea import duty (all of which are discussed below) should result in more favorable input/output price ratios and lead to wider use of fertilizer, water, and pesticides. Such incentive measures, together with 19/ Even in the short-term disturbance case, if favorable climate is expe- rienced in all rice growing countries simultaneously, major traditional exporters are unlikely to flood the world market at once (to make world prices plummet) because of the adverse revenue effects. Deficit rice growers like Indonesia and Bangladesh would tend to carry over their stocks, and probably the only potential exporters who may be less concerned about the revenue effects would be Pakistan or India. Hence, even for the short term, a doomsday scenario for plunging world prices is unlikely. - 32 - strengthened extension, should lead to productivity improvements within a relatively short period (e.g. two to four years) - especially in the irrigated areas. Experience in other East Asian countries has shown that the higher yields resulting from more intensive input use (especially fertilizer and water) increase farmers' incomes much more than their costs. How these "productivity benefits" will be shared between producers and consumers will depend on the working of competition in the market-place. It is entirely possible - even probable - that a program of intensification will generate both higher incomes for farmers and lower prices for consumers. This process may require a few years to work itself out; but even if the expected drop in consumer prices should be delayed, the political risks would seem much smaller today than they were when rice formed the major part of many consumer budgets. B. Achieving Intensification while Preserving Stability in the Domestic Price of Rice 5.02 The assessment of Chapters II and III also established that stability in the domestic price of rice is an important policy objective of the government and understandably so since rice provides over one-half of the calories in the Thai diet. Furthermore, we have shown that Thailand is confronting the end of the era of growth in rice production through expansion of the area planted to rice and established the existence of a pronounced lag in the adoption of methods of intensification of rice cultivation employed by other major Asian rice producers. It is clear that the existing system of taxation of rice has been a powerful disincentive to intensification of rice cultivation in Thailand. 5.03 Yet the question remains: How can the existing system of export taxes on rice be abandoned without exposing domestic rice prices to severe price shocks via direct linkage to the world market? This dilemma was resolved in the analysis of section D of Chapter IV, which showed that the average price the farmer receives for paddy can be increased by over 50% while still preserving equivalent stability in domestic rice prices. The mechanism for controlling the trade-off between intensification and stability consists of establishing threshold levels about the long-run trend of world prices, and only imposing export taxes or paying export subsidies when world prices exceed the upper threshold or drop below the lower threshold. The exact level of the trade-off is determined by the setting of a policy parameter. Of course, there should be a viable political consensus concerning the value of this parameter so that policymakers are not tempted to vary it capriciously. A stable but onerous setting is preferable to arbitrary variation which introduces its own source of instability to both domestic prices and the incentive for intensification. C. Recommendations for Reform of Rice Export Taxation 5.04 To implement a strategy which emphasizes agricultural intensi- fication while preserving stability of domestic rice prices, the following pricing initiatives are submitted for consideration: (a) Government should abandon its present system of export taxes. The export taxes have increased domestic rice availability and kept - 33 - prices at a lower level than would otherwise prevail. They have, therefore, been an important disincentive to intensification. Rice export taxes include the 2.5% ad valorem export tax, the rice premium (a specific levy), and the rice reserve ratio requirement (which was recently eliminated but could likely be reactivated when world prices return to more normal levels). Since world prices are currently at very low levels and export taxes have been similarly reduced to low levels (currently about 9% of farm price overall), eliminating these taxes now would not introduce a serious price shock to the cost of living. (b) In order to buffer domestic rice prices from large fluctuations in world prices, the following automatic and symmetrical system of temporary export taxesi2"d subsidies should be introduced in place of the present system:- (i) Impose a temporary specific export tax when the world price exceeds a certain threshold above the long-run trend. The tax should be such that domestic prices do not rise above the threshold, and the tax should be eliminated when world prices drop below the threshold. (ii) Pay a temporary export subsidy when the world price drops below a certain threshold determined symmetrically with the upper threshold with respect to the long-run trend price. The subsidy should be such that domestic prices do not drop below the lower threshold, and the subsidy should be eliminated when world prices rise above the lower threshold. (iii) Neither impose an export tax nor pay an export subsidy when world prices do not exceed the upper threshold nor drop below the lower threshold. Both the export tax and the export subsidy would be administered at the level of the exporter for ease of implementation and administra- tive efficiency. Both our analysis and the analyses of other students of rice markets in Thailand indicate that rice marketing is efficient (see paras. 3.14-3.16 and Appendix 3) and the effects of both taxes and subsidies would be transmitted to farmers. Our calculations for the 1970-82 period show that the policy of auto- matic taxes and subsidies (when the thresholds are set at one standard error of estimate from the long-run trend price) would have resulted in average prices to the farmer that were 56% higher, while the coefficient of variation of domestic wholesale prices should have been 12.8% as compared with 11.5% under the historic policy. 20/ The concept of temporary taxes and subsidies was also proposed by Ammar Siamwalla and others in 1981 (see references) and by the Regional Research and Development Center (AIT), in a study for NESDB in early 1983. - 34 - (c) Because of the unfair advantage and its compromising effect on cost efficiency of exports, subsidies for Government-to-Government trade (i.e., exemption for parastatals like MOF from payment of export taxes through the Department of Foreign Trade) should be discon- tinued. D. The Need for Government Procurement 5.05 The assessment of Government's rice and paddy procurement under its price support program in Chapter III has demonstrated their futility in trying to raise prices against the world market trend. Furthermore their benefits in terms of reaching farmers and improving their incomes have been very limited, especially in relation to the US$100 million per year subsidy of the program. The Public Warehouse Organization (PWO) and the Marketing Organiza- tion of Farmers (MOF) should cease their rice or paddy procurement operations and any attempts to reinstate them should be strongly resisted. 5.06 Since the subsidized distribution of fertilizer by the MOF has not achieved its original aims of yield improvement and the encouragement of competitive marketing, it should be phased out. Another premise used for such government involvement is that, since Thailand receives fertilizer from aid- in-kind assistance and from barter trading, it has to undertake the marketing of such fertilizer. Both from the standpoint of cost efficiency and farmer outreach, the Government is better off if it either resells such fertilizer to the fertilizer trade or allows the National Fertilizer Corporation to assume the function of taking delivery and disposing of such fertilizer. E. Promoting Greater Fertilizer Availability and Use 5.07 In addition to the reduction of export taxes and the improvement of marketing measures discussed above, greater fertilizer use will be fostered by the elimination of the 17% import duty on urea and the initiation of more effective promotion programs involving relevant government agencies and the private sector. The private sector cannot be relied upon to promote urea by itself because it would have no incentive to undercut its own established brand names of ammonium phosphate; Government has to be involved - at least initially until a minimum demand volume is generated that can justify wide- spread commercial involvement: (a) The Department of Agriculture (DOA) and the Department of Agricul- tural Extension (DOAE) should first identify the appropriate loca- tions and conditions under which urea use can be profitably expanded. (b) Existing fertilizer promotion programs in DOAE, MOF and BAAC should be rationalized in conjunction with their roles and areas of emphasis and with respect to that of the new National Fertilizer Corporation. - 35 - (c) Private sector assistance should be sought in conjunction with relevant agencies' programs for fertilizer research (particularly farmer trials) and the demonstration and promotion of production packages involving fertilizer. F. Institutional Implications 5.08 The adoption of greater automaticity in buffering domestic rice prices and the associated reforms proposed above will have various institu- tional implications: (a) Since the rice premium would be eliminated under the proposal, the Farmers Aid Fund would have to be more accountable for the remaining resources it commands. Otherwise, if it is frittered away on unpro- ductive undertakings, it will run out. (b) With the cessation of rice or paddy price support programs and the phasing out of subsidized fertilizer independently of technical promotion programs, the functions of the PWO and the MOF will be sharply reduced. While others have argued that, to minimize the waste, moribund (or near moribund) organizations such as the PWO and MOF should be revived and put back to work more effectively, such a move would be unwise. Besides, the low morale in these organiza- tions has led already to a general exodus of many of the agencies' better staff. (c) The elimination of the subsidies for G-to-G trade will make it easier to separate the promotion role of DFT from its regulatory or taxation role (see Appendix 4, Table 1) - a desirable development if the reduction of the conflict of interest within DFT is an important objective. 5.09 As greater competition in commodity trading is being promoted, (a) Government's ability to prevent trade abuse and ensure minimum levels of product integrity and (b) the background work for taking commodity decisions have to be considerably strengthened. Particularly important for the encouragement of crop intensification is the quality control situation with regard to cash inputs (particularly fertilizer, agro-pesticides and, to a lesser extent, improved seeds). Improvements are required for (a) the streng- thening of the institutions undertaking testing and monitoring of quality standards (taking into account their role vis-a-vis the private sector and the needed improvements in providing such support services); and (b) siyngthening the regulations governing quality standards and their enforcement.- 5.10 Critical to improving the background work for taking commodity decisions is better coordination of market intelligence gathering and improve- 21/ Particularly important is the need for regulations regarding the introduction, testing, and marketing of new imported crop seed varieties. - 36 - ment in the analysis of policy impact. Market intelligence gathering is scattered among various ministries and agencies and little attempt has been made to set the relevant information in a systematic framework for policy making. A study is needed to assess in what aspect of market intelligence each agency has comparative advantage, so that sources of information can be streamlined and strengthened. It should also propose an arrangement to ensure that consistent information can be made available for timely policy making (especially at the cabinet level). Such an arrangement would also benefit the macro-modelling efforts within NESDB and enable it to assess the impact of key policy changes on the Thai economy. G. Implications for Poverty Alleviation 5.11 The above initiatives, while likely to have a major impact on the income status of rice-surplus-producing farmers, are not expected to have as strong an impact on areas of more limited agricultural endowment (e.g., the less fertile and drought-prone areas of the Northeast). In such areas the amount of rice sold by most farmers constitutes only a small proportion of total production. Hence, pricing policy cannot be relied upon as a direct income enhancement tool in the poverty areas. However, in the longer term, the increased incomes of those farmers with significant rice surpluses will feed back on regional incomes via increased consumption and investment expenditures in the local market area. At present, the drain of both commodity surplus and labor surplus is toward metropolitan Bangkok, and this leaves regional centers stripped of purchasing power for local economic development. - 37 - References Amranand, Piyasvasti, "Impact of the Price Support Programme for Rice," Paper presented at the SIAM Project Conference of the National Economic and Social Development Board, Thailand, and the World Bank, Pattaya, Thailand, June 24-25, 1983. , and Wafic Grais, "The SIAM 2 Model," Paper presented at the Siam Project Conference of the National Economic and Social Development Board, Thailand, and the World Bank, Pattaya, Thailand, June 24-25, 1983. Bertrand, Trent, "Thailand: Case Study of Agricultural Input and Output Pricing," World Bank Staff Working Paper No. 385, April 1980. , and Lynn Squire, "The Relevance of the Dual Economy Model: A Case Study of Thailand," Oxford Economic Papers, v. 32, No. 3, November 1980. , "The Economics of Public Sector Support Programs for Agriculture: A Case Study of the Rubber Sector in Thailand," Draft Paper, Country Policy Department, 1983. Dowling, J. and Medhi Krongkaew, "Agricultural Supply Response of Some Major Crops in Thailand, "Thammasat University, Faculty of Economics, Res. Rep. No. 41, February 1983. Faber D. and W. Kennes, "Thailand and Food and Agricultural Model (THAM-1), Some Preliminary Results and Findings," Staff Working Paper SOW-82- 11, Center for World Food Studies, Amsterdam, March 1982. Kridakara, M. C. Sithiporn, Some Aspects of Rice Farming in Siam, Bangkok, 1970. National Statistical Office, Report, Socio-Economic Survey 1975-76, Government of Thailand, Bangkok, Thailand, 1978. Pinthong, Chirmsak, "A Price Analysis of the Thai Rice Marketing System," Ph.D. Dissertation, Stanford University, November 1977. Palacpac, A. C., World Rice Statistics. International Rice Research Institute, 1982. Siamwalla, Ammar, "A History of Rice Policies in Thailand," Food Research Institute Studies, v. xiv, No. 3, 1975, 233-249. , Chirmsak Pinthong and Vatchareeya Thosanguan, "Agricultural Marketing and Pricing in Thailand," Draft Paper, Thammasat University, March 1981. Swaminathan, M., "Rice," Scientific American, 250, No. 1 (January 1984), 80-93. - 38 - Tsujii, Hiroshi, "A Quantitative Model of the International Rice Market and Analysis of the National Rice Policies, with Special Reference to Thailand, Indonesia, Japan, and the United States," Chapter 10 in Max R. Langham and Ralph H. Retzlaff, eds., Agricultural Sector Analysis in Asia. Bangkok, Thailand: Singapore University Press, 1982. Foreign Agricultural Service, U.S. Department of Agriculture, Reference Tables on Rice Supply-Utilization for Individual Countries. Washington, D.C.: Foreign Agricultural Circular F6-22-82, U.S. Department of Agriculture, 1982. Usher, Dan, "The Thai Rice Trade," Chapter 9 in T.H. Silcock, ed., Thailand: Social and Economic Studies in Development. Canberra, Aust.: Australian National University Press, 1967. Wong, Chung Ming, "A Model for Evaluating the Effects of Thai Government Taxation of Rice Exports on Trade and Welfare," American Journal of Agricultural Economics, v. 60, No. 1, February 1978, 65-73. World Bank, "Thailand: Program and Policy Priorities for an Agricultural Economy in Transition," Report No. 3705a-TH, December 1982. World Bank, "Growth and Employment in Rural Thailand," Report No. 3906-TH, April 1983. World Bank, Commodity Trade and Price Trends. Baltimore: Johns Hopkins University Press, 1983. - 39 - Appendix I - ~ 39 ~ Page 1 of 4 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Rice Taxation in Relation to Other Pricing Distortions A. Taxes and Subsidies 1. Except for rice, rubber, sugarcane, and livestock, government inter- vention in agricultural pricing and marketing in Thailand is not as pervasive as in most other developing countries (see table at the end of this appen- dix). Among the taxes, the export tax is important only for rice, rubber and sugar: Taxes/Duties(-) and subsidies (+) as a x of Farmgate Price Taxes/Duties Product or Export Import Other Total Subsidies Input 1981 1983 1981 1983 1981 1983 1981 1983 1981 1983 Paddy -52 -9 -4 -4 -56 -13 +23/b +9/b Corn 0 0 -4 -4 -4 -4 Mungbean 0 0 -4 -4 -4 -4 Cassava 0 0 -4 -4 -4 -4 Sugarcane -2 0 -10 -10 -12 -10 +8 0 Peanuts 0 0 -7 -7 Kenaf 0 0 5 -5 Rubber -40 -20 Seed 0 0 Fertilizer -17/a -17/a -2 -17 +70/a+30/b Agro-pesticides -5 -5 -2 -7 Fuel -40 -35 Equipment -30 -15 -12 /a Urea only. 7r Selected beneficiaries. Source: Background Paper No. 1. Rice export taxes have been reduced substantially since 1981. The sugar premium (a progressive export tax based on ranges of export prices) has not been substantial since 1980 because of low world prices. Other taxes, consisting largely of the business tax (a profits tax) and the municipality tax (an excise charge based on the business tax) are relatively minor. Inputs 40 - Appendix 1 Page 2 of 4 that are largely penalized by import duties are fuel, agricultural equipment (tractors) and fertilizer (essentially urea). The extent to which these input taxes impinge on the incentive to use them depends on their importance in the structure of production costs and the benefits resulting from their use. 2. With respect to subsidies, only government rebates to sugarcane millers (for accepting the guaranteed price "negotiated" with growers) had across-the-board subsidy implications. Other subsidies are limited to a specific subset of beneficiaries like rice farmers benefitting from the price support/purchasing programs of the Public Warehouse Organization or the Marketing Organization of Farmers (MOF). For these beneficiaries the "subsidy" is the difference between the farmgate market price and the support price. Another category is the fortunate farmer receiving MOF fertilizers. The subsidy represents the difference between the private dealer credit price and the MOF credit price. 3. Other, less direct, subsidies include the below market interest rates of agricultural loans given by the Bank for Agriculture and Agricultural Cooperatives (BAAC) and the limited recovery of the costs of providing irriga- tion water directly to farmers. BAAC's rate of 14% for loans to individual farmers has an implicit subsidy of nearly 6%. This represents the difference between BAAC's long-term deposit rate (13.5%) and the rate BAAC would need to charge without subsidy from Government. About 40% of all farmers in Thailand are BAAC clients. Since its loan portfolio is quite evenly distributed across all regions, the credit subsidy may be considered to be widespread. The implicit subsidy from the virtual absence of direct cost recovery for irriga- tion water is difficult to estimate. At a minimum, it should be equivalent to the Government's annual operations and /maintenance cost for its irrigation system (presently estimated at $25/ha - or about $6 per ton of paddy (about 5% of current paddy price). B. Distortion of Gross Margins 4. Since the focus of this report is intensification incentives in an environment of increasing land scarcity, a useful indicator of the net effect of taxes and subsidies is the gross margin distortion rate (GMDR) - a measure of the extent financial (or market) returns to land and management differ from the economic (non-distorted) returns per unit area: GMf - GM GMDR = x 100 where: GMf GMf = Gross revenue minus input costs (at financial prices) GMe = Gross income minus input costs (at economic prices). 1/ Source: Royal Irrigation Department. - 41- Appendix 1 Page 3 of 4 Farmers' own labor and machinery costs are imputed at the market rate but land costs are excluded from input costs. The gross margins thus computed represent the returns to land and management and GMDR measures the extent (in percentage terms) gross margins are overvalued or undervalued by government intervention. For example, a GMDR of -50% means the net effect of taxes and subsidies on both product and input are depressing gross margins to such a level that if all these distortions were to be eliminated, gross margins can increase by 50%. Put in another way, a GMDR of -50% mean2, that the enterprise is subjected to an income (gross margin) tax rate of 50%.- 5. Selected GMDR estimated for 1981 and 1983 are summarized below: 1981 1983 _ (%) … Paddy /a -133% -43 Corn -29 -29 Mungbean -8 -8 Sugarcane -13 -5 Peanut -15 -15 Cassava -28 -28 /a Weighted average for non-glutinous paddy, by subregion. Source: Background Paper No. 1. 6. The net effect of taxation on paddy gross margins in 1981 was particularly dramatic. From above, it is clear that indicators of distortions at the product price level (-52% for rice) grossly understate the net effect on gross margins (-133%). Even with the reduction of paddy taxes to only 9% of the farmgate price by October 1983, such a rate still implies an income (gross margin) tax of 43% (assuming no other distortions have changed). Implications for regional/subregional GMDR for paddy is also interesting because it provides a picture of the to which extent to which various farmers in different parts of the country are being penalized by existing distortions: 2/ Other indicators may be used (e.g., the Effective Protection Rate which is similar to GMDR except that it is computed on a different numeraire and expressed on a unit output basis) but GMDR has the advantage of not having to impute returns to land and it is expressed in a form which can be more easily understood by the producer. - 42 - Appendix 1 Page 4 of 4 Non-glutinous Paddy 1981 1983 Upper North -96 -29 Lower North -165 -64 Upper Northeast -525 -177 Lower Northeast -357 -107 Central -168 -34 The non-glutinous paddy grower in the Northeast appears to be the category most discriminated against by existing taxes and subsidies affecting the cost and returns in rice farming in Thailand. The reduction in export taxation from 1981 to 1983 appears to have benefited the Central Region the most. THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Summary of Pricing and Marketing Interventions for Rice and Selected Agricultural Commodities, June 1983 Retail/ whole- Other State sale major Minimum Business tax & trading or Farn price Other price regu- export prices Export tax Export quota municipal tax /a purchasing support subsidies control lations Remarks Rice Abolished in - Export tax (5Z of Abolished in Oct - Miller/operator - PWO Yes No more PWO's main source Oct 1981 f.o.b.) 1981 business tax (1.52) - MOF of funds is bor- - Premium (2-7X of - ACFT rowing from com- f.o.b.) - Exporter business mercial banks; - Res. requirement tax (B 10/ton) MOF's is FAF; (abolished in May ACFT is BAAC. 1982) Rice bran Abolished Export ban abol- - Seller business tax No _ No No No ished (1.5Z) Wheat No - Seller business tax No No No No Imports only (1.5Z) Renaf No No - Seller business tax No No No No No (1.52) Rubber No - Export tax (about No No No No Rubber No No ORRAF provides 222 gazetted price) replanting replanting subsi- - Cess (about 82 ($1,321/ha) dy; BMAC provides gazetted price) and redis- loans at 142. count faci- lities Maize Abolished in No Export quota - POW Yes Rediscount No No Annual amount is December 1981 abolished - MOF facilities not significant December 1981 - ACFT for export /b Cassava No Export tax (1.5% of EEC Export re- No Eliminated Rediscount No No om ID f.o.b. price) stricted (1.6 in 1982/83 facilities ,_ 2. million for export t/quarter) /b rh x Retail/ whole- Other State sale major Minimum Business tax & trading or Farm price Other price regu- export prices Export tax Export quota municipal tax /a purchasing support subsidies control lations Remarks Cotton No Export tax (1.5%) No Seller and exporter MOF Yes Rediscount Annual amount is busineas tax (2%) facilities nor significant for cotton mills and textiles Sugar No - Export duty 1.5% Under ISA (one - Raw sugar miller No "Guarantee See price Yes for All domestic (both white and mil t/year) business tax (1.5%) Price" support. both (B 12/ sales raw) - White sugar miller based on Max B 782 kg/white) - Millers have - Premium based on and exporter tax estimated million in to sell through f.o.b. price ranges (1.7%) profit 1982 from the office of for raw sugar - Raw sugar exporter share /c premium sugar distri- (presently below tax (3%) bution (begun minimum to collect) in 1982/83) Oilseeds No 9.08% export tax for Ban on export of No No Production Import duty No No and oil- castor (paid by castor bean support on soybean seed meal Japanese import- since July for meal, import ers). 1.5% for ex- 1979. Oilseed soybean duty on palm porter/importer of meal export oil (in- peanut, soybean and banned creased to mungbean 15% ad valorem plus 20% sur- charge in April 1981) /a In addition, corporate income tax is imposed based on net profit - 30% if the company is listed in the Security Exchange of Thailand; 40%, if not. Business tax is basically a sales tax imposed on gross receipts, or CIF price, if imported; municipal tax is usually 10% of business tax. /b BOT provides rediscount facilities through commercial banks at a rate of 5% to commercial banks, 7% to exporters. BOT discounts 80% of letters of credit, 90% of bill of exchange, 70% of purchase contract and 40% of warehouse receipts. /c Based on 70-30 revenue share between growers and millers respectively. '-3 I3 o x _ 45 - Appendix 2 Page 1 of 12 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Government Procurement and Marketing Programs A. Introduction 1. This appendix reviews the recent experience of government procure- ment and marketing programs for rice/paddy and for fertilizer. These programs became important after 1979 and exert a claim of US$150 million/year of Government's budgetary and extra-budgetary resources. The economic, distribu- tive and financial effects of these programs are assessed with emphasis on the extent the original objectives of the program have been achieved. Government procurement and storage programs for rice or paddy to support farmers' farm price are first reviewed followed by those for subsidized fertilizer distribu- tion. B. Rice Purchasing for Price Support and Stabilization Background 2. Price support to increase farmgate prices was first announced for the 1966/67 crop season but government buying did not begin until the 1969/70 season. Purchases had been insignificant until 1979/80, when government agencies made a procurement of 1.1 million tons of paddy. The buying in 1979/80 was ad hoc and no clear objectives or strategy were enunciated. The 1980/81-1982/83 program, however, had clearer objectives and rationale. The basic objective was to increase the price of rice above the market rate early in the marketing season (December-March) to support "target" prices announced before the planting season. In the process, intra-seasonal price stabiliza- tion could thus result. A number of mechanisms were invoked through the following government agencies to ensure that an "artificial" demand was created early in the marketing season: (a) The Public Warehouse Organization (PWO) would purchase rice from mills in areas where paddy prices fell below the target price. (b) The Marketing Organization of Farmers (MOF) would purchase paddy from farmers at buying centers located at rice mills throughout the country. (This program only started in 1981/82.) (c) The Agricultural Federation of Cooperatives of Thailand (AFCT) would purchase paddy from its members at the target price (also started in 1981/82) and also encourage paddy storage through a crop mortgage scheme. - 46 - Appendix 2 Page 2 of 12 The premise for these actions was the disbelief on the part of policymakers that by just reducing the tax burdens on exporters, improvements in the farm- gate paddy price could result. Another complementary action to create an artificial demand early in the marketing season was the requirement for exporters to hold specified stocks from December to March and the expeditious facilitation of government-to-government (G-to-G) export sales. A tabular summary of the 1980/81-1982/83 programs is given below followed by an assess- ment of each agency's programs. Paddy /a Procurement Total Farm Support Ratio Volume Cost Procurement price price (l)t(2) PWO MOF AFCT PWO MOF AFCT vol. as Z of ----US$/ton---- (mln t paddy equiv) (US$ mln) production (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 1980/81 150 153 0.98 1.8 - 0.1 316 21 12 11 1981/82 127 164 0.77 1.8 0.1 0.2 387 69 35 11 1982/83 131 144 0.91 0.6 0.5 0.2 90 72 21 9 Total 4.2 0.6 0.5 793 162 68 10 /a Prices differ from Table 2 of the main text because this table is not grade specific. The Public Warehouse Organization (PWO) Programs 3. The PWO is a parastatal organization which was originally estab- lished to (a) purchase and store crops (primarily staples) for resale, and (b) administer low price rice storage and distribution programs. It was initially selected as the only agency to implement the 17ew "Price Guarantee" programs when it first began in the 1980/81 crop year.- The newness of the approach (compared with past programs) was (a) the announcement of a "target" price before the planting season, and (b) the purchase of rice rather than paddy to influence paddy prices. The target price was based on paddy produc- tion costs obtained by the Office of Agricultural Economics, MOAC. Allowance was also made for the target price to increase during the early marketing months (up to April) to reflect storage and interest costs. Purchase at the mill level implicitly acknowledged the efficiency of marketing agents from the mill to the farm level. Using a system of price intelligence at the district and even township levels (through Ministry of Commerce and local government sources), the Agricultural Price Support Committee (headquartered at the Ministry of Commerce in Bangkok) could identify areas where paddy prices were 1/ Crop year begins in May when initial preparation for rice planting begins. The main season crop is harvested in December. Hence a 1980/81 crop year is associated with a calendar 1981 marketing season. - 47 - Appendix 2 Page 3 of 12 below target levels and bids to purchase rice from a number of rice mills could then be initiated. Rice thus purchased was to be held by millers on behalf of the PWO who would give a 15-day notice when it intended to take delivery. Receiving stations were established in more than 40 rented ware- houses throughout the country. 4. Implementation in the first year faced a number of difficulties.2/ (a) Collusion among millers and traders. Such collusion had various facets. In a number of localities, not only could millers (who were also traders) manipulate the bids but they also succeeded in getting farmers to demonstrate for more government rice purchases late in the marketing season by jointly stopping their own paddy procurement. (b) Without properly differentiating among grades (especially the more valuable old rice compared with new rice) and because of its own inexperience, PWO ended up with low quality rice which could not be easily resold. (c) Other Inefficiencies. PWO intervention added an additional step in the marketing chain (i.e., instead of directly delivering to Bangkok or regional centers, rice from the mills had to pass through PWO- rented godowns at the provincial level). Not only were rental charges higher than market rates, this arrrangement provided extra opportunities for rice "losses". Furthermore, transportation of rice under the program was inefficient and expensive because a government parastatal, the Express Transport Organization (ETO), had to be used. Upcountry deliveries to Bangkok were often late and, in some instances, did not even materialize. 5. Despi e the rectification of some of these difficulties in subse- quent programs- the overall effect was essentially the same: (a) Overall target price objectives were not achieved by the program even though the 1980/81 program came close (see table in para. 2). At the individual provincial level where the purchasing took place, the 1980/81 paddy price relative to the corresponding export price for rice (less export tax distortions) was not significantly higher than past years (see Vol. II, charts). In a number of instances (where collusion predominated) prices were even lower. Hence, it was essentially favorable world market factors that resulted in the 2/ See Chirmsak Pinthong and Pranee Thinakorn, "An Evaluation of the Govern- ment Rice Price Stabilization Policy, Crop Year 1980/81" (in Thai language), undated. 3/ For example: (a) purchasing was reduced from about 60 locations to only seven in the second and restricted to only Bangkok in the third year; and (b) clearer grading regulations were established. - 48 - Appendix 2 Page 4 of 12 near attainment of target prices in 1980/81. This effect was reinforced in 1981/82 when equivalent amounts of rice were purchased by PWO, but a substantial shortfall in comparison with the target price resulted (see para. 2). In 1982/83, with more realistic target prices and an improved world rice market, the difference between the market price and the support price decreased. (b) The main beneficiaries were, therefore, primarily the millers and the owners of PWO-rented warehouses. (c) The cost of the program was high. Over the three years, about US$793 million were spent on payment of the procurement price alone. Preliminary results of losses (revenues minus costs) in the same period indicated that about B 6 billion (US$262) were essen- tially wasted. Such a loss is equivalent to about $88/ton of government subsidy (or 32% of the average procurement price). Because the program was primarily financed by a US$262.0 million loan (25% from the Bank of Thailand at 5% annual interest rate and 75% from commercial banks at the prime rate), Government (as guarantor) will have to work out an arrangement to make good the loss. The Program of the Marketing Organization of Farmer 6. MOF's role in the 1980/81-1982/83 program began in 1981/82 but only in a small way (purchasing about 100,000 tons from farmers). In 1982/83, it increased its purchases from farmers five-fold (para. 2). The basic objective of the program was essentially the same as that of the PWO: purchasing of paddy early in the marketing season so that farmers could obtain the target price. The MOF, in addition, encouraged the repayment in paddy for fertilizer loans and the direct exchange of paddy for fertilizer. The location of its purchasing activities by province was determined by the amount of marketable surplus. A Paddy Procurement Committee was established under the chairmanship of the Pr4y incial Governor in each of the 45 provinces (changwats) selected, Purchases were made at rice mills which had contracts with the MOF and each center was under the purview of three committee members who would ensure that MOF regulations (e.g., on weight loss, grades) were adhered to. 4/ The District Agricultural Officer, the District Cooperative Promotion Officer, a farmers representative and the MOF officer are members of this committee. Appendix 2 ~ 49 ~ Page 5 of 12 7. The results of MOF's 1982/83 program are summarized below: Target Actual Quantity Quantity Value …- ('000 tons) ----- ('000 Baht) Direct paddy purchasing 350.0 510.4 1,600.1 Paddy from fertilizer loans 100.0 15.0 48.4 Paddy from fertilizer exchange 50.0 - - Total 500.0 525.4 1,648.5 All paddy purchased was non-glutinous. About 44% came equally from the North and the Northeast, and about 75% was reportedly lower grade rice (with over 10% brokens.) 8. Our assessment of the impact of the program (partly based on exten- sive field surveys) showed overall effects similar to those of the PWO pro- gram. Because amounts purchased were less, the price impact was even less significant. Purchasing and distribution operations were carried out more efficiently than the PWO program because MOF relied almost entirely on the private sector and did not require intermediate storage at the provincial level before delivery to Bangkok. In any case, "leakages" invariably took place to facilitate the operation of the program. 9. An accounting of the "leakages" may be distilled from the summary of the share of the extra-margins generated by the 1982/83 program given below: Share of Extra-margins generated (x) Beneficiaries Farmers paddy Millers paddy Total Millers 8.4 16.9 25.3 Exporters 8.4 20.0 28.4 MOF and its officials 4.4 16.1 20.5 Local level officials - 6.3 6.3 Farm leaders - 6.3 6.3 Farmers 8.5 4.7 13.3 Total 29.7 70.3 100.0 Source: Background Paper No. 6. Appendix 2 - 50 - Page 6 of 12 10. Of the estimated B 236.3 million of extra margins accrued under the program, farmers share of the "pie" was only 20%. This arose primarily from the fact that only 30% of the total 525,000 tons purchased were farmers own paddy; 70% were actually what the millers had in stock but masqueraded as farmers paddy (through "hiring" farmers with proper identification to be temporary owners when the paddy was delivered at the buying centers). The miller, therefore, gained the difference (B 300/ton of paddy) between the support price and the market price. In addition, even without his own paddy, the miller benefited from undergrading of farmers paddy and, more importantly, from receiving cash payment of the crop in advance of delivery to MOF (which could be more than six months). Bona-fide delivery by farmers were in any case worthwhile (despite the downgrading) because the price for his rice would still be higher than the market level. The exporters (thirteen firms) gained primarily from the subsidy it got from government to store rice procured by millers upcountry and to mix the rice for G-to-C sales on behalf of MOF. In practice, like the miller, the 1xporters only took delivery of upcountry rice under the MOF program on paper - (i.e., little movement of paddy other than the normal amounts took place). They could, therefore, continue with their trading activities until instructed by MOF to deliver the necessary blend of rice for G-to-G exports. 11. Under this scheme, MOF cannot make a financial loss because it is paid a fee of B 550/ton of paddy from the Farmers Aid Fund (FAF) to administer the program while its cost of doing so (through using the private sector) was only B 350/ton. So for every ton of paddy it "handles", it makes a financial profit of B 200. In effect, the MOF acts as a financial broker for FAF funds rather than as a marketing organization and the B 200/ton of paddy is a clear subsidy under the program. If other indirect subsidies (like the interest free working capital obtained from the 1.7 million baht allocated by FAF as MOF's revolving fund and the exemption of premium for MOF's exports) were included, the procurement subsidy is nearer B 1,000 or $44 per ton of paddy (equivalent to 30% of the procurement price). 12. Hence the distributive impact of the MOF program is quite clear. Besides subsidizing MOF operations, it essentially ended up subsidizing the millers and the exporters favored by the MOF. Of the farmer who benefitted virtually all are better off farmers because: (a) only non-glutinous paddy was purchased (even though operations went to glutinous rice areas in th6e Northeast); and (b) the requirements for delivery to the buying centers - meant that, unless organized through a group, the farmer with small surpluses would be precluded. 5/ For an official acknowledgement of this "delivery", the miller had to pay the exporter a bonus of about 330 baht/ton of paddy. 6/ For example, minimum size volume to make it worth the while to transport paddy to the centers, financial paper work which requires familiarity with banking services. 51 - Appendix 2 Page 7 of 12 The Program of the Agricultural Federation of Cooperatives (AFCT) 13. The main element is a price guarantee scheme which provides a revolving fund (B 550 million annually) for cooperatives to buy paddy from members at the target price. The fund is provided by BAAC at an interest rate of 13%. The scheme is usually associated with BAAC lending to cooperatives for fertilizer purchase from MOF. The money for the purchase of cash inputs (essentially fertilizer) is lent to individual cooperatives with AFCT acting as guarantor. The cooperatives then collect the repayment in kind (as paddy) from its members and either sell it to MOF or, after milling at provincial AFCT mills, to PWO for export. The purchases under this scheme are summarized below: Quantity Value ('000 tons) (B million) 1980/81 94 276 1981/82 233 800 1982/83 155 470 14. In the first year,7/ although 340 primary cooperatives in 20 provinces participated in the program, most of the paddy purchased came from relatively remote localities as those near Bangkok received higher prices than those offered by the cooperatives. Glutinous rice prices received by members were much higher than the market price as the target price did not properly distinguish between glutinous and non-glutinous paddy. A wider spectrum of farmers, however, benefitted from this program compared with the PWO or MOF. 15. A pilot program was also initiated under AFCT auspicies. This was a paddy mortgage scheme which required farmers to deposit their paddy with the PWO in order to become eligible for loans of up to 80% of the value of paddy deposited. The pledged crop is guaranteed by AFCT, and the Cooperative Promo- tion Department issues guidelines and monitors the program. The loan is only for six months (up to a maximum of B 100 thousand). Repayment is in one year at 13% interest plus a storage fee. The response to this program has been low with only 421 tons (valued at B 1 million value) in 1981/82 and 1,433 tons (B 3.5 million value) in 1982/83. 7/ See Pinthong and Thinakorn, op cit. - 52 - Appendix 2 Page 8 of 12 Overall Impact and Implications 16. The overall objective of increasing the price level above the market rate has not been achieved. The creation of an artificial demand could not cause the price of paddy to increase because actors in the market knew that it would be temporary and adjusted their stock-holding accordingly. Rice merchants knew that, without substantially greater exports, purchased rice would have to be released at the end of the season either for domestic consumption or for G-to G sales. The former would just depress end season prices to even lower levels than without intervention. Thus no rice merchant would buy at the beginning of the season at a price higher than what they anticipated would have prevailed. The release of purchased rice for G-to G sales merely substituted for private demand and would not have increased total export. In fact, such a dumping action (if large) could push down export prices even more. Hence the PWO and MOF programs essentially ended up subsidizing the operating cost of the marketing agents, encouraged dubious payments and, in some cases, even encouraged collusion. 17. The wastage under the MOF program was substantially less than the PWO because it implicitly acknowledged that the marketing process was effi- cient and returns from intra-seasonal storage would not be inordinate unless effective speculation occurred. A review of Figures 1-3 (which show the average rates of return for rice or paddy storage over ten years) will attest to the fact that rates of return from stockpiling are normally not exhorbitant. From Figure 1, the rate of return of rice (both glutinous and, especially, non-glutinous) stored in Bangkok from January would, on average, not have covered the stockpilers' interest costs (12% and 15% alternatives are given). Therefore unless one is a very effective speculator, intra-seasonal storage of rice in Bangkok is not a worthwhile activity. However for non- glutinous paddy, storage up-country (especially in the Northeast and Central Plain) would have been profitable (Figure 2). Glutinous paddy in the Northeast (Figure 3) is the least profitable (especially if storage begins in April). Despite its supposedly more price - unstable character, the above r sults indicate that proposals for a buffer stock program for glutinous paddy are unlikely to be feasible. A major factor is that glutinou paddy deteriorates to a much greater extent than non-glutinous paddy.9 8/ See Ammar Siamwalla and others (1981). 9/ Glutinous paddy (unlike non-glutinous paddy), being small, hardens more easily and loses its cooking quality and aroma over time. Value losses between the old and the new crop averages as much as B 1,000 per ton. - 53 - Appendix 2 Page 9 of 12 C. Subsidized Fertilizer Distribution -0/ Background 18. Fertilizer marketing in Thailand, because of the well developed transportation network and an active private sector, is largely characterized by a widely dispersed, efficiently operated distribution system scattered throughout the country. However, the heritage of past protection of nitro- genous fertilizer plants (which began production in 1966) gave rise to the subsequent monopoly control of straight N fertilizer imports from 1968-1974. This action also resulted in the promotion of compound fertilizer (partic- ularly ammonium phosphate or ammophos) by importers to get around the ban. With the subsequent build-up of ammonium phosphate demand, an ammophos mixing plant was established in 1975. Trade protectionist measures were, however, removed in the mid-1970s, but control of the central mixing process linked with the larger importers led to assertions of price manipulation. Within such an environment, MOF's fertilizer distribution operations were set up in 1975 to: (a) moderate the tendency of firms to manipulate prices; and (b) provide subsidized fertilizer to encourage greater input use. This section assesses the MOF's subsidized fertilizer distribution program, traces its impact on market performance and its implications for fostering greater fertilizer use, and, finally suggests recommendations for further imiprovement. 19. MOF's subsidized fertilizer distribution became important only after 1977/78 when MOF's share of total fertilizer distribution (primarily ammonium phosphate or 16-20-0 fertilizer) increased from about 7% to 16% as shown below: MOF Share in National 1975/76 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 Distribution of: (in %) (a) Total fertilizer 5 7 16 17 22 24 16 (b) 16-20-0 n.a. n.a. n.a. 58 53 63 58 While MOF's share of total fertilizer use declined from 24% in 1981/82 to 16% in 1982/83, its share of total 16-20-0 (rice fertilizer) is still high (58%). 20. Until 1981, MOF distributed most of its fertilizer directly to farmers or farmer groups. Since then, however, MOF's direct distribution to farmers has decreased from 52% of total ammophos to an estimated 24% in 1983 (Table 1). This is the result of MOF's hesitance to depreciate high-price stocks accumulated in a downward market and the rapidly increallyg role of BAAC as a fertilizer supplier via its lending-in-kind program.- Such a 10/ See Background Paper No. 7 for details. 11/ BAAC's share of fertilizer supplied is now equal to that of MOF. 54 - Appendix 2 - Page 10 of 12 reduction is, however, not expected to persist. In any case MOF's share of all ammonium phosphate, either directly or indirectly through BAAC, remains high at 58%. 21. MOF presently distributes fertilizer to areas and projects under general instructions from the Farmers Aid Fund (FAF) with the mandate to emphasize farmers groups and small farmers. It provides fertilizer to program beneficiaries at prices equivalent to its wholesale cost level. The FAF therefore subsidizes the transportation and handling costs to bring the fertilijz up country. It also provides the fertilizer interest-free for six months - and guarantees to compensate bad debts. MOF's procurement of fertilizer is primarily by local bids and from taking delivery of grant fertilizer (e.g., from Japan). It is legally restricted from procuring and distributing more than one third of total fertilizer used nationally. 22. The manner in which MOF is paid for its services encourages distri- bution close to Bangkok (40% transported up to 150 km, 25% up to 300 km, 20% up to 400 km, and 15% beyond 400 km). MOF receives a government grant of B 350 per ton for fertilizer distribution. On average, B 270/ton is trans- ferred to ETO for transport and the rest is retained for operating activi- ties. However, since the transport subsidy passed on to ETO (as MOF's required transporter) is clearly inflated for longer hauls (see Table 3), MOF has little incentive to contract for such delivery. The Effect on Market Performance 23. MOF's role in providing over-generous credit terms and subsidized farm prices and substantially increasing its role in ammophos distribution threatens the viability of the marketing system. Table 4 shows that, prior to the oil crisis in 1974 and the establishment of MOF in 1975, profit margins were comparatively regular and generally declining (averaging B 70 or 4% of the Bangkok selling price for the importer and B 160 or 8% of the district or local retail selling price for the dealer). Considering the price and stocking risk as well as the bulkiness of the commodity, these margins seem reasonable and are indicative of effective competition. Since about 1973, however, erratic (and sometimes negative) profit-margins were associated with ammophos. The main squeeze is on the dealers who are subject to direct competition with the intervention institutions, while the importer feels it indirectly through his dealer-clients' inability to pay a satisfactory price. The profits of some major importers and the Thai Central Chemical Company (the ammophos blender), on the other hand, are derived from high- volume supply contracts with the intervention institutions. The number of active ammophos importers has decreased from eight in 1981 to only three by mid-1983. There is clearly a danger that only one or two firms would remain as ammophos importers. Since these firms would also be the predominant 12/ Interest free 16-20-0 fertilizer is based on "cash" prices charged to farmers at a lower level than "credit" prices. The latter is operative if payment of fertilizer is not received after six months (see Table 2 for relevant price differentials and interest rates). - 55 - Appendix 2 Page 11 of 12 suppliers of MOF's needs (other than G-to-G fertilizer), an oligopoly situa- tion could become a reality. 24. Other effects of negative consequences for the farmer are also given below: (a) because dealers experiencing continued loss on ammophos are reluctant to stock it, irregularity of supply has occurred; (b) since most large fertilizer dealers also handle agro-pesticides, increased trade margins on those agro-chemicals not exposed to government competition (in order to compensate for the greater price and stock risks associated with fertilizer trading) have resulted; (c) because the unrealistic payment facilities offered by MOF undermine farmers' appreciation of credit cost and willingness to repay, a reduction of dealers' credit sales has occurred. Hence, the viability of the distribution system is jeopardized. Cost and Beneficiaries of the Program 25. The amount of subsidy involved in MOF's fertilizer market interven- tion is not readily extractable either from Farmers Aid Fund records or from those of MOF, which have been in arrears since 1978. However, an estimate has been made which puts the subsidy at nearly 35% of the Bangkok wholesale value of the distributed fertilizer. This was derived as follows: Subsidy type B million 1. Interest-free working capital on retail sales of 130,000 tons (FAF's subsidy to MOF) 91 2. Distribution cost allowance (FAF's subsidy to MOF and its distributing agents) 46 3. Other indirect subsidies: (a) Six-months interest-free loans and lending losses on retail sales of 60,000 tons 75 (b) Other financial losses, estimated to average 5% of retail sales (Baht 300 million) 15 Total 227 Source: Background Paper No. 7. - 56 - Appendix 2 _ Page 12 of 12 Category 1: This revolving fund supplements MOF's budget and permits it to sell on six-month interest-free payment terms. However, the major part of this subsidy is absorbed in inefficient stock management. The present (mid- 1983) stock of 80,000 tons is equivalent to 8 months sales; normal private sector stocks are not normally equivalent to more than a couple of months sales. Category 2: This is fully transmitted to farmers via MOF's country-wide retail pricing at its f.o.b. (Bangkok) cost. Category 3a: Lending losses benefit those MOF farmer clients who are either unable or unwilling to pay their bills. Whether they are the most needy is questionable. The effect of this unintentioned subsidy to the farming commu-. nity is further compounded by MOF's unwillingness to offer a price discount to farmers who want to pay cash on delivery. Category 3b: This is a conservative estimate of losses due to inefficient speculation and stocking policies compared with the private sector (i.e., overstocking in a downward market or, conversely, stock depletion in an upward market, excessive overhead costs and pilferage losses). 26. About 85% of the beneficiaries of MOF's subsidized fertilizIs/ are in irrigated areas, and are primarily the larger, more well-off farmers.- As the above calculations indicate, of the subsidy given to MOF, only half carries benefits to farmers in the form of price and payment advantages. The other half covers management and system-inherent inefficiencies not shared by competitive private enterprises. Furthermore, even the benefits via the above-mentioned price and payment advantages are accompanied by potential disadvantages in the medium- and long-term due to deterioration or breakdown of the private commercial fertilizer supply system which is the backbone of regular, country-wide fertilizer supply. Recommendations 27. Since the subsidized distribution of fertilizer has not achieved its original aims of yield improvement and the encouragement of competitive marketing, it should be phased out. Another premise used for such government involvement is that, since Thailand receives fertilizer from aid-in-kind assistance and from barter trading, it has to undertake the marketing of such fertilizer. Both from the standpoint of cost efficiency and farmer outreach, the Government is better off if it either resells such fertilizer to the fertilizer trade or allows the National Fertilizer Corporation to assume the function of taking delivery and disposing of such fertilizer. MOF could perhaps still have a role in assisting the Government in monitoring the competitiveness and market abuse in upcountry wholesale and retail markets. 13/ From the bias in MOF payments (para. 22) the Central Region farmers benefited most. Also from field surveys, we found that beneficiaries were mainly members of farmers associations and better-off farmers. - 57 - Appendix 2 Figure 1 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Rate of Return on Milled Rice Stored in Bangkok (Wholesale Level) NON-GLUTINOUS RICE, 100 PERCENT, Av. 1964-73 15 (Storage Begins Januarv) Rate of Interest 15% 10 o o ntret 2 0 Rate of Return -5 I I I I 1 1 I 1 I Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec GLUTINOUS RICE 10 PERCENT, Av. 1972-82 10 (Storage Begins January) Rate of Interest 15% 8 6 6 - < f ROte~~~~~~~~~~ Of InSterest 1 2% 4 2 0_ -2 -4 -6 -10 I II I I I I I I I I I Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec World Bank 2' 788 - 58 - Appendix 2 Figure2 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Rate of Return on Non-Glutinous Paddy Stored Upcountry NORTH 15 ( (Storage Begins January) Rate of Interest 15% 10 Ratatetof Retum/ 5 CT 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec NORTHEAST (Storage Begins April) 15 - P Rate of Interest 15% c 10 5LI Rate of Interest 12% 0 Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan CENTRAL PLAIN (Storage Begins April) 15 - Rate of Interest 15% a) C) 10/ Rate of Return o / te of Inte~~~~~~~~~~~~~nrest 12% 5_ 0 Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Source: Somnuk Tubpun, Rate of Return on Holding Rice & Paddy in Thailand, 1974. Word Bank - 25786 - 59 - ApeLndix 2 Figure 3 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Rate of Return on Glutinous Paddy Storage, Northeast (Khon Kaen), Av. 1972-82 Percent 9 (Storoge Begins April) Rate of Interest 15% - / - ~~~~~~~~~~~~~~~~~Rate of Interest 12% 7 3 0 3 _*te of Return -5 -7 1 A M J A S O N D J F M 15 - (Storage Begins January) _ Rate of Interest 15% 13- 9 -/ / aeoInterest 127% 7 5 3 -1 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec World Bonk - 25787 - 60 - Appendix 2 Table 1 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE MOF Share in 16-20-0 Distribution, 1979-83 ('000 tons) 16-20-0 1979 1980 1981 1982 1983 (1) National production 40 41 126 64 - (2) National imports 189 152 171 156 - (3) Total National Availability 229 193 297 220 210/a (4) MOF total fertilizer sales directly to farmers 112 102 136 63 50/a (5) Total MOF fertilizer sales including BAAC and other institutions 130 105 188 127 100/a (4) as % of (3) 49 53 46 29 24 (5) as % of (3) 57 54 63 58 48 /a Estimated. Source: Background Paper No. 7. Appendix 2 - 61- Table 2 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Comparison of Fertilizer Price Charged by Government and Private Retailers, 1975-83 (Baht/ton of 16-20-0) Institution 1975 1976 1977 1978 1979 1980 1981 1982 1983 MOF /a Cash 3,800 2,230 2,400 2,600 3,700 4,700/d 4,700 4,700 4,400 Credit 3,800 2,400 2,580 2,800 4,000 5,052 5,066 4,900 4,600 Federation of Cooperatives /b Cash 4,560 3,050 2,850 3,350 4,350 4,950 4,950 5,200 4,300 Credit 5,100 3,450 3,200 3,750 4,900 5,700 5,700 6,000 4,900 BAAC /c Cash - - - - - 4,950 4,950 5,200 4,300 Credit - - - - - 5,594 5,643 5,928 4,900 Private Cash 4,660 3,100 3,150 3,242 4,026 5,025 5,100 5,100 4,600 Credit 6,654 4,427 4,498 4,630 5,750 7,175 7,282 7,282 6,000 /a Farmers/farmer groups using credit are charged the cash price, free of interest. B 100/ton is added to the cash price if payment is made between 6-9 months. A further B 100/ton is added if payment is made between 10 months and one year. The credit price is only charged to payments of more than one year and the interest rate is 0.75% per month. /b Federation of Cooperatives' interest for 1975-79 equals 12% p.a.; since 1980, 15% p.a. /c BAAC's interest rate for individual loans in 1980 equals 13% p.a.; since 1981/82, 14% p.a. /d 16-20-0 fertilizer was sold at B 3,700 up to June and B 4,700 since July. Source: Office of Agricultural Economics. - 62 - Appendix 2 Table 3 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Comparative Freight Rates of ETO and Private Trucks for Different Distances Baht/ton ETO/a Private 50-70 93 92 71-100 104 100 101-200 144 130 201-300 200 143 301-400 260 179 401-500 314 183 501-600 376 224 601-700 434 261 701-800 494 321 801-900 561 387 901-1000 630 500 over 1000 748 560 /a Express Transportation Organization Source: Background Paper No. 7. - 63 - Appendix 2 Table 4 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Market Margins and Implied Profits, 16-20-0 Fertilizer, 1963-83 (Baht/ton) Wholesale (Bangkok) - CIF Local retail - wholesale (Bangkok) As a % of: As a % of: Gross Implied Whole- Gross Gross Implied Whole- Gross Year margin profits sale margin margin profit sale margin -- (Baht/ton) -- -- (Baht/ton) -- 1963 301 101 5 34 384 184 10 48 1964 333 133 6 40 438 238 11 54 1965 320 120 6 38 416 216 10 52 1966 322 122 6 38 420 220 10 52 1967 303 103 5 34 387 187 10 48 1968 290 90 5 31 365 165 9 45 1969 277 77 4 28 343 143 8 42 1970 285 85 5 30 356 156 9 44 1971 272 22 1 8 335 135 8 40 1972 289 39 2 13 364 164 9 45 1973 282 32 1 11 762 512 20 67 1974 791 441 9 56 270 70 1 26 1975 1,267 867 20 68 216 16 0 7 1976 591 191 7 32 291 90 3 31 1977 432 32 1 7 407 207 8 51 1978 279 -121 -4 -43 234 34 1 15 1979 526 126 3 24 160 -40 -1 -25 1980 437 37 1 9 97 -103 -2 -106 1981 358 -92 -2 -26 275 25 1 9 1982 600 150 3 25 350 100 2 29 1983 500 50 1 10 300 50 1 17 Source: Background Paper No. 7. - 64 - Appendix 3 Page 1 of 8 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE The Efficiency of Marketing and Government's Role A. Introduction 1. Past studies have concluded t "t agricultural marketing in Thailand is generally competitive and efficient.- Many buyers and sellers character- ize the market for Thailand's main agricultural products. Prices were efficiently determined in response to aggregate supply and demand conditions, effectively transmitted from the trade to central markets and, through the marketing chain, to the farmer. Yet some policymakers, in pushing government intervention, often ignore this fact, arguing that: (a) price raising actions (like export taxation) can shift the burden to foreign buyers; (b) undue com- petition among traders results in lower prices for exporters (and thus farmers); (c) gains from price increases at the export level are not passed on to the farmer because of exploitive middlemen; and (d) for, equity reasons, the less well-off segment of the farm population is the most exploited in terms of the marketing services and should be compensated with more government assistance so that the prices it receives can be improved. This appendix re- evaluates the status of agricultural marketing and price transmission in Thailand with respect to the implications for efficiency and income distribution. 2. Our assessment validates the results of past studies. By and large, agricultural marketing in Thailand (especially for the major export crops of rice, maize, cassava and rubber) is competitive and efficiently managed by the private sector. Competition at the central and terminal market levels is generally sufficient to keep marketing margins at a reasonable level. Such competition is also complemented by widely scattered processing facilities, and an effective network of wholesale and retail establishments - a consequence of Thailand's generally extensive transportation network. The result is efficient price transmission which allows world price signals to be quickly reflected down to the farm level. Exceptions to such market performance are usually linked to government interventions distorting the pricing and marketing process or, more likely, relatively poor access to market centers or processing facilities. Under the latter situation, farmers tend to be at the mercy of the few better informed merchants who could 1/ See for instance: (a) Ammar Siamwalla, Chirmsak Pinthong and Vatchareeya Thosanguan, Agricultural Marketing and Pricing in Thailand, March 1981; (b) Chirmsak Pinthong and Ammar Siamwalla, "Preliminary Background Notes on Food and Nutrition Policy in Thailand," Discussion Paper, Thammasat University, 1978; and (c) Peter Pollak, Agricultural Markets and Marketing in Thailand, IBRD, August 1980. - 65 - Appendix 3 _ Page 2 of 8 shortchange them by withholding price information, undergrading and inaccurate weights and measures. While some changes could ease their difficulties, direct government intervention will likely have limited impact without concurrent efforts to improve access and production improvement to expand farm surpluses in these areas. B. Price Determination and Transmission 3. For the major traded commodities, agricultural prices in Thailand are made centrally (essentially in Bangkok) and transmitted from a central market to terminal/wholesale centers and to local trade outlets. Local supply and demand factors usually have little influence on this price determination process. With sufficient participants in the market and without transport and government restrictions, prices at any one point in time will therefore tend to differ from each other by the cost of transportation and handling. In some provinces which serve as centers for internal trade, however, some departures may occur especially if they are far from Bangkok. 4. That world prices are quickly and efficiently transmitted from Bangkok to the farmer is illustrated by the following table which summarizes the correlation coefficient (r) and transmission elasticities (E) of monthly prices for the major crops from 1967-80:- 2/ For details, see Background Paper, No. 3, "A Study of Price Transmission, Market Distortions and Subregional Effects for Selected Agricultural Commodities." - 66 - Appendix 3 Page 3 of 8 Export to Bangkok Wholesale Bangkok Wholesale to Farm Crop rxw /a E r E f /d Rice 0.75 (to) 0.65 (to) 0.98(t1/2 ) 0.99 (t1/2) Maize 0.94 (t1/2) 0.87 (t1/2) 0.93 (tl) 1.0 (tl) Sugar /e 0.55 (t1/2) 0.35 (t1/2) 0.85 (tl) 0.97 (tl) Cassava /f 0.96 (to) 1.0 (to) 0.92 (t ) 1.1 (t ) /a Rxw represents the proportion of Bangkok wholesale price changes explained by changes at the export price level. /b E represents the % change in wholesale price following a 1% change in the export price. /c rwf represents the proportion of farm price changes explained by changes at the Bangkok wholesale price level. /d Ewf represents the % change in farm price following a 1% change in the Bangkok wholesale price. /e Raw sugar at export to Bangkok wholesale level. Sugarcane at the Bangkok wholesale to farm level. /f Cassava pellets. N.B.: Items in parentheses indicate the associated time lag (in months). For example, to indicates the same month, t1/2 a half-month lag, etc. The time lags selected are the ones with the highest value of r and E. Source: Chaiwat Konjing and Apisish Issariyanukula, op. cit. Extremely high transmission and correlation are associated with the Bangkok wholesale to farm level marketing chains. At the export to Bangkok wholesale chain, however, it is significant that export prices for the traditionally well regulated commodities (rice and sugar) show substantially less correla- tion and transmission efficiency than those relatively free of intervention (maize or cassava). 5. Preliminary analysis also indicates that, for non-glutinous rice, while regional wholesale centers (e.g., Nakhon Ratchasima) are very effi- ciently connected to Bangkok (E=1.0), further price linkages upcountry (especially to the Northeast) do not take place as efficiently (E=0.6-0.8). For glutinous rice, monthly price transmission elasticities from the regional wholesale to the zonal farm level are quite high (E = 0.7-0.8). Regional Appendix 3 Page 4 of 8 glutinous wholesale prices and Bangkok non-glutinous prices are, however, much less effectively linked (E = 0.3). The latter result is not surprising because the glutinous rice market is quite separate from the non-glutinous market. Glutinous rice (grown mostly in the Northeast and Upper North) is primarily a subsistence crop and thus surpluses are small. Besides, trading with Thailand's most important customer (Laos) does not take place through Bangkok, since the rice is directly shipped from mills in the Northeast. Although intra-seasonal linkages for glutinous rice are low, correlation of annual average prices is high. Annual prices of glutinous paddy have, on the average, been between 5-10% lower than those for non-glutinous paddy. How- ever, the differential appears to be higher in low price years and lower in high price years (see Table 1 of this appendix). 6. Historical evidence on the link between rice export taxation and wholesale prices indicates that the effect is multiplicative; a one baht reduction, on average, was accomyanied by a nearly three baht increase in the wholesale price from 1967-1980.3 As has been pointed out by Chirmsak (1977), the middlemen seem to charge only in absolute margin terms, which means that marginal changes in the Bangkok price are transferred in a more than proportionate amount to the farm price level. The effect of the May 1982 elimination of the reserve requirement was particularly dramatic (see Figures 1 and 2). Wholesale prices and farm level prices increased substantially above their seasonally/adjusted levels in July-October while export prices continued to decline.- Such evidence should dispel any misgivings concerning whether price improvement from the reduction of export taxation will be passed on to the farmgate level. C. Market Efficiency 7. A study of marketing costs and margins 5/ indicated results similar to those obtained from the assessment of price transmissions above. Among the 3/ The relationship between the monthly wholesale price (Pw) and export premium (Tx) in baht per ton of rice for 1967-80 is: Pwt = 7,228.7 - 28.8 Txt r2 = 0.58; n = 56 (-6.6) Value in parenthesis, the t statistic, is significant at 99% confidence level. 4/ These measures did not coincide with the price support procurement activities which were essentially targeted for the early months (December to April) of the main rice crop marketing season. 5/ See Chaiwat Konjing and Apisith Issariyanukula, Food and Agriculture Policy Analysis: Output Demand, Input Supply and Marketing of Rice and Upland Crops, Kasetsart University, Dept. of Agricultural Economics, 1982. Appendix 3 Page 5 of 8 commodities studied (rice, maize, cassava, sugar) profit margins along the marketing chain were, in general, reasonable in relation to procurement and handling costs. Relative to other crops, however, those for rice were high (particularly at regional retail and wholesale levels). Hypothesizing that results for an unusually high price marketing year for rice (1981) may not be generalizeable, a reassessment of the situation was commissioned as part of our study. The purpose was to add a low price year (1982/83) for rice to see if results were substantially different. Less advanced provinces (with a high proportion of poverty districts) were also added in the marke6 margin surveys to see if differences in marketing efficiency were observed- 8. The conclusions are interesting. First, although profit rate differences were not as dramatic, market margins in the low price year were often nearly half those of the high price year. Profits would have been much lower had it not been for dealer efforts to reduce marketing costs through less costly and more efficient storage incurring less physical and weight losses. Hence, when averaged out, market margins for rice were much more reasonable. Second, despite the range of conditions encountered in the provinces, differences among farm level prices were less than those for retail prices, particularly in the Northeast. Nevertheless, differences in the structure of marketing costs and market margins between advanced (or surplus) areas compared with those that are deficit (or less accessible) have important implications for marketing policy. 9. With respect to the structure of marketing costs, the poorer or less commercially advanced provinces (e.g., Surin in the Northeast and Chiangrai in the Upper North) face high marketing costs arising from high transport costs and/or high physical losses (resulting from poor management or handling). In areas that are less accessible to Bangkok (e.g., Chiangmai and Chiangrai in the Upper North) high profit rates (particularly at the retail level) reflect the locational advantage afforded by high transport costs to export outlets in Bangkok and to the large surplus centers in the Central Region which make it possible to accommodate higher cost local surpluses. In the commercially advanced but deficit areas (e.g., Khon Kaen and Nakorn Ratchasima in the Northeast) the higher profit rates for retailers (compared with wholesalers and millers) are associated with the high local demand as well as some market control due to strong links between the retail and wholesale levels. In selected less accessible areas (e.g., the Upper Northeast), local assembler margins also appear to be inordinately high. Millers' profit rates are high compared with those of other marketing agents in the advanced Central (Ayudhaya) and Lower North Regions (Nakorn Sawan and Petchabun) - which is somewhat surprising since these areas are served by the bulk of the more than 25,000 rice mills found in Thailand. A plausible explanation could be the intervention of government price support (purchasing) programs (see Appendix 2). 6/ See Background Paper No. 3. - 69 - Appendix 3 Page 6 of 8 D. Market Information 10. The result on price determination and transmission validates the efficiency of the informal trader market information system. Brokers (Yong) at the market centers keep track of export prices and solicit bids from exporters and wholesalers. The resulting quotes on market price and outlook (the Hang Cheng) are relayed to local merchant clients upcountry by truck, mail or telephone. The Yongs also provide trucks to transport commodities to and from exporter and upcountry wholesaler warehouses. With more than 40 brokers handling price transactions in Bangkok and associated upcountry merchants keeping in touch with at least two brokers simultaneously, little variation in prices occurs in localities where sufficient merchants operate. As long as exporters do not monopolize these brokerage houses, such market forces will continue to work. 11. This rather efficient trader information system, which forms an important part of the effective price transmittal process is, however, not available to the farmer. The farmer is therefore at a disadvantage with respect to the lack of knowledge concerning fair prices, price trends and the quality testing of their product. In highly commercialized areas where the farmer can choose among traders or middlemen, the disadvantage is probably of less consequence. In areas where not as many traders operate farmers can often be exploited by merchants who shortchange them through:!/ (a) Withholding pricing information. When prices shoot up abruptly, merchants usually have advance notice, which gives them an advantage over farmers who have to conclude sales before the news breaks. (b) Weights and measures. Quite a few merchants short-weigh their purchases from unwary farmers. (c) Grading. Farmers often cannot learn about techniques used in quality or grading tests prior to sale. However, even where stiff competition might exist, a shrewd merchant, usually better informed than farmers, can turn his technical and marketing knowledge into a tidy profit on many transactions. E. The Role for Government 12. As our assessment of government procurement programs (Appendix 2) and the review of marketing efficiency above has shown, there is only a limited role for Government in fostering competition in rural markets in Thailand. Firstly, sufficient competition generally exists. Secondly, where exceptions to such market performance are found, the ultimate cause is related less to market exploitation by the private sector than to government inter- vention or, more likely, relatively poor access to marketing and processing 7/ See Ammar Siamwalla and others, op. cit., March 1981. - 70 - Appendix 3 Page 7 of 8 centers. Hence, the measures likely to be more effective would be the removal of government interventions, further improvement of transportation access and providing the means to increase the marketable surplus in these areas. However, even with these measures, the farmer is still at a great disadvantage with respect to price and market intelligence. To ensure that efficient transmission of prices actually benefits the farmer, the Government must be more effective in: (a) improving its market information system and ensuring its availability to the farmer; (b) ensuring minimum quality standards for output and inputs; and (c) reducing dealer fraud in weights and grading. 13. Market Information System. The gathering of price and market information is scattered among various government ministries and agencies, and little attempt has been made to consolidate the relevant information in a form that is meaningful to the farmer. For instance, the Ministry of Commerce collects wholesale/terminal market prices in large district towns and the Office of Agricultural Economics (MOAC) collects farm and some terminal market data in selected districts. Government could consolidate these data together with the price bids used by the private sector and announce them over the media. At the same time, through the extension service, farmers could be taught to calculate the marketing margin from the nearest market centers to their farm situation (taking into account, for example, differences in grade and market distances). Timely announcement of crop damage (e.g., drought, insect pests) and their implications would also be useful. A study is needed to look into: (a) the efficacy of these measures in more depth; and (b) what aspect of market information each government agency has comparative advantage in so that priority sources could be streamlined and strengthened. 14. Monitoring of Quality Standards and Fraud. Particularly important for the encouragement of intensification is the situation with regard to cash inputs (especially fertilizer, agro-pesticides and improved seeds). If mini- mum levels of product integrity for inputs cannot be assured, crop intensifi- cation efforts will be compromised. Government's role in two areas needs strengthening: (a) monitoring the level of product integrity for farmers' inputs; and (b) monitoring and preventing merchant fraud for farmers' output. 15. In the case of quality control for inputs, the strengthening of in- stitutions undertaking testing and monitoring of quality standards (especially the Department of Agriculture) is essential. A study is required to assess the appropriateness of existing regulations, procedures, quality of services and the institutional and enforcement framework for the quality control of fertilizer, agro-pesticides, and imported improved seeds. Besides monitoring to prevent the usual abuses of adulteration and illegal mislabellings, more subtle issues should also be analyzed relating to whether the proliferation of - 71 - Appendix 3 Page 8 of 8 brands of similar types of fertilizer or agro-pesticide is warranted. Con- cerning the trading abuse of farmers' output, the monitoring of merchant fraud in weighing or measuring (presently under the Office of Weights and Measures, Ministry of Commerce) should be strengthened. 16. Putting government resources into the above activities will be far less costly than buying crops. However, strengthening Government's attempt to reduce the illegal abuse of quality standards, weights and measures will not be enough: (a) the farmer should be better armed to detect fraud; and (b) the private sector should be encouraged to undertake greater self-enforcement. To do the former, farmers should be trained to understand the procedures mer- chants use to defraud them, particularly in relation to weights and measures, grade recognition, understanding the meaning of labels on quality content. For the latter, the private sector could be encouraged to furnish (for a fee) weighing, measuring and quality examination services independently of any middlemen trading in that input or product. These package of measures should make a significant contribution towards containing dishonest abuses by middlemen. - 72 - Appendix 3 Figure 3 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Baht Per Ton Rice ExPoft PnIce and Bangkok Wholesale Paddy Prices 5.000- 4.500- bv Price (Poddjy equNclent) 4.ODO- 3.500- N 3.000- \. N.' N% IWO-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~= . RBSS / \ equireent / AV1975-79 2,500.- **-,*,*/ ,, _ 2.000 _I- I I I I I Jan Feb Mar Apr May Jun Jul Aug Sup Oct Nov Dec Month Woo¶d Bgnor-25908 Legend 1982 ExoW 1982 - - Appendix 3 Figure 2 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Glutinous Paddy: Average Farm Price for Zone 3- Baht Per Ton 4,000 .35 r _.1975-79Average 3,6W .S00 ....... 1980 1981 1982 Elimination of Reserve / \ Reduction of Premium 3.000 - Requirement and Reserve Requirement 2.500 .......t~* a....Ruio . .. . t..... 2~~~~~~~~~~~~~~~~.50 .=>.. ~2.............................................. 2,000 _ _ _ _ - _ _ _ _ 00 _ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~0 1,500 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Zone 3 ComprIses the Following Provinces in the Northeast: Kolosin, Khon Koen, Maha Sarakham and Poi Et. World Bank - 25789 - 74 - Appendix 3 Table THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Farm-Gate Prices of Glutinous and Non-glutinous Paddy (Annual Averages in Baht per Kwien) /a, Thailand 1967-80 Price differential as Non-glutinous % of non-glutinous Glutinous paddy paddy rice price 1967 1,149 1,211 -5.1 1968 1,097 1,157 -5.1 1969 931 1,023 -9.0 1970 699 888 -21.3 1971 545 701 -22.1 1972 856 939 -8.8 1973 1,429 1,487 -3.9 1974 1,955 2,087 -6.3 1975 1,942 2,098 -7.4 1976 1,684 1,919 -12.2 1977 1,733 1,994 -13.1 1978 2,584 2,364 +9.3 1979 2,050 2,280 -1.3 1980 2,708 2,838 -4.8 /a One kwien equals one ton of paddy. Source: Office of Agricultural Economics, Ministry of Agriculture and 75- Appendix 4 Page 1 of 7 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Government Agricultural Price Policy Making and the Role of Rice A. General Price Policy Making 1. This appendix reviews the process of policy making in the area of agricultural pricing and marketing. It begins with general policy making and concludes with the situation specific to rice. 2. Policy making in agricultural pricing and marketing may be characterized as widely dispersed and ad hoc, yet in a relatively mysterious and somewhat complicated and tortuous way (the "Thai way"), it provides for a surprising amount of consensual decision making. The interaction of many ministries involved in agriculture (see Chart 23075), is, itself, a major constraint to effective policy making. But, in Thailand, the situation is further complicated by the independence (and, in some cases, the dominance) of strong departments over the very ministry established to "control" them. Also, the delicate political patronage and the political checks-and-balances underlying ministerial policies linked with the interplay of the three major influencing groups (the military leaders, the leading government bureaucrats, and the banking/business elite) make consensual decision making even more complicated and difficult. Hence, to be effective, recommendations for policy changes will have to be reasonably cognizant of these webs of vested interests impinging on the proposed policy. 3. Presently, the decision making clout for economic policy still revolves around the economic cabinet- with the National Economic and Social Developmeyy Board (NESDB) acting as the main initiator of policy issues for decision.- Other pressure points for cabinet decisions are the many national committees which preside over pricing and marketing policy, but their success has been mixed at best. Various committees with commodity policy implications 1/ Comprising the Ministers of Finance, Commerce, Industry, Agriculture, Interior. 2/ Cabinet decisions, however, do not necessarily result in binding obliga- tions on the part of the relevant government agency as these agencies can afford to wait out their politically appointed ministers who change frequently. - 76 - Appendix 4 Page 2 of 7 have been set up3/ often in response to exogenous developments (e.g., external commodity market crises, domestic weather effects). Except possibly for those chaired by the Prime Minister, where the clout exists, examples of effective decision making are rather few and far between. Part of the problem has been the dispg sal and lack of market intelligence among various ministries and agencies-/ and the limited analyses relevant to the issues for decisi?7. Ministerial vested interests have, therefore, been allowed to prevail- without credible verification of the facts presented and without an overview of the relevant effects of key policies. Certain developments are moving the Government decision making process in the right direction. 4. Besides the establishment of the economic cabinet and the establish- ment of the National Economic Policy Steering Committee (with NESDB designated as secretariat), changes in government planning, programming and budgeting approaches and procedures initiated under the Government's structural adjust- ment program wi0k provide the basis for strengthening ministerial ability to conduct policy. In the Ministry of Agriculture and Cooperatives (MOAC), the Agricultural Policy and Development Planning Committee (chaired by the 3/ The National Rice Policy Committee, Agricultural Products Price Stabili- zation Center, Export Development Committee, Committee for the Barter of Agricultural Commodities for Inputs. 4/ Market intelligence is scattered among various ministries and agencies. For instance, the Office of Agricultural Economics (MOAC) has a crop intelligence system through its Center for Agricultural Statistics and also monitors foreign developments especially in external commodity- market prospect and commodity agreements; meanwhile the Department of Business Economics (Ministry of Commerce) focuses on external commodity intelligence but also has a system of collection of domestic prices and market information upcountry. Various external and domestic market monitoring is undertaken by the Bank of Thailand and the Board of Investment. 5/ The most vivid examples are for rice: the Ministry of Commerce (especially its Foreign Trade Department) derives considerable advantage over the private sector in being exempted from paying the premium for its government-to-government export sales); the Ministry of Agriculture and Cooperatives (MOAC) and the Marketing Organization of Farmers (MOF) rely on the Farmers Aid Fund which is essentially derived from the rice premium; the Ministry of Finance (its Revenue Department) depends on the export tax as a revenue source; and the Public Warehouse Organization (PWO) depends on the reserve requirement for its basic operations. 6/ See background reports relating to the World Bank's two Structural Adjustment Loans in Thailand and the initiatives in the Bank's proposed MOAC Support Services Project. - 77 - Appendix 4 Page 3 of 7 7' Minister of Agriculture)- is now an institutional fixture although its use has been primarily project oriented. Similarly, the National Rural Develop- ment Coordinating Committee, while providing an effective framework for inter- agency coordination among the ministries involved in rural development pro- grams and projects, is not really suitable for policy making in pricing or even marketing of agricultural commodities. A gap in such coordination there- fore exists which is now probably worsened by the dissolution of the National Rice Policy Committee which, under the chairmanship of the Prime Minister, did provide an inter-ministerial perspective for a difficult commodity (in policy terms). In its place is a Rice Policy Committee, located in the Ministry of Commerce, chaired by the Commerce Minister with the Director General of the Foreign Trade Department acting as secretary. Although representatives from other agencies are included, this Committee does not have the clout it had in its previous form. However, as discussed below, policy formulation and imple- mentation in 1983/84 became more of a quiet lobbying effort to influence Cabinet, with NESDB and the Advisory Council to the Prime Minister taking the lead. This more informal system appears to have been successful in pushing for politically difficult reform like the Cabinet rejection, in January 1984, of the Marketing Organization of Farmers' 1984 price support program. Since the conditions for success have been rather ephemeral (being hinged on the role of key individuals and the current climate of financial stringency which made it easier to turn down expensive and wasteful programs), a long-term objective should be to reduce the ad hoc nature of pricing policy and the introduction of greater automaticity in the policy making process so that the disruptive interplay of vested interests can be minimized. B. Rice Policy Making The Key Actors and Decision Making Process 5. As detailed in Background Paper No. 2, rice price policy making is intricate and, given its intersectoral ramification, has to be political. Within the purview of the more general interactions discussed above, there is an interplay of vested interests in the policies and programs for rice pricing and marketing. The or7nizations involved in rice policy appear to fall into three main categories:- (a) Policy initiating bodies. This is essentially the National Rice Policy Committee (RPC). Also involved in varying degrees are the Cabinet, the Council of Economic Ministers and, occasionally, the NESDB. 7/ With MOAC directors-general and representatives from core agencies (e.g., NESDB and Budget Bureau) as members. 8/ The original mandate and the roles and functions of these organizations and committees are summarized in Table 1 of this Appendix. Details on the functions and legal mandate are given in Background Paper No. 2. - 78 - Appendix 4 Page 4 of 7 (b) Policy making and transmittal agencies. These are the ministries (essentially Agriculture and Commerce) and the departments within the ministries, in particular the Department of Foreign Trade (DFT), probably the single most important power for rice policy. Another important entity is the Farmers Aid Fund (FAF). (c) Operational agencies. These are MOF, PWO, AFCT and also, in its capacity as the government trading agency, DFT. Also relevant in this process are the lobbying organizations, the foremost being the Rice Exporters Association and the Rice Millers Association. The AFCT, in addition to its operational work, also lobbies on behalf of farmers. These three levels of decision-making and implementation reflect themselves in the phases of how each year's decisions on rice prices are formulated and implemented. The Phases of Yearly Rice Policy Making 6. The following attempts to generalize rice pricing policy making and implementation in the past decade and suggests a yearly pattern of some regularity which may be divided into three phases. It must be borne in mind that arrangements each year are ad hoc and depend very much on various exigencies like, for example, the personality of the Prime Minister, the relationship between the Ministers of Agriculture and Commerce, and the world price of rice. One constant it does reflect is the central role that governments between 1975 and 1983 have placed on the price support program. Phase I: Policy Initiation 7. This phase, usually lasting from about July to September, is the most irregular of the three phases. Each year the question of who takes the initiative in this area is never clear. Under the Kriangsak government, for example, the initiative would be taken up by a Cabinet-appointed Prices and Incomes Committee who would be clearly charged with setting "the" price of paddy at which it is to be supported. With the entry of the Social Action Party into the government with its strong backing of the price support program, there would be in this phase a working group or task force, tech- nically appointed by the Rice Policy Committee (RPC) or the Council of Economic Ministers, to study rice policy for the forthcoming year. Such groups have sometimes the character of a guerrilla action designed to subvert the main plank of the senior coalition party. 8. Two key features characterize this phase of policy formulation: (a) the presence in it of academics and officials of the staff agencies, particularly the NESDB and the Rice Policy Committee secretariat; and (b) the absence of any input from the major line agencies, such as DFT to the Ministry of Agriculture, although individuals from the Office of Agricultural Economics have occasionally participated. 79 Appendix 4 Page 5 of 7 9. Such groups would then draw up reports which are submitted for discussion by whoever appointed them. When there is a prior commitment to a price support program, it is the main task of such a group to submit "the" price at which paddy is supported. This is normally the one lasting achieve- ment of this phase. In many instances, most notably in 1982, the working group went further and re-examined the means to achieve the government's price target. This initiative resulted in failure as soon as the policy moved into the second phase. Phase II: Policy-making and Transmittal 10. In this phase lasting from about September to December, the main actors are the Ministers of Commerce and Agriculture and senior officials from these two ministries particularly the Director-General of DFT, the controller of the G-to-G (the account Unit of DFT) money, and the Permanent Undersecre- tary of the Ministry of Agriculture and Cooperatives, the controller of FAF money. They would settle on the main outlines of the procurement program, its size, the distribution of tasks among MOF, PWO and AFCT, and, most important- ly, the mode of financing to be employed. The question of export taxes is hardly discussed but, when discussed, it is generally in the context of how much funds the premium will generate for FAF and the Account Unit of DFT. 11. How much outside political currents percolate to the decision-makers at this stage depends critically on whether the Ministries of Agriculture and Commerce are within the same political group or not. If so, the two ministers will collude to prevent the discussion from going public and present a united front when the policy has been decided on. Otherwise, their rivalry will sometimes force the issue into the open as each side tries to gain support. In such a case, a farmers' demonstration could be used, for example, to induce the government to adjust the support price. 12. This phase is easily the most important of the three. It is at this stage that the government is irrevocably committed to a procurement program, to the method of procurement, to the size of the program and to its finan- cing. It is also at this stage that the decision is usually made not to tamper with the export tax structure. From this point on, the matter moves out inexorably to the field. Both Ministries now begin to prepare detailed plans to direct their "creatures", MOF and PWO, on the methods to be used in procuring the paddy or rice. Phase III: Implementation 13. From a policy point of view, nothing of note occurs during this phase which extends from December to March or April. The two procurement agencies, MOF and PWO, would be directed by their respective ministries to go out and purchase the rice, and would do so. AFCT would also work closely with the Cooperative Promotion Department to do the same. 14. The only events to liven the scene are the demonstrations by farmers designed to induce MOF to proceed to their particular districts to purchase the paddy. Because such demonstrations usually end up at the Government House, it often becomes the task of the RPC secretariat to discuss the matter - 80 - Appendix 4 Page 6 of 7 with the demonstrators, consider their demands and transmit their requests to the operational agencies. 15. Alongside such overt lobbying efforts, there are no doubt some, most likely considerable, covert efforts designed to subvert the procurement program to their own benefit. As Background Paper No. 6 which documents the profitability of the procurement program shows, millers, traders and exporters would no doubt benefit even more if they could direct MOF's or PWO's operations to their localities. The Next Step 16. The above account discusses the institutional basis of policy making as it was practiced in the seven or eight years prior to 1983 (especialy 1981 to 1983 when market intervention to support prices was the centerpiece of the government policy). That policy came to an end in 1983, primarily because of the financial collapse of PWO and the high cost (and limited benefits to farmers) of the MOF program, which spilt over into a general reluctance to pursue such wasteful and ineffectual policy. 17. It is interesting to note that policy formulation and implementation was also considerably simplified in 1983/84. The policy initiative that year was taken by NESDB in association with the Advisory Council to the Prime Minister, and an extremely simple approach was decided on by these two organizations, namely to slash export duty and the premium by a half during the next marketing year. The Cabinet also decided to discontinue the price support programs for the PWO and the MOF for the 1984 marketing year. With some quiet lobbying with the Minister of Commerce, the policy was eventually adopted by the Cabinet. The Cabinet stood by this decision despite an intense campaign by members of Parliament and outside pressure groups for the Govern- ment to revert to the price-support program. The success of such informal approaches is hinged on the role of key individuals and, in this case, a national climate of financial stringency which made it easier to turn down wasteful programs. Just as important is the role of timely analytical work which provided policymakers with a perspective of the extent of waste and the impact of such programs in relation to original objectives and on various categories of beneficiaries. 18. To design a new set of institutions that will emerge from the debris of the older system, it is necessary to set out, more clearly, the conditions which can lead to a successful system: (a) the institutions which are to be set up must be capable of sustaining themselves financially. If they are to rely on the central budget for any project, its full financial implication must be known and settled before the project is embarked upon; (b) if any extra-budgetary fund is to be created, its purpose should be clearly set out and must be very specific. The scope of work should be as narrow as possible; (c) any agency involved in a regulatory or taxing function should not be 81 - Appendix 4 Page 7 of 7 involved in direct trading in competition with the regulated or taxed sector; (d) what the rice price level should be will remain in Thailand forever a political decision. A political arena is inevitable as long as there is no overwhelming economic rationale (and in a practical sense, there really is none) for a particular choice of the price level. Of course, there should be sufficient staff work on the part of the civil servants as to the consequences of any given level of rice price; and (e) the question of the technique of attaining that price level should be as insulated as possible from political controversy. The civil servants should be allowed to get on with the task of reaching the objective, subject to the constraint set out under (a). 19. Although a suggestion for a revamped system which could fulfill these conditions is given in Background Paper No. 2, the task of this report is not to make specific recommendations on what such a system should be. The report has focussed on the analysis of the Thai pricing and marketing policy experience for rice and distilled the lessons from it so that past mistakes will not be repeated. The lessons are worthwhile recapitulating. Firstly, price support programs which attempt to raise prices against the world market trend are futile, expensive and wasteful. Any government attempts with such a mandate should be discontinued. Secondly, input subsidy programs which greatly distort market prices (like those for fertilizer), even if they achieve their goal, will usually do so at too high a cost to justify the benefits - especially if undertaken independently of technology transfer programs. Thirdly, while domestic price stabilization is a perennial objective of pricing policy, especially for important staples like rice, attempts to achieve it should be modest with respect to expectations for substan- tially reducing its variability. Fourthly, while improvements in pricing policy may help a little in reducing income disparities, it should not be relied upon to make a substantial impact on poverty alleviation. Taken in their proper perspective, these lessons have a direct bearing on the institutional basis for rice policy making. - 82 - Appendix 4 Table THAILAND PRICING AND 1MARYETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Snum- of Role and Functions of Government Agencies and Committees Involved in Rice PrlcinR and Marketing Interventions Present role and functions Original mandate Export level Internal trade level Farm level Policy Initiating Bodies Rice Policy Conmittee (lit- Set policy on rice. Decide, sometimes on premium. SOt limits and funding on set limits and funding on banded at end of 1982) intervention by PWO. intervention by MOF. Rice Price Maintena-ce - - - - - - - - - - - - - - - - - - - N…ocl.a. role - - - - - - - - Committee (sc censor to RPC) Policy Making and Transmittal Age-cien Depart-est of Foreign Trade 1. Deal with all forvign Control premium rute. Boy rice for G-tn-G. (It may None. issues except tariffs. time its purchases to move 2. Obtain intelligeoce vs in- Regilate e-port trade. prices) ternationol trade. 3. Negotiate trade igree.ents. Collect renerve rice from esporters (end 1981) C-to-i 4. Standardn and quality trade. control of e-ports. 5. ERport pro.otltn. 6. G-to-G export trader. Farmers id Food (FAF) Fond to be used for: Fond is primarily obtained Soor of foods for MOF, PWO Source of funds for MOF and L. Pr-omting production. from proceedn of the rice and AFCT-np.nsored actiRitlen. AFCT-sponsored activities. 2. Output price support. premium. 3. Any action essential for pre-vnting emviroeetal damage. Agricultural Price Coordinate agencies within Set policy on rice purchanes Issue directives to PWO. None. Maintenance Operation. Ministry of Commerce. for G-to-C. Center Department of Interval 1. Set up qualtfications fur Enforce stock and other Distribute reserve rice Trade rice traders and millers in requirements on exporters. throogh special shops (ended accordance with the various 1981). Acts of 1946. 2. Promote Thai shops where reserve rice is sold. Operational Agencies Public Warehoose 1. Os ag-commodities, Sell rice to DFT (for G-to-G) Purchase of rice from mills .t None Organieation intervene in markets to and to enporters. support prir.. influence prices., Collectin of rice from Store ric- to influence time 2. To have some role in esporters through "rice path of rice prices. Huy rice exports and imports of ag- reserve requirement." from AFCT. Mixing rice from commodities. reserve requirement to sell as cheap rice. Marketing Org. of Farmers 1. Set up markets for farmers Obtain some G-to-G quotas from Inadvertently buy paddy from Supposed to boy paddy from to boy and sell "directly". IFT to export trie (begisnlng rIce mills at s-pp.rt price Earners at support price 2. Provide price support. 1982). (1975-83). 3. Obtain inputs for farmers. 4. Aid farmers in marketing .rea.. Federation of Agri. Coops. 1. Federative of cooperatives. Fill some C-to-C orders for Has a number of rice mills., Member coops buy from farmers. OFT (beginning 1982). which buys paddy from farmers. 2. Promote cooperatives. Sell rice to PWO. Source: Background Paper No. 2. P A R T I I S U P P O R T I N G T A B L E S I. Agriculture in International Perspective i Ii i i i - 85 - Table ] THAILAND PRICING AND DIARKETING POLICY FOR INTENSIFICATION Of RIUE AGRICULTURE The Agricultural Economy of Thailand in Regional Perspective: Changes 1970-80 (Index numbers for 1980, with 1970 100) Burma Indonesia Thailand Philippines Korea Japan Population 127 126 128 130 118 112 Cultivated land " 96 108 131 104 96 89 Irrigation area - 118 124 135 157 116 98 Forest area - 100 99 71 77 99 100 Agr. production 131 140 165 158 151 101 paddy production 157 155 129 148 120 82 Agr. labor force ' 103 104 118 108 99 60 % lab. force in agr. 86 88 94 85 73 53 Tractors - 182. 153 460 218 2,314 394 Fertilizer/ha ' 309 371 229 162 160 124 Paddy yield ' 148 141 99 133 120 101 Cereals yield 150 144 97 123 137 105 Variability of agr. production /a 12 32 35 15 17 4 /a Measured as coefficient of variation for agricultural production. Source: World Bank Report No. 4366-TH, Thailand - Managing Public Resources for Structural Adjustment, August 31, 1983. - 86 - Table 1.02 THAILAND PRICING AND I[ARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Growth of Cereal Production and Population in the 1970s and Cereals Self-Sufficiency Ratio (SSR) in Southeast Asia (Average annual growth in %) Cereal production Population 1979/80 SSR (%) /a Bangladesh 2.3 2.6 88.0 Burma 4.6 2.4 106.9 India 2.3 2.1 92.2 Indonesia 4.4 2.0 89.3 Kampuchea -10.9 -0.2 82.5 Lao PDR 1.6 2.3 83.1 Malaysia 2.3 2.6 52.1 Nepal 0.1 2.3 100.4 Pakistan 3.9 2.8 98.7 Philippines 4.3 2.8 91.4 Sri Lanka 3.4 1.7 61.7 Thailand 3.1 2.5 133.0 Viet Nam 1.8 2.2 85.6 Southeast Asia 2.7 2.2 - China 3.8 1.7 96.2 Asia 3.0 2.0 Asia ex-China 2.4 2.2 World 2.6 1.9 /a SSR = Production/Apparent Consumption. Apparent consumption is taken as production + imports + release from stock - exports - additions to stocks. Source: "Crop Intensification - The Need of the Future," Address delivered at the International Rice Research Conference, April 18-22, 1983, IRRI; and Table 3. - 87 - - 87 - Table 1.03 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Cereals Productivity, Percentage Irrigated Land and Fertilizer Use in Southeast Asia Cereals yield Irrigated land Rice Fertilizer Double kg/ha as % of total irrigation (NPK) used rice crop Countries 1978-81 cultivated land /a rate /b kg/ha /c ratio /d Bangladesh 1,963 17.7 13 44.6 133 Burma 2,415 10.0 17 10.5 103 India 1,341 23.3 43 29.6 105 Indonesia 2,879 27.8 76 44.1 135 Kampuchea 936 2.9 7 - 103 Lao PDR 1,406 18.1 9 - 103 Malaysia 2,818 8.6 84 103.2 157 Nepal 1,606 9.9 28 8.8 103 Pakistan 1,607 70.4 75 51.9 108 Philippines 1,592 13.1 54 34.6 153 Sri Lanka 2,423 24.5 92 71.8 152 Thailand 1,944 14.7 35 17.4 105 Vietnam 2,064 28.1 38 30.0 121 Asia 1,621 24.99 41 61.5/e 113 China 2,977 46.4 - 129.0 - /a For 1980. /b Irrigation rate = irrigated harvested area/total harvested area x 100; 1975. /c For 1979, based on total arable land and permanent crops. /d Double crop ratio = total rice area/net rice area x 100; 1975. _e For Asia including China. Source: "Rice-Wheat Cropping System in Relation to Agro-Ecological Capability and Cereals Production in Southeast Asia," by R.B. Singh, Regional Plant Production and Protection Officer, FAO Regional Office for Asia and the Pacific, Bangkok, January 1983. - 88 - Table 1.04 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Fertilizer Use and Rice Yields for Selected Countries in Asia Paddy/N Fertilizer use (1978) Yield (1979) price ratios (N kg/ha) (ton/ha) Jiapan 2.27 449.6 6.2 Korea 1.35 391.9 6.6 JTaiwan n.a. 94.0 3.7 Bangladesh 0.62 41.4 1.9 JSri Lanka 0.58 62.5 2.0 IBurma 0.51 8.5 2.0 J Indonesia 0.93 44.9 3.0 4 Malaysia 0.41 57.1 2.9 Philippines 0.32 38.5 2.0 India 0.30 26.7 1.8 Pakistan 0.26 44.1 2.5 Thailand 0.26 16.5 1.9 World n.a. 75.4 2.6 Sources: World Bank, EPDCE, Rice Handbook, 1981; FAO, Production Yearbook, 1979; and FAO, Fertilizer Yearbook, 1979. - 89 - Table 1.05 THAILAND PRICING AND AARKETING POLICY FOR INTENSIFICATION OF RICE AGFICII.TURE Fertilizer Retail Prices for Selected Products, December 1981 (US$/metric ton)/a Triple Ammonium Diammonium Super- NPK Potassium Country Urea sulphate phosphate phosphate compound chloride Remarks (AS) (DAP) (TSP) (15-15-15) (MOP) Afghanistan 158.10 - 225.30 142.30 177.90 - Subsidized prices December (9-25-25) 17, 1981. Bangladesh 186.60 - 186.60 134.30/b - 127.20 Subsidized prices per 162.5067 November 7,1981. Burma 49.20 - - 170.00 69.80 81.70 Subsidized prices since (12-12-19) 1972; fluctuations on account of currency rate differentials. India 258.50 - 396.00 286.00/c 231.00 143.00 Subsidized maximum prices exclusive of taxes per July 11, 1981. Indonesia 110.30 102.40 141.80 110.30 110.30 110.30 Subsidized maximum prices since 1976 for urea, DAP, TSP and 15-15-15 and since 1979 for AS and MOP. Iran 114.50 67.40 152.70 /d - - Subsidized prices since 1979. Malaysia - 202.50 420.50 329.30 406.00 200.20 Average ex-godown prices according to NAFAS in April 1981. Nepal 258.30 200.00 - 225.00 229.20 131.00 Subsidized prices per October 27, 1980. Pakistan 187.90 84.90 202.00 - - Subsidized prices per February 24, 1980. Papua New Guinea 281.70 211.10 - 357.30 - 228.60 Unsubsidized prices per August 1979. Philippines 318.10 241.60 474.80 - 279.10 285.20 Average subsidized maximum (14-14-14) prices per July 23, 1981. Republic of Korea 319.50 142.50 - - 249.70 110.00 Subsidized prices per (17-21-17) December 1, 1980 until December 23, 1981. Sri Lanka 134.80 206.70 294.00 130.00 134.80 140.40 Subsidized maximum prices (5-15-15) for Colombo district per September 16, 1981. Thailand 313.00 163.00 - - 256.50 265.20 16% special import duty on urea. /a IMF exchange rates of November 1981. 7T Powder TSP. 77 Granular TSP. 7W Figures not available. Source: FADINAP (Fertilizer Advisory, Development and Information Network for Asia and the Pacific, ESCAP/FAO) techni- cal liaison offices. - 90 _ Table 1.06 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRI-CULTURE Fertilizer Use by Product (1,000 metric tons product) Urea AS DAP TSP MOP Others Total Afghanistan (1980/81) 74 - 21 7 - 1 103 Bangladesh (1981/82) 527 - 49 212 46 9 843 Burma (1981/82) 170 - - 61 6 2 239 Fiji (1980/81)/a - 49 - 6 5 13 73 India (1981/82?)/b 6,726 1,003 737 47 1,163 815 13,491 Indonesia (1981/82) 2,021 282 - 644 - 325 3,272 Iran (1981/82) /c 602 61 608 5 - 2 1,278 Malaysia (1981/82) /d 158 60 15 5 230 591 1,059 Nepal (1981/82) /e 25 6 1 - - 543 2,474 Pakistan (1981/82) /f 1,316 364 251 - - 543 2,474 Philippines (1981/82) 307 126 13 1 64 274 785 Republic of Korea (1981/82) /h 511 15 - - 44 1,093 1,663 Sri Lanka (1981/82) /i 127 76 - 26 61 76 366 Thailand (1981/82) /j 21 213 - - 4 554 792 /a Others include mainly SSP. /b "AS" includes CAN and ammonium chloride; "Others" include SSP, compound and mix- tures. /c "AS" includes CAN. /d IFA estimates: "AS" includes ammonium nitrate; "Others" include SOP, compounds and rock phosphate. /e Others are NPK (20-20-0), (23-23-0) and (15-15-15). /f "AS" includes CAN, "Others" include SSP, SPO, compounds and mixtures. /g "AS" includes CAN and ammonium chloride; "Others" includes NPK (16-20-0) and (14-14-14). /h "Others" includes compounds (mainly NPK (17-21-17) and (21-17-17)) and fused (super) phosphates. /i "Others" includes rock phosphate, apatite and compounds. ai "Others" includes various mixtures, most common NPK (16-20-0). Source: "News in Brief," "Comparative Economic Indicators of the Fertilizer Sector in Selected Developing Countries of the Asia-Pacific Region," December 1982, FADINAP/ARSAP, Agriculture Division, ESCAP, Bangkok, Thailand. - 91 - Table 1.07 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Estimated Fertilizer Use on Rice From Chemical Sources, Selected Locations in Asia, 1960-80 ('000 mt NPK) Bangladesh Burma India Indonesia Japan S. Korea W. Malaysia Pakistan Phillippines Sri Lanka Taiwan, China Thailand /a /b /c /d /e /f 5 /h /f L /k /L 1960 7.2 - 76.8 - 1,094.2 107.1 - 3.1 21.8 - 119.4 4.6 1961 7.2 - 108.3 19.2 1,122.1 120.1 - 3.8 29.6 7.8 130.9 6.2 1962 8.6 4.4 144.7 59.1 1,059.3 119.7 - 4.0 13.0 10.1 143.3 8.7 1963 15.7 3.0 174.0 57.2 1,066.3 131.4 - 6.9 26.8/m 12.3 147.5 12.4 1964 14.4 6.1 247.4 85.3 1,024.4 137.1 - 8.7 26.5 16.0 168.1 17.6 1965 17.3 4.7 251.1 74.2 1,064.1 127.9 18.5/m 7.1 17.4 11.5 155.6 13.3 1966 24.3 5.8 352.2 67.2 1,041.6 158.8/m 21.2 11.2 35.2/m 14.0 180.7 22.1 1967 30.7 13.9 539.2 39.6 1,068.3 191.21/ 24.4 19.0 46.5 24.9 174.8 42.3 1968 34.6 13.8 563.4 97.1 1,248.2 181.3S1 27.9 21.5 61.0 30.2 176.7 57.2 1969 41.5 24.6 634.6/m 155.8 1,201.2 205.37; 32.1 30.8 58.9/m 29.7 171.6 61.6 1970 45.8 13.3 700.9 159,7 1,275.3 195.S/m 36.8/1 28.3 73.17;; 32.4 87.4 42.9 1971 36.5 20.9 774.1 183.5 1,076.4 196.9/m 37.8 38.2 79.97;; 39.4 122.3 35.1 1972 58.3 28.3 854.9 204.9 936.8 217.7 38.8 44.0/I 95.67;; 39.4 94.2 63.9 1973 58.2 17.1 944.2 307.0 917.3 240.7 39.8/m 40.O/Ia 108.4 54.0 156.0 64.0 1974 41.3 32.1 1,042.9 317.2 914.6 266.2 40.27;; 43.0 86.2 43.5 162.6 61.3 1975 69.0 40.0 1,151.8/m 342.1 880.6 294.3 40.5/m 66.0 98.3 23.1 179.5 85.6 1976 77.2 41.4 1,351.4 369.4 1,013.6 218.7 40.5/m 76.0 106.8 33.9 188.6 110.0/. 1977 104.8/D 48.5 1,631.6 461.6 1,020.3 250.3 n.a. 86.0 131.0 55.5 213.2 133.2 1978 113.6 71.9 1,804.4 572.6 1,039.5 296.1 n.a. 106.0 147.2 62.5 185.1 161.3 1979 130.2 77.5 2,002.0 641.8 1,013.4 289.4 n.a. 125.0 147.0 59.2 178.3 195.3 1980 132.9 84.3 2,305.9 922.1 785.1 280.5 n.a. n.a. 145.8 94.2 193.9 174.6 Area ('000 ha) 10,309 4,677 30,773 9,005 2,377 1,233 718 2,034 3,459 845 637 9,600 1980 kg/ha 12.9 18.0 58.0 102.4 330.3 227.5 n.a. 61.5 42.2 111.5 304.4 18.2 Ia Aasused as 32% of total crop consuaptlon. For 1977 - actual rice consumption based on A. Haque, country report "Bangladesh," in APO Fertilizer Distri- butlo in Selected Arian Countriea (Tokyo, 1979). 1978-80 - ausumed same percent as 1977. Source of total crop consumption - 1950-71 - Bangladesh Agricultural Corporation as shown in Ministry of Agriculture, Bangladesh Agricultore in Statistics (Darcs, 1973). 1972-76 - FAO Annual Fertilizer Review. 1978-80 - FAO Monthly Bulletin of Statistics, Vol. 5, No. 3, March 1982. /b Source of total crop coosumption - FAO Anonal Review and FAO Fertilizer Yearbook. For percent of total consumption used for rice - Ministry of Planning and Ffnance, Report to the Pyithu HIluttaw on the Financial and Social Condition of the Socialist Republic of the Union of Burma, 1976/77 to 1982/83. Ic Prior to 1969, assumed as 32% of total crop consumption based on Desal G.M. "Nitrogen Use and Foodgrain Production, India, 1973/74, 1978/79 and 1983/84," Occasional paper No. 55, Cornell University, USAID Employment and Income DIstribution Project (March 1973). After 1975 assumed as 40% of total consumption based on B.P. Sikder's country report "India," in APO Fertilizer Distribution ... op cit. Years in between are interpolated values. For total crop consu-ption - Fertilizer Statistics, The Fertilizer Association of India (New Delhi, annual). /d Fur 1961-75, assumed as 80.96% of total food crop consumption. Source: IRSD Report No. 183 INO, Agricultural Sector Survey Annex 13. For 1964-75, source: Secretariat Fertilizer Committee, Department of Agriculture, 1976. For 1976-80, assumed as 75% of total crop consumption, derived from C.Y. Lee, "Fertilizer Marketing in Asian Countries," FAO Regional Office for Asia and the Far East, Bangkok 1979. /e Source: "Survey on Cost of Production," MinIstry of Agriculture, Forestry and Fisheries, Japan, annual. /f For 1960-65, assumed as 38% of total crop consumption. For 1966-71, derived from P.Y. Moon and B.S. Yoo, "A Review of the Crop Production Estimates and Key Statistics Related to Grain Policy," Korea, Development Institute, 1974. 1972-74, interpolated values; 1975-80, assumed as 34 of total crop con- sumption derived from C.Y. Lee, "Fertilizer Marketing ....," op cit. /g Source: for 1965, from Ylm Kong Ming, "A Study into the Sources of Agricultural Growth in West Malaysia." For 1970, 1973-76, from K. Kanapathy, Guide to Fertilizer Use in 1966-69 and 1971/72 - interpolated values. /h From 1960-72, assumed as 10% of total crop consumption based on estimates shown in the report "Fertilizer Consumption and Market Development in Pakistan," ESSO Pakistan Fertilizer Company, Ltd. (undated). Source of total consumption - 25 years of Pakistan in Statistics, Pakistan Central Statis- tical Office, 1972. For 1973-79, source: Government of Pakistan Statistics Division, Pakistan Statistical Yearboo, 1980 (Karachi, 1981). Ii Source: for total consumption - for 1955-71 from "Data Series on Rice Statistics," Philippine Council for Agriculture and Resources Research, 1981. For 1972-79, from Miguel M. Zosa, "The Philippine Domestic Fertilizer Marketing Situation," mimeograph paper presented at the Rice Strategy Seminar hbld in Los Banns, Philippines, September 1980. 1980 from Fertilizer and Pesticide Authority, Philippines. Years in between are interpolated values. For percent use on rice - 1963, 1966 and 1969-72 from "Data Series on Rice Statistics," op cit. Source: Ceylon Fertilizer Corporation, National Fertilizer Secretariat. /k Source: IPFB, Taiwan Statistical Data Book 1982, Council for Economic Planning and Development, Executive Yuan, June 1982. /1 Source: for total consumption - FAO Fertilizer Yearbook, Boae. For percent use on rice - 1960-74, Departent of Economic Research, Bank of Thailand, 1975. 1977/78 are interpolated values. 1976, from J. Intachaiari, country report "Thailand," in APO Fertilizer Distribution in Selected Asian Countries, op cit. 1979, from AgroChemicals News in Brief, ESCAP, June 1981, Bangkok. 1980, assumed same percent as 1979. /s Indicated data available from sources cited. Other years are interpolated or assumed as mentioned in above footnotes. - 92 - Table 1.08 Page 1 of 2 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Producer Prices of Paddy (Rough Rice), Selected Locations in Asia, 1960 to 1981 1960 1965 1970 1975 1980 1981 Bangladesh Taka/kg 0.31 0.59 n.a. 1.95 2.70 3.46 US¢/kg 6.52 12.40 n.a. 13.15 16.60 17.43 India /a Rupee/kg n.a. 0.40 0.53 0.81 1.05 1.15 US¢/kg n.a. 8.41 7.06 9.06 13.24 12.64 Indonesia Rupiah/kg n.a. n.a. 21.63 50.55 113.42 119.75 US¢/kg n.a. n.a. 5.72 12.18 18.10 18.59 j Japan /a Yen/kg 51.90 78.50 99.80 189.10 228.67 245.07 US¢/kg 14.49 21.75 27.91 62.00 88.77 111.45 South Korea Won/kg 11.80 28.89 54.95 167.88 321.84 n.a. US¢/kg 18.15 10.66 17.36 34.69 48.77 n.a. Pakistan /a Rupee/kg 0.29 0.29 0.34 1.73 n.a. n.a. US¢/kg 6.10 6.09 7.08 17.47 n.a. n.a. \ Philippines Pesos/kg 0.20 0.30 0.36 0.92 1.08 1.23 US¢/kg 9.01 7.65 5.56 12.27 14.20 15.00 \ Sri Lanka /a Rupee/kg 0.58 0.58 0.67 1.58 2.39 2.75 US¢/kg 12.21 12.15 11.30 20.48 13.28 13.38 \ Taiwan NT$/kg 4.20 4.13 4.72 11.08 13.40 n.a. US¢/kg 10.54 10.30 11.77 30.78 37.21 n.a. Thailand Baht/kg 0.89 0.86 0.63 1.98 3.23 3.75 US¢/kg -s> 4.21 4.13 3.01 9.71 15.66 16.30 Table 1.08 Page 2 of 2 /a Government procurement price. Sources: Bangladesh 1960,1965 - Season and Crop Report of East Pakistan (Dacca). 1970-81 - Bangladesh Bureau of Statistics, Monthly Statistical Bulletin of Bangladesh (Dacca). India 1965-80 - India Directorate of Economics and Sta- tistics, Ministry of Food and Agricul- ture, Bulletin on Food Statistics (New Delhi). 1981 - The Fertilizer Association of India, Fer- tilizer Statistics 1980/81 (New Delhi 1981). Indonesia 1970-81 - Indonesia Biro Pusat Statistik, Indicator Ekonomi (Jakarta, 1970-81). Japan 1960-79 - Ministry of Agriculture, Forestry and Fisheries, Statistical Yearbook of the Ministry of Agriculture (Tokyo, annual). 1980/81 - Ministry of Agriculture, Forestry and Fisheries, Monthly Statistics of Agricul- ture, Forestry and Fisheries (Tokyo, December 1982). South Korea 1960-80 - Ministry of Agriculture and Fisheries, Yearbook of Agriculture and Forestry Sta- tistics (Republic of Korea, annual). Pakistan 1960-75 - Pakistan Ministry of Food, Agriculture and Development, Agriculture Wing, Agri- caltural Statistics of Pakistan (Islamabad, 1975). Philippines 1960-81 - Bureau of Agricultural Economics, "Prices Received and Paid by Farmers," annual. Sri Lanka 1960-70 - Sri Lanka Department of Census and Sta- tistics, Statistical Abstract of the Democratic Socialist Republic of Sri Lanka (Colombo, annual). 1975-80 - Central Bank of Ceylon, Central Bank of Ceylon Review of the Economy (Colombo, 1981). Taiwan, China 1960-80 - Taiwan Province, Department of Agricul- ture and Forestry, Taiwan Agricultural Prices Monthly (Taipei). Thailand 1960-75 - Thailand Ministry of Agriculture, Agri- cultural Statistics of Thailand (Bangkok, annual). 1980/81 - Agricultural Economics Research Division, Ministry of Agriculture and Cooperatives. Quoted in: R.W. Herdt and A.C. Palacpac, World Rice Facts and Trends, IRRI, Department of Agricultural tEconomics, April 1983. -94- Table 1.09 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Area, Production and Yield of Paddy (Rough Rice) by Country - Asia, 1979-81 Area ('000 ha) Production ('000 mt) Yield (mt/ha) Location 1979 1980 1981 1979 1980 1981 1979 1980 1981 Asia 127,713 128,749 129,281 341,707 360,277 372,863 2.68 2.80 2.88 Afghanistan 210 190 190 455 380 380 2.17 2.00 2.00 Bangladesh 10,064 10,309 10,391 19,090 20,844 20,084 1.90 2.02 1.93 Burma 4,442 4,677 4,800 9,750 13,000 13,650 2.19 2.78 2.84 China 33,873 33,772 32,683 143,750 139,254 143,254 4.24 4.12 4.38 India 39,414 39,773 40,300 63,559 79,926 81,081 1.61 2.01 2.01 Indonesia 8,804 9,005 9,376 26,282 29,651 32,776 2.99 3.29 3.50 Iran 300 310 315 1,212 1,174 1,212 4.04 3.79 3.85 Japan 2,497 2,377 2,278 14,948 12,188 12,824 5.99 5.13 5.63 Kampuchea 1,200 1,320 1,465 1,000 1,580 1,850 0.83 1.20 1.26 Korea, North 773 783 793 4 500 4,000 4,300 5.82 5.11 5.42 Korea, South 1,233 1,233 1,224 7,274 6,154 7,032 5.90 4.99 5.75 Lao PDR 689 690 725 925 1,042 1,145 1.34 1.51 1.58 Malaysia 738 718 778 2,111 2,083 2,109 2.86 2.90 2.71 Nepal 1,245 1,260 1,260 2,060 2,464 2,477 1.65 1.96 1.97 Pakistan 2,034 1,935 1,985 4,829 4,685 4,955 2.37 2.42 2.50 Philippines 3,637 3,459 3,500 7,836 7,723 8,131 2.15 2.23 2.32 Sri Lanka 783 845 864 1,878 2,088 2,222 2.40 2.47 2.57 Taiwan, China 721 637 668 3,214 3,087 3,117 4.46 4.85 4.67 Thailand 9,435 9,600 9,800 15,758 18,500 19,250 1.67 1.93 1.96 Viet Nam 5,481 5,740 5,750 10,742 10,000 10,500 1.96 1.74 1.83 Other Asia /a 140 116 136 534 454 514 3.81 3.91 3.78 World 143,298 144,705 145,143 377,184 395,878 410,939 2.63 2.74 2.83 /a Asian countries with less than 100,000 ha of paddy production in 1979. Source: USDA Foreign Agriculture Circular, Grains, FG-22-82, September 30, 1982. - 95 - II. Prices TRAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Average Wholesale Prices (Bangkok) of Selected Agricoltural Coimodities, 1960-81 (B per metric ton)- 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 Nonglutinous, paddy, no. 2 /a 845 905 1,096 954 762 834 1,197 1,235 1,151 1,093 1,011 848 1,101 1,538 2,248 2,310 2,254 2,261 2,469 2,584 3,159 3,585 Nongluti7nous, rice, 5% /a 1,486 1,633 1,893 1,682 1,544 1,536 2,086 2,398 2,001 2,205 1,905 1,578 1,974 2,865 3,773 3,723 2,822 3,865 4,250 4,522 5,671 6,500 Nonglutinous, rice, 20% T. 1,186 1,450 n.a. n.a. 1,349 1,396 1,882 2,120 1,833 1,747 1,614 1,429 1,718 2,408 3,680 3,520 3,641 3,610 3,849 4,196 5,155 5,935 Al broken (super) /a 956 1,237 1,441 1,324 1,008 1,068 1,648 1,650 1,620 1,186 1,197 1,022 1,513 1,962 2,808 2,982 2,480 2,785 2,842 3,026 3,928 3,682 Glutinous rice, 10% -/a 1,700 1,348 1,536 1,535 1,501 1,946 2,289 2,134 2,044 1,730 1,172 1,136 1,762 3,055 3,440 3,540 3,740 3,234 5,068 4,016 - - Maize /b 1,010 1,108 989 1,027 1,042 1,203 1,125 1,165 971 1,105 1,230 1,189 1,160 1,785 2,543 2,482 2,208 2,091 2,142 2,626 3,050 2,909 SorghuW,- good tb n,a. n.a. n.a. n.a. n.a. n.a. 890 1,050 920 1,006 1,117 1,000 867 1,520 2,133 1,983 1,900 1,921 1,969 2,416 - - Muogbean, large /~b 1,992 2,350 3,030 2,890 2,460 2,100 2,570 3,330 2,940 2,520 2,167 2,967 3,167 3,367 4,500 5,217 8,433 8,200 6,199 7,196 - - Cassava flour (tapioca flour) lb 2,081 1,920 2,351 1,896 1,672 1,839 1,964 1,951 1,792 1,757 1,813 2,140 2,236 2,717 3,747 3,506 3,429 3,688 3,250 5,884 5,770 4,623 Castor bean, good lb 2,921 2,610 2,040 2,410 2,400 2,170 2,090 2,680 3,100 2,600 2,350 2,550 3,883 8,530 5,510 4,100 5,333 6,700 7,371 7,343 - - Sesame (black), good lb 4,700 4,400 3,490 4,230 4,960 4,880 4,620 5,310 5,140 4,990 4,867 4,900 6,033 7,867 7,700 10,033 12,367 12,317 11,219 13,174 - - Grounduuts (shelled), good lb 4,128 3,510 3,590 3,680 4,110 4,100 3,660 4,370 4,340 4,200 4,100 4,117 5,417 6,637 8,583 9,050 8,717 12,383 12,809 13,039 - - Soybean~,Chliengmai, good lb 1,890 2,580 2,420 1,930 1,980 2,680 2,500 2,370 2,420 2,410 2,433 2,617 3,100 5,600 5,217 5,300 5,767 6,567 5,704 6,296 - - cotton 7W3,760 4,380 3,660 3,350 3,330 4,080 3,260 3,760 4,370 4,090 4,020 4,910 5,550 7,230 10,080 7,340 10,200 10,133 9,270 12,470 - Kapok (ginned), good lb 6,022 5,606 6,499 7,004 6,754 5,830 5,413 5,004 7,563 7,642 8,717 9,967 8,850 9,050 11,217 11,467 13,233 13,433 13,206 12,956 -- * Kenaf, high grade /b 3,196 3,583 2,343 2,733 2,850 3,019 3,311 1,975 2,526 3,040 2,967 3,650 4,861 3,765 3,630 3,981 4,500 5,838 5,148 5,784 6,362 6,366 Sugarcane /c n.a. 110 118 120 146 119 96 141 176 136 141 143 145 162 216 300 300 300 297 323 n.a. - Rubber, NO. 1 /d 12,849 9,593 8,733 8,124 7,776 8,111 7,617 6,003 6,387 8,139 6,740 5,495 5,500 9,880 9,753 8,510 10,941 11,870 13,950 17,620 19,040 14,940 Rubber, No. 3 Td 12,601 9,336 8,463 7,891 7,584 7,930 7,446 5,851 6,237 7,995 6,580 5,295 5,300 9,680 9,553 8,310 10,841 11,760 13,850 17,520 18,940 14,840 Sources: * /a Department of Internal Trade, Ministry of Commerce. 7W Department of Business Economics, Ministry of Commerce. 7c Sugar Institute. 7i- Rubber Division, Ministry of Agriculture and Cooperatives. - 97 - Table 2.02 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Development of Producer Prices of Major Commodities in Thailand, /a 1967-81 (B/kg) Producer prices Sugar- Mung- Year Paddy cane Rubber Tobacco Cassava Maize Sorghum beans Kenaf Cotton 1967 1.25 n.a. 5.06 13.28 0.47 0.82 0.89 2.61 1.61 3.50 1968 0.97 0.11 5.49 13.46 0.33 0.71 0.75 2.73 1.89 3.75 1969 0.86 0.11 6.94 15.27 0.54 0.76 0.79 1.81 1.31 3.64 1970 0.63 0.11 5.72 15.18 0.47 0.84 0.84 2.30 1.68 3.85 1971 0.80 0.11 4.74 15.09 0.52 0.70 0.75 2.24 2.24 3.87 1972 1.31 0.11 4.77 15.74 0.47 0.86 0.91 2.57 2.83 4.45 1973 1.96 0.13 6.86 21.69 0.34 1.35 1.16 2.68 2.62 5.46 1974 2.23 0.18 7.38 21.74 0.30 2.06 1.85 1.54 2.35 6.75 1975 1.98 0.25 6.42 23.50 0.41 1.85 1.69 3.74 2.65 6.39 1976 1.87 0.28 9.15 24.14 0.46 1.67 1.49 4.98 2.99 6.07 1977 2.12 0.27 9.49 29.98 0.46 1.61 1.51 6.99 2.63 7.57 1978 2.53 0.27 10.74 30.24 0.36 1.64 1.53 5.64 2.91 - 1979 2.40 0.30 14.55 36.38 0.74 2.04 1.93 5.69 3.13 9.10 1980 3.75 0.43 16.12 44.79 0.78 2.40 2.28 5.52 3.85 8.83 1981 3.43 0.59 14.49 36.20 0.45 2.36 2.57 5.59 3.25 8.50 /a Average for whole Kingdom. Source: Ministry of Agriculture, Office of Agricultural Economics. - 98 - Table 2.03 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Export and Domestic Prices of Rice and Paddy Wholesale Nonglutinous rice Bangkok Wholesale FOB paddy Bangkok Bangkok Ratios (1) (2) (3) (1)/(2) (2)/(3) 1962 1,172 1,893 2,549 0.62 0.74 1963 1,031 1,632 2,415 0.61 0.70 1964 874 1,544 2,315 0.57 0.67 1965 912 1,536 2,287 0.59 0.67 1966 1,282 2,086 2,654 0.61 0.79 1967 2,343 2,398 3,139 0.56 0.76 1968 2,349 2,001 3,534 0.62 0.57 1969 1,211 2,205 2,879 0.55 0.77 1970 1,157 1,905 2,366 0.61 0.81 1971 950 1,578 1,846 0.60 0.85 1972 1,170 1,822 2,101 0.64 0.87 1973 1,690 2,865 4,235 0.59 0.68 1974 2,426 3,773 9,500 0.64 0.40 1975 2,530 3,723 6,152 0.68 0.61 1976 2,380 3,822 4,359 0.62 0.88 1977 2,414 3,866 4,542 0.62 0.85 1978 2,605 4,250 6,488 0.61 0.66 1979 2,706 4,522 5,575 0.60 0.81 1980 3,260 5,671 6,968 0.57 0.81 1981 Qtr I 3,682 6,479 8,481 0.57 0.76 Qtr II 3,956 7,149 8,876 0.55 0.81 Qtr III 3,995 6,616 9,310 0.60 0.71 Qtr IV 3,350 5,753 7,983 0.58 0.72 1982 Qtr I 3,336 5,765 6,902 0.58 0.84 Note: (1) = No. 1 grade; (2) - 5% white rice; (3) = average. Source: Bank of Thailand. - 99 - Table 2.04 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE ACRICULTURE Fertilizer Nutrient Price and Selected Nutrient to Crop Price Ratios Nutrient price, B/kg Nutrient: crop price ratio 16-20-0: 21-0-0: 13-13-21: 21-0-0: 15-15-15: Sugar- Sugar- Cas- Cas- Year 21-0-0 16-20-0 13-13-21 15-15-15 Rice cane cane sava sava 1968 9.76 6.75 5.62 6.20 6.69 88.73 51.09 29.58 18.79 1969 8.90 6.39 5.51 6.04 7.43 80.91 50.09 16.48 11.19 1970 8.90 6.61 5.51 6.04 10.49 80.91 50.09 18.94 12.85 1971 8.81 6.25 5.64 5.84 7.81 80.09 51.27 16.94 11.23 1972 8.81 6.72 6.26 6.11 5.13 80.09 56.91 18.74 13.00 1973 12.14 9.36 8.47 7.76 4.78 93.38 65.15 35.71 22.82 1974 16.67 13.89 10.64 10.89 6.23 96.61 59.11 55.57 36.30 1975 15.39 12.94 11.04 11.58 6.54 61.56 44.16 37.54 28.24 1976 7.50 8.61 8.65 8.86 4.60 26.79 30.89 16.30 19.26 1977 9.52 8.75 7.73 8.18 4.13 35.26 28.63 20.70 17.78 1978 11.20 7.01 7.88 8.29 2.77 41.48 29.19 31.11 23.03 1979 12.09 11.18 9.09 9.50 4.66 40.30 30.30 16.34 12.84 1980 16.05 13.96 12.27 11.79 3.72 37.33 28.53 20.58 15.12 1981 17.58 14.54 12.25 12.83 4.24 29.80 20.76 39.07 28.51 Source: Office of Agricultural Economics, MOAC. Table 2.05 -100 - THAILAND PRICING AND IARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE CIF Price, Bangkok Price and Local Price of Ammonium Sulphate and 16-20-0 Fertilizer Formula, 1963-83 (Baht/ton) Ammonium Sulphate (21:0:0) 16-20-0 CIF Bangkok Local CIF Bangkok Local (1) (2) (3) (2)-(1) (3)-(2) (1) (2) (3) (2)-(1) (3)-(2) 1963 906 1,112 1,334 206 222 1,619 1,920 2,304 301 384 1964 1,075 1,304 1,565 229 261 1,856 2,189 2,627 333 433 1965 1,272 1,524 1,832 252 308 1,762 2,082 2,498 320 416 1966 1,272 1,527 1.832 255 305 1,777 2,099 2,519 322 420 1967 1,177 1,420 1,704 243 284 1,631 1,934 2,321 303 387 1968 1,259 1,512 1,814 253 302 1,535 1,825 2,190 290 365 1969 1,200 1,360 1,632 160 272 1,437 1,714 2,057 277 343 1970 1,200 1,360 1,632 160 272 1,495 1,780 2,136 285 356 1971 1,166 1,340 1,632 174 268 1,401 1,673 2,008 272 335 1972 1,166 1,340 1,608 174 268 1,529 1,818 2,182 289 364 1973 1,624 1,926 2,311 302 385 2,228 2,610 3,372 282 762 1974 3,016 3,380 3,500 364 120 3,939 4,730 5,000 791 270 1975 1,456 2,778 3,232 1,322 454 3,177 4,444 4,660 1,267 216 1976 1,078 1,286 1,574 208 288 2,218 2,809 3,100 591 291 1977 1,321 1,823 2,000 502 177 2,311 2,743 3,150 432 407 1978 1,792 2,183 2,352 391 169 2,729 3,008 3,242 279 234 1979 2,036 2,408 2,539 372 131 3,340 3,866 4,026 526 160 1980 2,759 3,170 3,370 411 200 4,491 4,928 5,025 437 97 1981 3,100 3,440 3,692 340 252 4,600 4,958 5,233 358 275 1982 1,840 2,517 3,017 677 500 3,950 4,550 4,900 600 350 1983/a 1,880 2,300 2,700 420 400 3,700 4,200 4,500 500 300 a/ Preliminary estimate. Source: Office of Agricultural Economics, Market of Fertilizer, Economics Paper No. 142, October 1982, with updates from the fertilizer trade. - 101 - Table 2.06 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE CIF Prices for Ammonium Sulphate, Urea and Ammonium Phosphate, 1.9,63-73 (BahtIt on) Ammonium Ammonium Sulphate Urea Phosphate /a 1963 906 n.a. 1,619 1964 1,075 n.a. 1,856 1965 1,272 n.a. 1,762 1966 1,272 n.a. 1,777 1967 1,177 n.a. 1,631 1968 1,259 1,500 1,535 1969 1,200 1,710 1,437 1970 1,200 1,800 1,495 1971 1,166 1,900 1,401 1972 1,166 2,590 1,529 1973 1,624 4,800 2,228 1974 3,016 6,000 3,939 1975 1,456 n.a. 3,177 1976 1,078 n.a. 2,218 1977 1,321 n.a. 2,311 1978 1,792 n.a. 2,729 1979 2,036 n.a. 3,340 1980 2,759 n.a. 4,491 1981 3,100 4,600 n.a. 1982 1,840 n.a. 3,900 1983 1,800 n.a. 3,700 /a 16-20-0 formula. Source: Office of Agricultural Economics, Market of Fertilizer, Economics Paper No. 142, October 1982. , 102 - Table 2.07 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Output/Fertilizer Price Ratios, Thailand, 1967-80 All crops Rice (paddy) AOP /a AFP /b Ratio RP /c FP /d Ratio 1967 0.77 2.73 0 28 1.24 2.32 0.53 1968 0.68 2.61 0.26 1.41 2.19 0.64 1969 0.65 2.52 0.26 1.11 2.06 0.54 1970 0.79 2.51 0.32 1.04 2.14 0.49 1971 0.80 2.49 0.32 0.80 2.01 0.40 1972 0.87 2.56 0.34 1.31 2.18 0.60 1973 0.90 3.79 0.24 1.96 3.37 0.58 1974 0.94 5.69 0.17 2.23 5.00 0.45 1975 0.96 5.69 0.17 1.98 4.66 0.42 1976 0.99 4.27 0.23 1.87 3.10 0.60 1977 1.05 4.00 0.26 2.37 3.15 0.75 1978 1.14 4.40 0.26 2.31 3.24 0.71 1979 1.16 4.59 0.25 2.24 4.03 0.56 1980 1.39 5.18 0.27 2.68 5.03 0.53 1981 3.00 5.10 0.58 1982 2.70 5.00 0.54 Average (67-80) 0.94 3.79 0.25 1.75 3.18 0.55 1983, 1st half 2.60 4.50 0.58 /a Average output price: rice, maize, sugarcane, cassava, mungbean, (baht/kg). /b Average fertilizer price (baht/kg). /c Rice price (baht/kg). /d Price of 16-20-0 fertilizer formula (baht/kg). Source: /a and /b Wisat Maekarron, "The Utilization of Natural Gas in Fertilizer Industry", Master Thesis submitted to Department of Economics, Chulalongkorn University, Bangkok, Thailand, 1981. /c and /d Office of Agricultural Economics. THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Fertilizer and Paddy Prices /a Price (baht/metric ton) 1971 1972 1973 1974 1975 1976 Average 1983 Urea /b - 3,290 - 7,800 - 4,000 - 5,600 Ammonium sulfate (20%) 1,8481 1,848 3,126 3,400 3,226 1,574 1,574 2,300 Super phosphate (207 P 0 ) 1,859 1,901 3,708 5,450 4,610 3,880 3,560 - Double superphosphate t48% P205) 2,502 2,789 4,775 7,010 7,915 5,842 4,139 Potassium chloride (60% K20) 2,098 2,216 4,186 4,375 4,380 3,829 3,472 - Ammonium phosphate (16-20-0) 2,248 2,422 4,186 4,730 4,444 2,816 3,473 4,500 Paddy (unhusked rice) 629 800 1,311 1,959 2,232 1,975 1,484 2,600 Price ratio of N/paddy (ammonium sulfate-N) 15 12 12 9 7 4 8 4.3 /a US$1 = B 20 /b Data supplemented by trade sources; 1983 US$1 = B 23. Source: Division of Agricultural Economics, Office of the Under-Secretary of State, Ministry of Agriculture and Cooperatives, Thailand. 0' (D - 104 - Table 2.09 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Comparison of Short-Run and Long-Run Elasticities of Area Planted in Rice with Repsect to Price of Rice, 1937-63 and 1963-77 Medhi & Dowling Behrman (1937-63) (1963-77) Region and province SR LR SR LR Northeast Chayapum 0.34 0.24 0.30 0.21 Nakornratchsrima 0.55 0.57 0.19 0.14 Burirum 0.25 0.14 n.a. n.a. Surin 0.36 0.31 0.12 0.13 Srisaket 0.16 0.26 0.17 0.14 Ubonratchthanee 0.22 0.33 n.a. n.a. Nong Khai 0.15 0.31 0.01 0.01 Udonthanee 0.15 1.04 0.03 n.a. Roi-Et 0.08 0.06 0.04 0.03 North Maehongsorn n.a. n.a. 0.16 0.23 Chiengmai n.a. n.a. 0.03 0.11 Chiengrai n.a. n.a. 0.00 0.01 Central Chai-nat 0.19 0.25 0.01 0.01 Singburi 0.02 0.08 0.02 n.a. Lopburi 0.50 0.46 n.a. n.a. Saraburi 0.07 0.07 0.21 n.a. Angthong 0.04 0.09 0.01 0.01 Ayuthaya 0.08 0.07 0.03 n.a. Nonthaburi 0.23 0.24 n.a. n.a. Pathumthani 0.12 0.23 0.07 0.21 Prachinburi 0.08 0.18 0.14 0.15 Chachoengsao 0.15 0.14 0.07 0.07 Lower North Uttradit 0.24 0.45 0.25 0.11 Sukhothai 0.21 0.21 0.30 0.15 Phitsanulok 0.28 0.56 0.07 n.a. Kamphaengphet 0.07 0.07 0.33 n.a. Phichit 0.27 0.33 n.a. n.a. Petchbun n.a. n.a. 0.22 n.a. Uthai Thani 0.13 0.21 0.46 0.72 Source: Medhi Krongkaew and J. Malcolm Dowling, Agricultural Supply Response of Some Major Crops in Thailand, February 1983. - 105 - Figure 2.10 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Export and Wholesale Prces for 5% Rice Baht/Ton 13,000. 12,000O 11,000 2.000- J xotFceMnsTx3rn_ 71o,00 /%Al~ ~~~~~/ ' / Export (F.OB.) Price of 5% Dice 2,000- Export Price Minus Tax Burden f -.. ~~~~~~~~~~~~~~~~Bangkok Wholesale Price of Rice 5% 1,000-1970 '71 1 72 '731 '74 1 '751 '76 '77 1 '781 '79 1 '80 1 '81 1 '82 1 Year Source: Piyasvash Amranond & Others, Impact of Rlce Pricing Policy on Production Consumption & Trade, 1983 World Bank-25910 - 106 - Figure 2.11 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Farm Paddy Price and Bangkok Wholesale Rice Price Baht/Ton 8,000- 7,000 1 _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ l\ 6.000- / \ 5000- ,J~~~~~~~~~~~~~~~~~~~~~~~~~~0 6,000 II 4,000_ -^/ 2,000- -)r\ 1.000 - 0-~~~~~~~~~~~~~~~~~~~~ I 1970 '71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 Year Legend: Bangkok Wholesale Price of 5%Rlce Farmgate Price of Paddy Source: Piyasvash Amranand & Others, Impact of Rice Pricing Policy on Production Consumption & Trade, 1983. World Bank-25909 - 107 - Figure 2.12 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Rate of Price Appreciation and Storage Cost Rate Northeast (Khon Kaen), Av. 1972-82 Percent (Storage Begins in April) 6 /---,~~~-- Cumulative Storage Cost Rate 2 0 -2 Rate of Price Appreciation -4 -6 Apr May jun Jul Aug Sept Oct Nov Dec Percent 14 (Storage Begins in January) 12 1 0 Rate of Price Appreciation 8 4 _ /,-' Cumulative Storage Cost Rate 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Word Bank - 25785 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Northern Chao Phya Inigated Rice Relationship between Paddy Prices, Yield and Fertilizer Use DRY SEASON 1972-79 4.0 3.0 XC CD) ~~~~~~~~~ 2.0~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~0 20~ 1.0 2.0 3.0 4.0 10 20 30 Yield ton/ha Fertilizer Applied kg/rai Word Bank-25895 - 109 - III. 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(0 Vt 0. (0 0 0 0. - 0 000 0 0000000000 0 0000 0 0 0 0 0000000 0 0 0 0. 000 0 0000000000 0 000010 0 0 0 0000000 - - '0 (0 (0 Vt - 0 o Vt - 0000000000000 0 OoOo 0 0 0 00000000 010 0 0 -0 00 0 - S 0 S S 0 g g |~- 11 Table 3.02 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Rice Reserve Requirement (B/ton) 02/27/81 06/01/81 07/01/81 10/29/81 12/08/81 01/07/72 02/02/82 05/31/81 06/30/81 10/28/81 12/07/81 01/06/82 02/18/82 05/12/82/a White Rice 100% 1,942.92 2,123.64 2,183.64 2,000 1,000 750.00 350 5% 1,942.92 2,123.64 2,183.64 2,000 1,000 750.00 350 10% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 15% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 20% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 25% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 - Lower than 25% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 - Broken, Al super special 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 Broken, Al all 323.82 352.95 363.94 300 150 437.50 - Other broken 323.82 352.94 363.94 300 150 - - Parboiled Rice 100% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 5% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 10% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 15% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 20% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 25% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 - Broken 323.82 352.94 363.94 300 150 - - Cargo Rice 100% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 5% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 10% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 15% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 20% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 Broken 323.82 352.94 363.94 300 150 - - Glutinous Rice 10% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 20% 1,942.92 2,123.64 2,183.64 1,750 875 437.50 215 Broken 323.82 352.94 363.94 300 150 - - /a Rice reserve requirement eliminated as of May 12, 1982. Source: Department of Foreign Trade, MOC. Table 3.03 - 112 - THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Export Taxes and Central Government Revenue (in million Baht) Central Rice Rice Fiscal Govt. Rice export reserve Rubber year /a revenue premium tax requirement cess Other 1961 7,212 830 189 - 212 32 1970 19,744 654 135 9/b 195 63 1975 39,034 795 514 665 325 471 1978 63,120 1,510 524 527 1,177 74 1980 93,933 1,517 907 738 2,501 55 1981 113,953 1,436 1,241 1,312 1,837 49 1982 116,309 971 1,093 330/b 645 32 1983 141,000 850/b 1,085 - 965 50 /a FY1961-82: actual FY1983: estimated /b Mission estimates. Source: Bank of Thailand, except rice reserve requirement which is calculated based on the data given by Piyasvasti Amranand and others, Impact of Rice Pricing Policy on Production, Consumption and Trade, March 1983 (mimeographed). Table 3.04 - 113 - THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Proportion of Export Taxes To Total Government Revenues (in %) Est. Proj. 1960 1970 1975 1978 1980 1981 1982 1983 1984 Rice 14.1 4.1 5.2 4.0 3.4 3.6 2.0 1.5 0.6 Of which: Premiums (11.5) (3.3) (2.0) (2.4) (1.6) (1.3) (0.8) (0.6) n.a. Expott tax (2.6) (0.7) (1.3) (0.8) (1.0) (1.1) (0.9) (0.8) n.a. Reserve requirement (-) (0.1) (1.9) (0.8) (0.8) (1.2) (0.3) (-) (-) Rubber 2.9 1.0 0.8 1.9 2.7 1.6 0.6 0.7 n.a. Other 0.4 0.3 1.2 0.1 0.1 n.s. n.s. n.s. n.a. Central government reve- nue (billion baht) 7.2 19.7 39.0 63.1 93.9 114.0 116.3 141.0 160.0 n.s. = less than 0.5%. n.a. = not available. Source: Table 3.04. - 114 - IV. Rice Price Support Agencies and Programs - 115 - Table 4.01 Page 1 of 2 THAILAND PRICING AND IARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE MOF: Paddy Bought in Relation to Changwat Allocation and Market Surplus, 1982/83 (1) (2) (3)/a Allocated Marketable Paddy bought fund surplus (1)/(3) (2)/(3) (kg) (baht) (kg) North Chiangrai 26,233,091 81,000,000 566,432,650 4.63 14.30 Chiangmai 9,517,780 80,000,000 195,330,500 4.87 15.36 Lamphun 2,007,768 9,000,000 80,252,000 2.50 11.21 Lampang 2,167,227 12,000,000 121,068,100 1.79 9.91 Payao 13,894,385 45,000,000 279,462,800 4.97 16.10 Uttaradit 9,883,750 30,000,000 125,021,250 7.91 23.99 Nakhon Sawan 9,439,380 36,000,000 590,644,800 1.59 6.10 Phitsanulok 22,696,252 70,000,000 453,143,300 5.01 15.45 Phetchabun 4,714,081 30,000,000 383,880,750 1.23 7.81 Phichit 17,659,954 60,000,000 397,996,900 4.44 15.08 Kamphaeng-Phet 14,953,519 45,000,000 247,101,000 6.05 18.21 Sukhothai 10,694,455 36,000,000 242,418,000 4.41 14.85 Central Region Bangkok 6,336,377 22,000,000 -598,090,000 -1.06 -3.68 Ratchaburi 7,321,035 24,000,000 112,004,000 6.54 21.43 Uthai Thani 8,788,442 30,000,000 141,887,450 6.19 21.14 Chai Nat 15,061,340 50,000,000 239,381,800 6.29 20.89 Ang Thong 7,832,494 39,000,000 129,219,100 6.06 30.18 Singburi 8,813,721 39,000,000 174,943,000 5.04 22.29 Lob Buri 17,283,896 60,000,000 296,872,000 5.82 20.21 Saraburi 22,522,115 75,000,000 228,083,730 9.87 32.88 Suphan Buri 13,735,498 100,000,000 263,213,000 5.22 3.99 Ayutthaya 12,452,553 45,000,000 280,563,900 4.44 16.04 Phthum Thani 17,189,144 50,000,000 157,030,000 10.95 31.84 Nonthaburi 4,459,914 15,000,000 -35,120,550 -12.69 -42.11 Nakhon Pathom 18,565,914 60,000,000 50,741,100 36.59 118.25 Petchaburi 9,850,333 32,000,000 25,285,000 38.96 126.56 Samut Prakarn 6,632,004 23,000,000 7,950,650 83.41 289.28 Chachaengsao 17,347,302 60,000,000 284,937,150 6.09 21.06 Samut Sakhon 4,821,572 19,000,000 -3,043,200 -158.44 -624.34 Prachin Buri 13,440,343 30,000,000 228,956,000 5.87 13.10 Nakhon Nayok 4,010,984 17,000,000 132,608,950 3.02 12.82 Chon Buri 5,646,135 20,000,000 -35,686,500 -15.82 -56.04 /a Marketable surplus - output of 1981/82. First crop minus Changwad consumption assuming per capita consumption of 150 kg/head/year. Table 4.01 -116 - Page 2 of 2 (1) (2) Marketable Paddy bought Allocated fund surplus (1)/(3) (2)/(3) (kg) (baht) (kg) Northeast Khon Kaen 5,917,488 40,000,000 146,084,750 4.05 27.38 Udon Thani 12,474,248 45,000,000 300,457,000 4.15 14.98 Nong Khai 18,712,276 50,000,000 149,171,600 10.53 33.52 Nakhon Phanom 11,933,536 39,000,000 104,528,450 11.42 37.31 Mukdaharn } Sakon Nakhon 7,597,431 30,000,000 159,747,850 4.76 18.78 Maka Sarakham 2,160,423 30,000,000 182,659,400 1.18 16.42 Kalasin 2,245,928 30,000,000 173,938,000 1.29 17.25 Roi Et 5,661,515 30,000,000 254,205,000 2.23 11.80 Nakhon Ratchasima 7,260,837 30,000,000 290,552,800 2.50 10.33 Chaiyaphum 7,906,743 24,000,000 -20,983,100 -37.68 -114.38 Buri Ram 13,065,703 40,000,000 401,614,350 3.25 9.96 Surin 18,731,955 60,000,000 400,578,750 4.68 14.98 Si Sa Ket 20,934,718 65,000,000 262,065,050 7.99 24.80 Ubon Ratchathani 3,514,230 45,000,000 303,579,000 1.16 14.82 Yasothon 4,748,582 15,000,000 131,951,700 3.60 11.37 Loei 4,576,515 15,000,000 50,656,700 9.03 29.61 Source: Working Paper No. 6. - 117 - Table 4.02 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Estimates of Extra Margins Accruing to Various Groups by Source of Gain (Baht/ton Paddy) MOF high buying price Delivery Total /a Farmer's Miller's to exporter Exporter's Farmer's Miller's paddy paddy above market special paddy paddy (30%) (70%) price expense (30%) (70%) MOF -450 -450 -450 -450 (100) (100) Miller +320 +300 -192 +128 +108 (28.4) (24) Exporter +192 -64 +128 +128 (28.4) (28.4) Political affiliates +58 +58 +58 (12.9) (12.9) Local staff +40 +40 (8.9) Low-level MOF staff +40 +6 +6 +46 (10.2) Farmers' leader +40 +40 (8.9) Farmers +130 +30 +130 +30 (28.9) (6.7) /a Figures in parenthesis are percentages of the total extra margin distributed for each category. Source: Working Paper No. 6. - 118 - Table 4.03 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Ratio of MOF Paddy Procurement in Each Changwat to Output of Major Crop and Total Procurement, 1982/83 Paddy bought as proportion of Changwat procurement 1981/82 paddy as proportion of Paddy bought 1982/83 production total procurement (kg) (X) (%) Central Region Bangkok 6,336,347 5.84 1.24 Ratchaburi 7,321,034.55 3.55 1.43 Uthari Thani 8,788,442 5.14 1.92 Chainat 15,061,340.98 5.25 2.45 Angthong 7,832,494 4.67 1.53 Singburi 8,813,721 4.32 1.73 Lopburi 17,283,891 4.53 3.34 Saraburi 22,522,115 9.42 4.41 Suphanburi 13,735,498 3.73 2.69 Ayutthaya 12,452,553 3.46 2.44 Pathum Thani 17,189,144 8.40 3.37 Nonthaburi 4,459,914 3.44 0.87 Nakhon Pathom 18,565,914 14.32 3.64 Petchaburi 9,850,333.2 12.45 1.93 Samut Prakarn 6,632,004 8.22 1.30 Chachoengsao 17,347,302 4.93 3.40 Samat Sakhon 4,821,572 14.17 0.94 Prachinburi 13,440,343.1 4.31 2.63 Nakhon Nayok 4,010,984 2.45 0.79 Chonburi 5,646,135 8.26 1.11 Northeast Khon Kaen 5,917,487.5 1.77 1.16 Udon Thani 12,474,247.6 2.41 2.44 Nong Khani 15,712,275.5 6.49 3.08 Nakhorn Phanom 9,354,231 5.43/a 1.83 Mukdaharn 2,579,305 1 - 0.51 Sahon Nakhon 7,597,431 2.71 1.49 Maha Sarakham 2,160,423.2 0.74 0.42 Kalasin 2,245,928 0.80 0.44 Roi Et 5,661,515 1.44 1.11 Nakhon Ratchasima 7,260,837 2.15 1.42 Chaiyaphum 7,906,743 1.80 1.55 Buri Ram 13,065,702.5 2.31 2.56 Surin 18,731,955 3.40 3.17 Si Sa Ket 20,934,718 4.97 4.10 Ubon Ratchathani 3,514,230 0.65 0.69 Yasothorn 4,748,582.2 2.47 0.93 Loei 4,576,515 3.92 0.90 North Chiangrai 26,233,091 3.74 5.14 Chiangmai 9,517,780 2.58 1.86 Lamphun 2,007,768 1.55 0.39 Lampang 2,167,227 0.99 0.42 Payao 13,894,385 4.06 2.12 Uttaradit 9,883,750 5.34 1.94 Nakhon Sawan 9,439,380 1.29 1.83 Phitsanulok 22,696,252 4.14 4.45 Petchabun 4,714,081 0.97 0.92 Phichit 17,659,954 10.33 3.46 Kamphaeng Phet 14,952,519 4.66 2.93 Sukothai 10,694,455 3.37 2.10 /a Mudaharn's 1981/82 crop was included in 1981/82 Nakhon Phanom's crop. Source: Working Paper No. 6. THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial Transfers Under the MOF Paddy Procurement Program, 1982/83 (Baht per ton of Paddy) Receipt Expenditure Revolving Rice Differences Transportation Rice mixing Operating fund premium with market Ginny mill to and Weight Godown Ship Source expenses (implicit)/a exemption Total price bag Bangkok transport loss rent loading /b Total Farmers' Aid Fund -550 -270 -820 Ministry of Finance -231 -231 MOF +550 +270 +231 +1,051 -450 -75 -145 -125 -29 -52 (-12) -876 H Rice miller +75 +145 +220 Exporter +125 +29 +52 (+12) +206 Farm beneficiaries /c 450 /a Calculated from average paddy price of B 3,000/ton, 18% return on revolving fund with average shortage period of 6 months (opportunity cost of capital is assumed to be equal to the rate of return). /b Lending at Sri Chang Island was included only for delivery there and is not included in total. /c Distribution of benefit is summarized in Table 7. Source: Working Paper No. 6. ._ <~~~~~~~~~~~~~~~~~~~~~~~~~~~~ THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE FAF's Allocation for All Projects by Agency Classification, FY75-82 /a (in million baht) Agency 1975 1976 1977 1978 1979 1980 1981 1982 Total Ministry of Agriculture and 803.49 30.72 114.65 85.60 853.61 871.79 426.72 784.58 3,971.16 Cooperatives Ministry of Finance - 0.105 0.06 0.01 0.08 - - - 0.26 Ministry of Commerce - - 2.45 80.0 100.0 - 70.0 200.0 452.45 1 Ministry of Interior - 3.11 7.0 10.0 - 46.02 - - 66.13 F Ministry of Industry - 440.0 128.0 - 325.0 - 30.50 780.0 1,703.50 O Central Security Command - - - 60.0 40.0 36.0 - - 136.06 National Energy Bureau - - - 31.73 - - - - 31.73 Office of the Aids-de-camp - - - - 2.0 - - - 2.0 Public Warehouse Organization - 7.0 9.81 2.0 - - 175.29 - 194.10 Marketing Organization of Farmers 897.49 214.24 496.15 671.10 1,763.15 1,992.21 602.79 2,047.73 8,684.86 Dairy Farm Organization of Thailand - - - - 12.99 - 80.0 22.97 115.96 Fishery Organization - - 25.0 - - - 10.0 - 35.0 The Cold Storage Organization - - - - - - - 11.0 11.0 Bank of Agriculture & Agricultural - - - 385.0 - 47.0 - 127.2 559.20 Cooperatives Office of Farmers Aid Fund - 0.18 - 0.03 0.03 - - 1.0 1.24 Total 1,700.98 695.36 783.12 1,325.47 3,096.86 2,993.08 1,395.30 3,974.48 15,964.65 /a Fiscal year ending September 30 of year started. Source: Rangsun Thanapornpun, the role of Farmers Aid Fund, July 1980 and mission updates. 0D CA - 121 - Table 4.06 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE FAF's Total Allocation, by Functional Classification, FY75-82 (million baht) Function 1975 1976 1977 1978 1979 1980 1981 1982 Total To Support/Guarantee Price 672.6 569.5 430.8 505.7 1,832.0 1,884.8 337.5 2,574.0 8,806.9 Rice 636.6 107.0 189.0 310.0 1,251.2 1,734.8 - 1,384.0 5,606.6 Marketing Organization of Farmers (500.0) (100.0) (163.3) - (900.0) 1,504.8 - (1,150.0) (4,318.1) Public Warehouse Organization - (7.0) (9.8) - - _ - - (16.8) Sugar & sugarcane - 440.0 130.4 - 325.0 - 242.5 780.0 1,917.9 Cotton 42.0 - 21.6 30.0 100.0 100.0 - 110.0 403.6 Maize - 22.5 89.8 103.7 120.8 40.0 25.0 280.0 704.3 Mung bean - - - 60.0 30.0 - - - 90.0 Garlic - - - - 5.0 - - - 5.0 Salt - - - 2.0 - - - - 2.0 Coconut - - - - - - 20.0 20.0 Coffee - - - - - 70.0 - 70.0 To Promote Livestock Breeding - - - 41.8 15.0 24.2 121.5 - 202.5 To Promote Fisheries - 0.7 33.0 5.0 6.4 2.7 21.5 23.0 92.3 To Promote Crop Planting 1,003.0 101.8 220.0 740.0 1,028.3 748.1 851.7 20.6 5,716.5 General - 2.4 - - 120.0 - 110.6 1,027.6 1,260.6 Rice fertilizers 691.5 54.0 152.5 401.3 527.5 277.1 577.8 302.4 2,984.1 Sugarcane fertilizers 164.0 37.7 - 49.2 17.1 50.1 - 717.2 1,035.2 Rice & sugarcane fertilizers - - 56.7 - - - - - 56.7 Seeds - - - 63.0 8.0 - 143.2 - 214.2 Plant insecticide 38.2 - 3.3 7.5 0.5 11.5 - 3.5 64.5 Water source/irrigation - - - 31.7 355.2 292.0 - - 678.9 Artificial rain 0.73 6.9 7.5 1.4 - 14.0 - - 30.5 Land reforms 100.1 - - - - - 16.6 - 116.7 Research & development 8.42 - - - - - 3.6 4.6 16.6 Credit - - - 100.0 - - - - 100.0 Water pumps - - - 25.9 - 100.0 - - 125.9 Marketing of Plant Crops 25.0 - 79.3 5.0 94.7 43.3 - 52.0 299.0 Revolving funds - - 7.0 - - - - - 7.0 Barns & silos 25.0 - 67.3 - 94.7 20.0 - 52.0 261.7 Vehicles - - 5.0 - - 20.6 - - 25.6 Agricultural market places - - - 5.0 - - - - 5.0 Others - 23.3 20.1 28.0 120.4 290.1 100.0 277.3 882.5 FAF office expense - 0.3 - - 0.1 - - 1.0 1.4 Aid to farmers in natural disasters - 20.0 30.0 10.0 120.3 290.1 100.0 126.3 696.7 Others - 3.0 18,0 18.0 - - - 150.0 189.0 Total Source: Rangsun Thanapornpun, The Role of Farmers Aid Fund, July 1980 and mission updates. - 122 - Table 4.07 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Total Amounts Drawn From FAF by Functional Classification FY75782 (million baht) Function 1975 1976 1977 1978 1979 1980 1981 1982 Total To Support/Guarantee Price 577.6 566.2 414.6 463.1 1,723.3 1,884.8 337.5 2.374.D 8,341.1 Rice 535.6 105.2 185.4 310.0 1,151.2 1,734.8 - 1,184.0 5,206.2 Marketing Organization of Farmers (405.0) (100.0) (163.3) - (900.0)(1,504.8) - (950.0) (4,023.1) Public Warehouse Organization - (5.3) (6.2) - - - - - 11.5 Sugar & sugarcane - 438.4 117.9 - 321.3 - 242.5 780.0 1,900.1 Cotton 42.0 - 21.6 18.7 100.0 100.0 - 110.0 392.3 Maize - 22.5 89.8 103.7 120.8 40.0 25.0 280.0 681.8 Mung bean - - - 30.0 25.0 - - - 55.0 Garlic - - - - 5.0 10.0 - - 15.0 Salt - - - 0.7 - - - - 0.7 Coconut - - - - - - - 20.0 20.0 Coffee - - - - - - 70.0 - 70.0 To Promote Livestock Breedip.g - - - 41.8 15.0 7.6 59.0 5.8 136.8 To Promote Fisheries _ 0.7 33.0 5.0 6.4 0.2 13.3 14.1 72.7 To Promote Crop Platitog 879.0 99.9 211.8 719.3 1,021.1 728.3 728.4 758.9 5,146.7 General - 0.6 - 56.8 119.6 - 65.9 57.8 300.7 Rice fertilizers 571.4 54.0 147.8 397.6 526.4 277.1 540.5 698.3 3,213.1 Sugarcane fertilizers 164.0 37.7 - 46.8 18.3 42.6 - - 309.4 Rice & sugarcane fertilizers - - 54.6 - - - - - 54.6 Seeds - 0.7 - 63.0 - - 103.2 - 166.9 Plant insecticide 36.1 - 2.5 6.8 0.5 11.5 - 1.1 58.5 Water source/irrigation - - - 22.5 350.0 284.5 - - 657.0 Artificial rain 0.7 6.8 6.9 0.2 - 13.3 - - 27.9 Land reforms 100.0 - - - - - 15.9 - 115.9 Research & development 6.7 - - - - - 3.0 1.7 11.4 Credit - - 100.0 - - - - 100.0 Water pumps - - - 25.7 - 99.3 - - 125.0 Marketing of Plant Crops 25.0 - 79.3 5.0 67.2 40.1 - - 216.6 Revolving funds - - - - - - - 'Z Barns & silos - - - - 67.2 19.5 - - 86.7 Vehicles - - - - - 20.6 - - 20.6 Agricultural market places - - - 5.0 - - - - 5.0 Othexs - 22.5 19.6 26.1 114.3 272.1 97.0 189.9 741.5 FAF office expense - 0.2 0.1 0.02 0.03 - - 0.6 0.9 Aid to farmers in natural disasters - 19.2 19.6 10.0 114.3 272.1 97.0 39.3 571.5 Others - 3.0 - 16.0 - - - 150.0 169.0 Tota. Source: Rangsun Thanapornpun, The Role of Farmers Aid Fund, July 1980 and mission updates. - 123 - V. Rice Production, Exports and Farm Surpluses THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Paddy and Rice Supply by Glutinous and Nonglutinous Varieties (Million metric tons) See-feed-loss Rice available Apparent domestic rice Milled rice Stock Exports /d (15% milled Population for and utilization for food Crop Paddy production equivalent /b change milled rice products) mid-year/e industry use + industry (kilos per year /a Total Ng. GI. Total Ng. Gl. Total Total Ng. GI. Total Ng. G1. (millions) Total Ng. Gl. capita) Ng. + G1. 1967/68 9,625 6.80 2.80 6.25 4.05 2.20 -0.10 1.10 1.00 0.10 0.95 0.60 0.35 34.0 4.10 2.35 1.75 120 1968/69 10,430 6.85 3.55 6.80 4.45 2.35 -0.25 1.05 0.95 0.10 1.00 0.65 0.35 35.1 4.50 2.60 1.90 128 1 1969/70 13,410 8.60 4.85 8.70 5.60 3.10 -0.35 1.10 1.00 0.10 1.30 0.85 0.45 36.4 5.95 3.40 2.55 163 1970/71 13,570 8.40 5.15 8.80 5.45 3.35 +0.30 1.60 1.45 0.15 1.30 0.80 0.50 37.5 6.20 3.50 2.70 165 41 1971/72 13,744 8.90 4.85 8.95 5.80 3.15 +0.25 2.15 1.95 0.20 1.35 0.85 0.50 38.5 5.70 3.25 2.45 148 1 1972/73 12,413 8.35 4.05 8.05 5.40 2.65 +0.50 0.90 0.80 0.10 1.20 0.80 0.40 39.7 6.45 4.30 2.15 162 1973/74 14,898 10.10 4.80 9.70 6.55 3.15 -0.60 1.05 0.95 0.10 1.45 1.00 0.45 40.8 6.60 4.00 2.60 162 1974/75 13,386 9.00 4.40 8.70 5.85 2.85 -0.15 1.00 0.90 0.10 1.30 0.90 0.40 41.9 6.25 3.90 2.35 149 1975/76 15,300 10.10 5.20 9.95 6.55 3.40 +0.35 2.10 1.90 0.20 1.50 1.00 0.50 43.0 6.70 4.00 2.70 156 1976/77 15,070 10.30 4.80 9.80 6.70 3.10 +0.10 3.00 2.80 0.20 1.45 1.00 0.45 44.0 5.45 3.00 2.45 124 1977/78 14,010 10.10 3.90 9.10 6.55 2.55 - 1.60 1.45 0.15 1.35 1.00 0.35 45.1 6.15 4.10 2.05 136 1978/79 17,470 11.85 5.60 11.35 7.70 3.65 -0.10 2.80 2.70 0.10 1.70 1.15 0.55 46.1 6.75 3.85 2.90 146 1979/80 15,758 10.06 5.70 10.24 6.54 3.70 +0.36 2.80 2.70 0.10 1.54 0.98 0.56 47.3 6.26 3.22 3.04 132 1980/81 17,368 11.87 5.50 11.29 7.72 3.58 -0.20 3.04 2.90 0.14 1.69 1.15 0.54 48.4 6.36 3.47 2.89 131 /a Crop year begins April I and ends March 31. 7 Paddy converted to rice at 0.65 x paddy production. /c A minus change means a stock build-up during the CY; a plus change means a stock drawdown; nonglutinous rice only. /d Exports are for calendar year; i.e., 1967/68 = 1968 CY exports; glutinous rice normally is less than 10% of total exports. F- Te National Economic and Social Development Board. M Source: Agriculture Operations Center and Office of Agricultural Economics, Ministry of Agriculture. - 125 - Table 5.02 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Paddy Production and Rice Exports (Million metric tons) Paddy production Rice exports Crop year Glutinous Nonglutinous Total G-G Private traders Total 1967/68 2.80 6.82 9.62 0.35 0.72 1.07 1968/69 3.55 6.88 10.43 0.32 0.70 1.02 1969/70 4.85 8.56 13.41 0.33 0.73 1.06 1970/71 5.15 8.42 13.57 0.61 0.97 1.58 1971/72 4.85 8.89 13.74 0.54 1.57 2.11 1972/73 4.05 8.36 12.41 0.31 0.54 0.85 1973/74 4.80 10.10 14.90 0.30 0.73 1.03 1974/75 4.40 8.99 13.39 0.37 0.58 0.95 1975/76 5.20 10.10 15.30 - - 1.97 1976/77 4.80 10.27 15.07 - - 2.95 1977/78 3.90 10.11 14.01 0.48 1.13 1.61 1978/79 5.60 11.87 17.47 1.19 1.61 2.80 1979/80 5.70 10.06 15.76 1.03 1.77 2.80 1980/81 5.50 11.86 17.36 1.12 1.92 3.04 1981/82 n.a. n.a. 18.50 1.34 2.29 3.63 Source: Agriculture Operations Center, MOAC. THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Incidence of Agricultural and Rice Surpluses All agricultural households Rice producing households Surplus as a % of Ag. Production Surplus as a % of rice production Subregion >30 >10 <10 Total >30 >10 <10 Total Total Thailand 47.6 65.9 34.1 30.9 42.6 58.4 Bangkok BKK Proper 0 5.0 50.0 - - - BKK Fringe 11.0 92.9 7.1 11.8 91.8 9.2 BKK Suburban 4.8 90.4 9.6 20.0 60.0 40.0 Other East Central 80.4 88.0 12.0 59.4 69.4 30.6 Mid. Central 74.5 84.4 15.6 68.4 80.8 19.2 West Central 55.8 73.7 26.3 47.8 57.7 42.3 Lower Northeast 27.2 50.6 49.4 15.8 30.0 70.0 Upper Northeast 20.0 44.6 56.4 19.4 30.8 69.2 Lower North 62.6 76.9 23.1 51.4 60.0 40.0 Upper North 38.2 64.6 35.4 10.4 18.3 81.7 Lower South 66.6 76.9 23.1 6.1 9.1 90.9 Upper South 62.7 75.0 25.0 9.9 16.3 83.7 Source: NSO, 1975/76 Socio Economic Survey tapes. F3 ID. 0n THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Proportion of Agricultural Households by Types and Income Groups, 1975/76 /a (7.) Household types by crop enterprises Rice and no Rice and All crop enterprises as % of: other ma or cro s other major crops No rice Subregion Whole country on- ub- No- Sb Non- Sub- No- Non- ub- Poor poor total Poor poor total Poor poor total Poor poor Poor poor total Northeast Upper 36.5 37.9 74.4 7.5 14.8 22.3 1.5 1.9 3.4 45.5 54.6 9.8 11.9 21.7 Lower 28.7 27.0 55.7 16.4 16.2 32.6 3.7 8.0 11.7 48.8 51.3 10.2 10.8 21.0 Subtotal 47.2 52.8 20.1 22.6 42.7 1 North Upper - - - 32.5 56.9 89.4 4.6 5.9 10.5 37.1 62.9 4.8 8.2 13.0 N Lower 14.8 30.9 45.7 8.1 28.7 36.8 6.5 11.0 17.5 29.5 70.5 4.0 9.6 13.6 Subtotal 33.7 66.3 8.9 17.8 26.6 Central Middle 8.2 69.4 77.6 0.5 20.0 20.5 1.6 - 1.6 10.3 89.7 0.5 5.4 5.9 West 6.0 68.6 74.6 0.3 6.6 6.9 1.6 17.0 18.6 8.2 91.8 0.8 7.2 8.0 East 7.5 24.4 31.9 1.8 13.6 15.4 3.6 24.4 28.0 17.2 82.8 0.9 4.3 5.3 Subtotal 12.1 87.9 2.2 17.0 19.2 Sout.h Upper 8.5 26.0 34.5 10.6 27.5 38.1 6.9 20.4 27.3 26.0 74.0 2.3 6.6 9.0 Lower 9.8 5.3 15.1 25.6 12.0 37.6 24.8 22.6 47.4 60.2 39.9 1.5 1.0 2.5 Subtotal 52.9 47.1 3.8 7.6 11.5 Total 282.8 617.5 35.0 65.0 100.0 /a Totals and subtotals may not add up due to rounding. U, Source: Derived from NSO, 1975/76 Socioeconomic Survey data given in Oey Meesok and Ian Porter, Profiles of Agricul- o tural Households in Thailand (Draft), February 1983. - 128 - Table 5.05 THAILAND PRICING AND MARXETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Agricultural Sales from Rice Farms, by Subregion, 1975/76 Total paddy sale All agricultural Quantity Value surplus (value) '000 tons x '000 x '000 baht 2 Upper North 264.9 3.7 394.1 2,6 709.4 14.3 Lower North 1,507.4 21.0 3,063.4 20.4 506.6 10.2 Upper N.E. 560.2 7.8 916.0 6.1 1,238.8 25.0 Lower N.E. 369.3 5.1 732.5 4.9 974.7 19.7 West Central 827.8 11.5 1,716.0 11.5 303.4 6.1 Mid Central 1,640.1 22.8 3,749.4 25.0 412.0 8.3 East Central 680.3 9.5 1,506.1 10.1 232.6 4.7 Upper South 64.0 0.9 132.4 0.9 410.8 8.3 Lower South 2.1 n.e. 5.2 n.s. 104.8 2.1 Bangkok - - - - 4.8 0.1 Greater Bangkok 1,278.9 17.7 2,768.8 18.5 56.6 1.1 Total 7,195.0 100.0 14,983.9 100.0 4,954.50 100.0 Source: NSO, Socio-economic Survey, 1975/76 tapes. - 129 - VI. Gross Margins for Rice and Related Crops - 130 - Table 6.01 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model Al - Paddy for the Northern Region 1980/81 (per rai) North Upper North Lower North Financial Economic Financial Economic Financial Economic Value of Production Yield (kg) 343 343 449 449 349 349 Price (baht/kg) 3.46 5.36 3.40 5.27 3.51 5.44 Gross value of production (baht) 1,186.78 1,839.51 1,526.6 2,366.23 1,224.99 1,898.73 Production Cost (baht) Traded Inputs Seed 34.64 53.69 21.16 32.80 34.58 53.60 Fertilizer 19.19 18.90 32.87 32.38 16.18 15.94 Pesticide 3.42 3.18 0.91 0.85 4.77 4.44 Fuel 17.54 11.40 0.74 0.48 30.22 19.64 Equipment 183.57 107.20 30.35 17.72 229 133.74 Maintenance 1.76 1.03 2.00 1.17 1.47 0.86 Subtotal 260.12 195.41 88.03 85.40 316.22 228.21 Nontraded Inputs Manure 0.01 0.01 - - - - Draft animal 67.97 67.97 248.50 248.50 68.47 68.47 Labor Land preparation 3.70 3.70 4.92 4.92 3.19 3.19 Irrigation 9.32 9.32 9.08 9.08 9.51 9.51 Weeding 10.77 10.77 13.01 13.01 9.43 9.43 Fertilizing 3.64 3.64 3,36 3.36 4.22 4.22 Pest control 10.20 10.20 9.47 9.47 10.29 10.29 Harvesting 112.39 112.39 73.58 73.58 129.23 129.23 Collecting 31.36 31.36 26.21 26.21 42.07 42.07 Threshing 25.84 25.84 51.74 51.74 24.53 24.53 Transport 12.90 12.90 15.87 15.87 17.30 17.30 Planting 92.83 92.83 104.52 104.52 128.93 128.93 Subtotal 380.93 380.93 560.26 560.26 447.17 447.17 Returns to Land and Management 545.73 1,263.17 878.31 1,720.57 461.60 1,223.35 Source: Ministry of Agriculture and Cooperatives, MOAC, OAE. - 131 - Table 6.02 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model A2 - Nonglutinous Paddy for the Northeast Region 1980/81 (per rai) Northeast Upper Northeast Lower Northeast Financial Economic Financial Economic Financial Economic Value of Production Yield (kg) 216 216 214 214 222 222 Price (baht/kg) 3.29 5.10 3.17 4.91 3.27 5.07 Gross value of production (baht) 710.64 1,101.49 678.38 1,051.49 725.94 1,125.21 Production Cost (baht) Traded Inputs Seed 22.01 34.12 25.87 40.10 21.79 33.77 Fertilizer 32.00 31.52 13.68 13.47 32.46 31.97 Pesticide 2.11 1.96 4.62 4.30 2.04 1.90 Fuel 2.49 1.62 5.66 3.68 - 0.00 Equipment 35.12 20.51 51.23 29.92 12.77 7.46 Maintenance 1.04 0.61 0.91 0.53 0.85 0.50 Subtotal 94.77 90.34 101.97 92.00 69.91 75.60 Nontraded Inputs Manure Draft animal 159.28 159.28 132.98 132.98 178.32 178.32 Labor Land preparation 1.56 1.56 1.03 1.03 1.02 1.02 Irrigation 13.33 13.33 9.25 9.25 14.69 14.69 Weeding 14.52 14.52 16.25 16.25 17.43 17.43 Fertilizing 9.11 9.11 8.37 8.37 10.41 10.41 Pest control 5.29 5.29 2.19 2.19 4.58 4.58 Harvesting 111.58 111.58 123.00 123.00 116.38 116.38 Collecting 28.62 28.62 27.41 27.41 22.51 22.51 Threshing 30.61 30.61 31.42 31.42 30.04 30.04 Transport 18.22 18.22 29.47 29.47 20.18 20.18 Planting 128.18 128.18 121.72 121.72 130.97 130.97 Subtotal 520.30 520.30 503.09 503.09 546.53 546.53 Returns to Land and Management 95.57 490.86 73.32 456.40 109.50 503.08 Source: MOAC, OAE - 132 - Table 6.03 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model A3 - Paddy for the Central and Western Central Region 1980/81 (baht per rai) Central Western Western Central Financial Economic Financial Economic Financial Economic Value of Production Field (kg) 316 316 247 247 333 333 Price (baht/kg) 3.65 5.66 3.56 5.52 3.69 5.72 Gross value of production (baht) 1,153.40 1,787.77 879.32 1,362.95 1,228.77 1,904.59 Production Cost (baht) Traded Inputs Seed 50.93 78.94 51.27 79.47 28.59 44.31 Fertilizer 47.48 46.77 27.26 26.85 58.95 58.07 Pesticide 6.76 6.29 5.38 5.01 23.77 22.13 Fuel 14.33 9.31 9.40 6.11 31.68 20.59 Equipment 188.17 109.89 234.20 136.77 294.11 171.76 Maintenance 2.74 1.06 2.14 1.25 2.9 1.69 Subtotal 310.41 252.81 329.65 255.46 440.00 318.56 Nontraded Inputs Manure 0.60 0.60 - - - - Draft animal 62.94 62.94 47.37 47.37 - Labor Land preparation 2.90 2.90 3.20 3.20 12.00 12.00 Irrigation 6.58 6.58 4.75 4.75 11.50 11.50 Weeding 10.49 10.49 15.71 15.71 8.00 8.00 Fertilizing 7.08 7.08 2.47 2.47 9.50 9.50 Pest control 14.72 14.72 7.25 7.25 9.75 9.75 Harvesting 154.12 154.12 109.23 109.23 111.00 111.00 Collecting 32.63 32.63 18.96 18.96 22.00 22.00 Threshing 24.49 24.49 29.74 29.74 21.00 21.00 Transport 16.87 16.87 7.97 7.97 10.50 10.50 Planting 96.80 96.80 66.74 66.74 126.00 126.00 Subtotal 430.22 430.22 313.39 313.39 341.25 341.25 Returns to land and management 412.77 1,104.74 236.28 794.10 447.52 1,244.79 Source: MOAC, OAE. - 133 - Table 6.04 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model A4 - Paddy for the Southern Region 1980/81 (per rai) Financial Economic Value of Production Yield (kg) 281 281 Price (baht/kg) 3.34 5.18 Gross value of production (baht) 938.54 1,454.74 Production Cost (baht) Traded Inputs Seed 22.26 34.50 Fertilizer 44.69 44.02 Pesticide 1.84 1.71 Fuel - - Equipment 160.46 93.71 Maintenance 2.05 1.20 Subtotal 231.30 175.14 Nontraded Inputs Manure 1.52 1.52 Draft animal 69.50 69.50 Labor Land preparation 13.13 13.13 Irrigation 12.68 12.68 Weeding 18.28 18.28 Fertilizing 8.13 8.13 Pest control 5.46 5.46 Harvesting 144.91 144.91 Collecting 14.97 14.97 Threshing 52.46 52.46 Transport 36.70 36.70 Planting 157.30 157.30 Subtotal 535.04 535.04 Returns to Land and Management 172.20 744.56 Source: MOAC, OAE. - 134 - Table 6.05 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model Bl - Glutinous Paddy for the Northern Region 1980/81 (per rai) North Upper North Lower North Financial Economic Financial Economic Financial Economic Value of Production Yield (kg) 448 448 464 464 344 344.00 Price (baht/kg) 2.84 3.96 2.88 4.02 2.79 3.89 Gross value of production (baht) 1,272.32 1,774.89 1,336.32 1,864.17 959.76 1,338.87 Production Cost (baht) Traded Inputs Seed 23.10 35.81 24.55 38.05 21.60 33.48 Fertilizer 36.46 35.91 44.88 44.21 16.73 16.48 Pesticide 2.47 2.30 1.62 1.51 3.63 3.38 Fuel 3.14 2.04 1.28 0.83 19.87 12.92 Equipment 103.51 60.45 88.19 51.50 130.36 76.13 Maintenance 2.12 1.24 1.98 1.16 3.63 2.12 Subtotal 170.80 137.75 162.50 137.26 195.82 144.50 Nontraded Inputs Manure 0.92 0.92 1.31 1.31 - Draft animal 164.71 164.71 176.01 176.01 160.47 160.47 Labor Land preparation 5.85 5.85 5.55 5.55 5.49 5.49 Irrigation 9.08 9.08 7.29 7.29 9.32 9.32 Weeding 11.71 11.71 11.96 11.96 8.55 8.55 Fertilizing 4.67 4.67 4.27 4.27 3.72 3.72 Pest control 12.15 12.15 11.77 11.77 7.33 7.33 Harvesting 98.36 98.36 87.39 87.39 122.66 122.66 Collecting 30.82 30.82 28.65 28.65 33.81 33.81 Threshing 50.96 50.96 53.01 53.01 35.33 35.33 Transport 23.56 23.56 26.92 26.92 16.73 16.73 Planting 110.13 110.13 99.22 99.22 147.44 147.44 Subtotal 522.92 522.92 513.35 513.35 550.85 550.85 Returns to Land and Management 578.60 1,114.22 660.47 1,213.56 213.09 643.51 Source: MOAC. OAE. - 135 - Table 6.06 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model B2 - Glutinous Paddy for the Northeast Region 1980/81 (baht per rai) Northeast Upper Northeast Lower Northeast Financial Economic Financial Economic Financial Economic Value of Production Yield (kg) 198 198 206 206 204 204 Price (baht/kg) 2.56 3.57 2.46 3.43 2.43 3.39 Gross value of production (baht) 506.88 707.10 506.76 706.93 495.72 691.53 Production Cost (baht) Traded Inputs Seed 19.31 29.93 16.72 25.92 18.52 28.71 Fertilizer 25.50 25.12 18.57 18.29 32.13 31.65 Pesticide 2.58 2.40 5.38 5.01 4.71 4.39 Fuel 2.22 1.44 3.38 3.38 0.14 0.09 Equipment 36.21 21.15 47.52 27.75 11.45 6.69 Maintenance 1.27 0.74 1.60 0.93 1.10 0.64 Subtotal 87.09 80.78 93.17 80.10 68.05 72.16 Nontraded Inputs Manure 2.09 2.09 2.19 2.19 - - Draft animal 174.90 174.90 164.79 164.79 161.47 161.47 Labor Land preparation 1.51 1.51 1.47 1.47 1.33 1.33 Irrigation 6.39 6.39 7.61 7.61 9.94 9.94 Weeding 11.51 11.51 14.54 14.54 14.81 14.81 Fertilizing 5.90 5.90 5.96 5.96 4.76 4.76 Pest control 5.79 5.79 2.71 2.71 6.38 6.38 Harvesting 105.54 105.54 111.62 111.62 116.61 116.61 Collecting 28.63 28.63 23.06 23.06 24.87 24.87 Threshing 29.48 29.48 25.06 25.06 27.94 27.94 Transport 27.21 27.21 30.01 30.01 21.03 21.03 Planting 114.37 114.37 118.90 118.90 114.70 114.70 Subtotal 513.32 513.32 507.92 507.92 503.84 503.84 Returns to Land and Management (93.53) 113.00 (94.33) 118.91 (76.17) 115.53 Source: MOAC, OAE. - 136 - Table 6.07 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE' Financial and Economic Costs and Returns: Models Cl and C2 - Corn and Mungbean (baht per rai) Farm Model Cl Farm Model C2 (Corn) (Mungbean) Lower North Region Lower Northeast Financial Economic Financial Economic Value of Production Yield (kg) 312 3.12 124 124 Price (baht/kg) 2.56 2.63 6.42 6.63 Gross value of production 798.72 821.88 796.08 821.55 (baht) Production Cost (baht) Traded Inputs Seed 22.97 23.64 89.88 92.76 Fertilizer 1.88 1.85 13.00 12.81 Pesticide 2.63 2.45 11.58 10.78 Fuel - 0.00 - 0.00 Equipment 170.94 99.83 34.69 154.40 Maintenance 1.63 0.95 - - Subtotal 200.05 128.72 149.15 136.60 Nontraded Inputs Manure - - - - Draft animal 48.31 48.31 - - Labor Land preparation 10.91 10.91 0.50 0.50 Irrigation - - - - Weeding 82.77 82.77 50.94 50.94 Fertilizing 1.91 1.91 6.63 50.94 Pest control 5.22 5.22 - 6.63 Harvesting 69.97 69.97 62.27 62.27 Collecting - - 2.03 2.03 Threshing - 2.40 12.40 25.22 25.22 Transport 40.07 20.50 20.50 Planting 40.07 40.07 14.41 14.41 Drying and packing - - 5.33 5.33 Subtotal 271.56 271.56 187.83 187.83 Returns to Land and 327.11 421.61 459.10 497.12 Management Source: MOAC, OAE. - 137 - Table 6.08 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Models C3, C5, C6 - Cassava, Peanut and Kenaf Production 1980/81 (baht per rai) Farm Model C3 Farm Model C5 Farm Model C6 (Cassava) (Peanut) (Kenaf) Northeast Lower Northeast Northeast Financial Economic Financial Economic Financial Economic Value of Production Yield (kg) 2,207 2,207 168 168 197 197 Price (baht/kg) 0.51 0.53 7.33 7.76 3.50 3.65 Gross value of production (baht) 1,125.57 1,173.97 1,231.44 1,304.09 689.5 718.46 Production Cost (baht) Traded Inputs Seed 60.17 62.76 207.42 219.66 31.57 32.90 Fertilizer 3.33 3.28 5.24 5.16 8.51 8.38 Pesticide - 0.00 7.39 6.88 3.16 2.94 Fuel 4.16 2.70 - - 4.08 2.65 Equipment 173.52 101.34 66.54 38.86 130.34 76.12 Maintenance 2.93 1.71 0.77 0.45 3.97 2.32 Subtotal 244.11 171.79 287.36 271.01 181.63 125.31 Nontraded Inputs Manure Draft animal - - _ _ _ _ Labor 24.21 24.21 95.60 94.60 44.78 44.78 Land preparation 24.98 24.98 77.87 77.87 39.22 39.22 Irrigation - - - - - - Weeding 162.34 162.34 145.24 145.24 120.77 120.77 Fertilizing 0.92 0.92 1.65 1.65 0.80 0.80 Pest control - - 7.33 7.33 0.80 0.80 Harvesting 145.08 145.08 124.80 124.80 118.34 118.34 Collecting - - 11.55 11.55 41.17 41.17 Threshing - - - - - Transport 22.66 22.66 18.61 18.61 17.02 17.02 Planting 71.40 71.40 141.49 141.49 50.62 50.62 Drying and packing 120.19 120.19 162.27/a 162.27 Subtotal 451.59 451.59 744.33 744.33 595.79 595.79 Returns to Land and Management 429.87 550.59 199.75 288.76 (87.92) (2.64) /a Includes packing 8.86; peeling, cleaning, drying 120.34; soaking stalk 33.07. Source: MOAC, OAE. - 138 - Table 6.09 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Financial and Economic Costs and Returns: Model C4 - Sugarcane Production 1980/81 (baht per rai) Average sugarcane First sugarcane First ratoon cane Second ratoon cane Financial Economic Financial Economic Financial Economic Financial Economic Value of Production Yield (ton) 6.81 6.81 7.21 7.21 6.58 6.58 5.19 5.19 Price (ton) 650 664.95 650 664.95 650 664.95 650 664.95 Gross value of production (baht) 4,426.50 4,528.31 4,686.50 4,794.29 4,277 4,375.37 3,373.5 4,048.20 Production Cost (baht) Traded Inputs Seed 335.11 342.82 769.83 787.54 159.02 162.68 - - Fertilizer 210.21 207.06 214.49 211.27 221.86 218.53 147.9 0.00 Pesticide 40.88 38.06 54.45 50.69 24.82 23.11 21.36 144.88 Fuel 10.47 6.81 11.88 7.72 8.23 5.35 9.09 19.89 Equipment 466 272.14 468.26 273.46 158.08 92.32 68.41 5.91 Maintenance 14.87 8.68 15.30 8.94 14.14 8.26 14.51 39.95 Subtotal 1,077.54 875.57 1,534.21 1,339.62 586.15 510.24 260.46 219.10 Nontraded Inputs Manure Draft animal 12.36 12.36 9.26 9.26 20.94 20.94 3.71 3.71 Labor Land preparation 33.47 33.47 33.48 33.48 - - - - Irrigation 15.93 15.93 21.66 21.66 7.27 7.27 11.05 11.05 Weeding 218.74 218.74 186.65 186.65 252.52 252.52 307.96 307.96 Fertilizing 35.50 35.50 38.85 38.85 32.25 32.25 26.95 26.95 Pest control 38.54 38.54 48.18 48.18 25.51 25.51 24.15 24.15 Harvesting 313.89 313.89 317.83 317.83 332.42 332.42 237.36 237.36 Collecting - - - - - - - - Threshing - - - - - - - - Transport 113.55 113.55 133.82 133.82 86.85 86.85 80.09 80.09 Planting 249.46 249.46 182.78 182.78 65.97 65.97 - - Subtotal 1,031.45 1,031.44 972.51 972.51 823.73 823.73 691.27 691.27 Retuirns to Land and Management 2,317.51 2,621.30 2,179.78 2,482.16 2,867.12 3,041.40 2,421.77 2,540.72 Source: MOAC, OAE. i0 0 1S i hfNoZ< t It4 It .%1 1iii _ .U ~N_|s_ >|f o ~ - OC00- 00-00 0.00 --0 000 0.40 0 08 F.~ ~ 0 g,g t|. g|g* g _< 0 > 4-1O > iii 4-J.--G-4 vvC 2 u-0. -Oi 4D4 o Ot 4-ot 'el _ 0 0 _.* 00 - f0.4. 0, tOO, g ' . *_. | ,,, 0 g4 00 oc Y ej O fiDOD~O 10.0006 0 b o00 C 000e 00 .-t0 , 0_^w ., ~ .--^ e ^, ¢ M DXl / sG I 1e n < u ° RN_ N r t e C C .4 0 0 4 .0 O o . C .C ... ' 0 5 < ~ ~ 11 .0 0C 000 N D \1._ 00 0. 000I 00 0.o 0t I ._Ot| V NI , , ,,-sO * ~ ~ ~ ~ 14. - 40 0.- 0 ° > - °o - - .-. I I-e e e o- > < e x^ b o ~ o w 14 00 OO -0 0 a..0 0 0 00 1 . 0. _ O 0 1 G 0 V 0j4 . /_ 4 f - CO ew 0.00- 0 X 0054C. C > 004. .0 . 4| 14 0 o.....5...... e4 0) I0 00 0 000 00 0 oC 000 or n - o 0 .2 - IIO. _CO C 0o1oo c 0 C C _ O Or G 4C O - 0 - C g - 0 0 g. 0 C 0 gC I I I I I I I e | ~ooo o__o 0 0 0-oo0 o 0 o 00 -f 0S 0 ~ ~ 4 C0' 011 e0 e00 e _I ^4 S0 - 01. 03 0.1 0 O 0 01 0 .0 . '4 51 44 0 14 G4 0 0G 0 0 f . 0. 20 3 4 a 0 Itoe e 0~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~_ 01 0o40110 _- C 14 0 01 00 0 0S 1' 14- C 4.4Cf S _CUJ GC _ . C0 G0 C 14 14 G.I__O G0:* 1400... CO 00. ' al 40000OC = 010- Lt 1443 0 l° - 140 - Table 6.11 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model A2 - Paddy for the Northern ReRion.' 1980/81 (Per rai) Northeast Upper Northeast /a Lo-er Northeast /b QOantity Unit Total Quantity Unit Total Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Hired Owned Total cost (B) value (B) Hired Owned Total cost (B) value (B) Return Production kg - - 216 - - - - 214 - - - 222 - - Price obtained B - - - 3.29 - - - - 3.17 - - - - 3.27 - Revenue B - - - - 710.64 - - - - 678.38 - - - - 725.94 Cost Land preparation Manual MD - 0.06 0.06 26.00 1.56 - 0.04 0.04 25.62 1.03 - 0.04 0.04 25.44 1.02 Animal MD 0.04 3.26 3.30 47.03 155.22 - 2.76 2.76 48.18 132.98 0.07 3.81 3.88 45.54 176.73 Machioe hr. 0.05 0.15 0.20 80.25 16.05 - 0.00 0.50 65.07 32.54 - - - Irrigation control Manual MD - 0.53 0.53 25.15 13.33 - 0.38 0.38 24.33 9.25 - 0.56 0.56 26.24 14.69 Machine hra 0.1 - 0.15 26.13 3.92 - - - - - - - - - Planting - anual MD 1.24 3.71 4.95 25.89 128.18 1.33 3.53 4.86 25.04 121.72 1.01 4.04 5.05 25.93 130.97 Material (seeds) kg 0.05 6.58 6.63 3.31 22.01 - 7.69 7.69 3.36 25.87 - 6.32 6.32 3.44 21.79 Weeding - manual MD 0.01 0.58 0.59 24.61 14.52 - 0.67 0.67 24.25 16.25 - 0.66 0.66 26.41 17.43 Fertilizer application - manual MD - 0.34 0.34 26.79 9.11 - 0.31 0.31 26.98 8.37 - 0.39 0.39 26.69 10.41 Material (fertilizer) kg 4.80 0.37 5.17 6.19 25.84 2.21 - 2.21 6.19 11.31 5.28 0.58 5.86 5.54 28.42 Pesticide application Manual MD - 0.12 0.12 44.08 5.29 0.01 0.06 0.07 31.33 2.19 - 0.10 0.10 45.78 4.58 Machine hra - - - 10.75 0.01 - - - - - - - - - - Material (pesticide) kg 0.08 - 0.08 26.04 2.11 0.04 - 0.04 115.50 4.62 0.09 - 0.091 22.41 2.04 Harvesting - canual MD 0.98 3.34 4.32 25.82 111.58 1.45 3.48 4.93 24.94 123.00 0.82 3.63 4.45 26.15 116.38 Collecting MD 0.03 1.09 1.12 25.55 28.62 0.11 1.02 1.13 24.25 27.41 - 0.87 0.87 25.87 22.51 Threahing Manual MD 0.02 1.18 1.20 25.50 30.61 0.09 1.15 1.24 25.34 31.42 0.01 1.15 1.16 25.89 30.04 Ani,al MD - 0.01 0.01 64.00 0.64 - - - - - - 0.01 0.01 21.06 0.21 Transport iog Manual MD 0.03 0.68 0.71 25.66 18.22 0.38 0.79 1.17 25.18 29.47 - 0.78 0.78 25.87 20.18 Animal MD 0.005 0.06 0.06 50.29 3.42 - - - - - - 0.06 0.066 20.94 1.38 Machine hra 0.13 0.02 0.15 69.66 10.45 0.11 0.02 0.13 116.82 15.19 0.08 - 0.08 115.34 9.23 Others Fuel liter 0.30 - 0.30 8.30 2.49 0.80 - 0.80 7.07 5.66 - - - - - Equipment used B - - - - 4.69 - - - - 3.50 - - - - 3.54 Equipsent maintenance B - - - - 1.04 - - - - 0.91 - - - - 0.85 Opportunity cost B - - - - 36.53 - - - - 36.16 - - - - 36.74 Depreciation cost B - - - - 10.24 - - - - 10.24 - - - - 9.54 Total cost (excludes land used) B - - - - 655.68 - - - - 649.09 - - - - 658.68 Costs/kg B - - - - 3.04 - - - - 3.03 - - - - 2.97 Gross margin. B - - - - 54.96 - - - - 29.29 - - - - 67.26 Land used B 10.54 123.36 133.90 - 133.90 2.44 146.23 148.67 - 148.67 8.93 137.07 146.00 - 146.00 /s Of agroeconomic eons 3. /b Of agroeconomic eons 4. Note: MD - Man-day, 8 hours per day. Anil - 6 hours per day, machine - 8 hours per day. Source: MOAC, OAE. - 141 - Table 6.12 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model A3 - Paddy for the Western Central Regton., 1980/81 (Per rai) Central Central (western part) /a Central (western part) /b Quantity Unit Total Quantity Unit Total Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Hired Owned Total cost (B) value (B) Hired Owned Total coot (B) volue (B) Return Production kg - - 316 - - _ _ 247 - - - - 333 - Price obtained B - - - 3.65 - - - 3.56 - - - - 3.69 - Revenue B - - - - 1,153.40 - - - - $79.32 - - - - 1,228.77 Cost Land preparation Manual MD - 0.09 0.09 32.22 2.90 - 0.10 0.10 31.96 3.20 - 0.24 0.24 50.00 12.00 Animal MD 0.02 0.72 0.74 62.50 46.25 - 0.73 0.73 53.77 39.25 - - - - - Machine hra 0.54 0.97 1.51 94.63 142.90 0.86 0.35 1.21 168.21 203.54 0.57 1.23 1.90 117.12 210.83 Irrigation control Manual MD - 0.20 0.20 32.90 6.58 - 0.19 0.19 25.00 4.75 - 0.23 0.23 50.00 11.50 Mathine hra 0.07 0.18 0.25 22.76 5.69 - - - - - 0.71 0.81 1.52 20.32 30.89 Planting - mAnual MD 1.05 1.30 2.35 41.19 96.80 0.72 1.00 1.72 38.80 66.74 1.42 1.10 2.52 50.00 126.00 Material (seeds) kg 3.93 11.30 15.23 3.34 50.93 2.14 13.48 15.62 3.28 51.27 - 9.53 9.53 3.00 28.59 Weeding - man..l MD - 0.30 0.30 34.96 10.49 - 0.53 0.53 29.63 15.71 - 0.16 0.16 50.00 8.00 Fertilizer application - anual MD 0.01 0.16 0.17 41.64 7.08 - 0.08 0.08 30.84 2.47 - 0.19 0.19 50.00 9.50 Material - m.nure kg 1.39 - 1.39 0.43 0.60 - - - - - - - - - - - fertilizer kg 9.67 0.06 9.73 4.88 47.05 4.92 - 4.92 5.54 25.04 10.64 - 10.64 5.54 53.20 Pesticide application Manual MD 0.02 0.25 0.27 54.51 14.72 - 0.13 0.13 55.75 7.25 - 0.11 0.11 88.60 9.75 Machine hrs - 0.12 0.12 3.22 0.39 - - - - - - - - - - Material (pesticide) kg 0.15 0.01 0.16 42.25 6.76 0.16 0.002 0.162 33.20 5.38 0.47 - 0.47 50.56 23.77 Narvesting - manual MD 1.65 1.91 3.56 43.29 154.12 1.46 2.01 3.47 31.47 109.23 1.04 2.13 3.17 35.01 111.00 Collecting MD 0.08 0.80 0.88 37.07 32.63 - 0.62 0.62 30.58 18.96 0.07 0.37 0.44 50.00 22.00 Threshing Manual MD 0.12 0.57 0.69 35.49 24.49 0.05 0.93 0.98 30.34 29.74 0.07 0.35 0.42 50.00 21.00 Animal MD 0.02 0.44 0.46 21.39 9.84 - 0.25 0.25 22.97 5.74 - - - - - Machine hr. 1.07 0.18 1.25 15.56 19.46 0.17 0.15 0.32 60.96 19.51 0.07 0.79 0.86 39.05 33.59 Transporting Manual MD 0.04 0.38 0.42 40.16 16.87 - 0.25 0.25 31.86 7.97 0.02 0.19 0.21 50.00 10.50 Anisal MD 0.01 0.11 0.12 57.08 6.85 - 0.07 0.07 34.00 2.38 - - - - - Machine hrs 0.15 0.17 0.32 45.21 14.47 0.13 0.04 0.17 43.04 7.32 0.01 0.44 0.45 33.55 ' 15.10 Others Fuel liter 1.72 - 1.72 8.33 14.33 1.11 - 1.11 8.46 9.40 3.61 - 3.61 8.77 31.68 Equipment used B - - - - 5.26 - - - - 3.83 - - - - 3.70 Equipment maintenance 8 - - - - 2.74 - - - - 2.14 - - - - 2.90 Opportunity cnst B - - - - 43.38 - - - - 38.33 - - - - 45.81 Total cost (excludes land used) 8 - - - - 783.58 - - - - 679.15 - - - - 821.31 Costs/kg 8 - - - - 2.48 - - - - 2.82 - - - - 2.48 Gross margins 8 - - - - 369.82 - - - - 200.17 - - - - 407.46 Land ueed B 25.42 139.90 165.32 - 165.32 24.86 144.66 169.52 - 169.52 19.10 121.11 140.21 - 140.21 /a Of agroeconomic zone 12. /b Of agroeconomic sons 14. Note: MD - Man-day, 8 hours per day. Animal - 6 hours per day, machine - 8 hours per day. Source: hOAC, OAE. S~~~~~~~~~~~~~~ c 11 lo1 rZg22 f S l9 xrt| 0 0f CC ' 0 0 _0-0 nXD=8n D5~>D X- N 0 e - 0 0f *f 1 0 0 000 000 0- 0 00 000O U O OO_O f e ~ 0 0.'" 000 00_ 40O 0' Oo.o-0 o. 0_ S0. D _ a ° °o 0' 0 0 0 0, - '0,4o -'00' v w I n 0 ef 000 0 0' 00 00. 0_ 00 00 0_00 0.- 2.2 0 'o~ goc _Wo> c66 6 66 * II FWF~~I FF.FI FFF I 0 ' o °x|'I D g' _ 0~ OO_> o 0EWo, Oo , 0 000 0 0.'.D O C Z . - F 0o ,,_, _ 3 0 so 1D o Z ~~~~~~~/N0'1 t> i .-F;X ' ° n 0 ~ ~~~~~~ - 0 - 0O < J3 V @- 9031 . 3 W * D 30 10_U 0"0 0 0'. _ 000 S0. 300__ 30 '_ 0 O 01 0 3 2E S' - FF FF FFWFF-- ~ -4 I - 00 I _1 0 - '..' '.O' 00 '. ~N| 0. _ 0 1- '-''' '''6° 0-0 0- 0- @00'I40 000 -.00- r'. -~ 0cJ 6 4 00_ 3'. _' 0 _0 _~0 0' .'' S' @ Fr@~> 3 0*9 -6.0s9 > _> ° M w > °w Hl - 143 - Table 6.14 THAILAND PRICING AND MARICETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Co-t: Model B2 - Paddy (Glutinous) for the Northern Region. 1980/81 (Petr al) Northeast Upper Northeast /a Lower Northeast /b Quantity Unit Total Quantity Unit Total Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Hired Owned Total cost (B) value (B) Hired Owned Total cost (B) value (B) Return Production kg - - 198 - - - - 206 - - - - 204 - Priceobtained B - - - 2.56 - - - - 2.46 - - - - 2.43 Revenue B - - - - 506.88 - - - - 506.76 - - - - 495.72 Cost Land preparation Manual MD - 0.06 0.06 25.09 1.51 - 0.06 0.06 24.52 1.47 - 0.05 0.05 26.53 1.33 Animal MD 0.04 2.89 2.93 58.89 172.55 0.12 2.22 2.34 70.22 164.32 - 3.38 3.38 47.38 160.38 Machine hb- 0.01 0.25 0.26 66.50 17.29 - 0.49 0.49 64.72 31.72 - - - - Irrigation control Manual MD - 0.26 0.26 24.58 6.39 - 0.32 0.32 23.76 7.61 - 0.39 0.39 25.49 9.94 Machine hrs 0.01 0.14 0.15 14.73 2.21 - 0.07 0.07 5.00 .35 - - - - - Planting - Manual ND 1.02 3.55 4.57 25.02 114.37 1.29 3.54 4.83 24.61 118.90 0.12 4.22 4.34 26.42 114.70 Material (seedn) kg 0.07 6.47 6.54 2.95 19.31 0.03 6.08 6.11 2.73 16.72 - 6.91 6.91 2.68 18.52 Weeding - manual MD - 0.48 0.48 23.98 11.51 - 0.62 0.62 23.44 14.54 - 0.57 0.57 25.98 14.81 Fertiliner application - manual MD - 0.24 0.24 24.58 5.90 - 0.23 0.23 25.91 5.96 - 0.18 0.18 26.45 4.76 Material - manure kg 2.68 4.16 6.84 0.30 2.09 1.14 1.59 2.73 0.80 2.19 - - - - - - fertilizee kg 4.06 0.06 4.12 6.19 21.33 2.98 0.02 3.00 6.19 15.20 4.97 0.83 5.80 5.54 29.76 Pesticide application Manual MD - 0.14 0.14 41.38 5.79 0.01 0.06 0.07 38.66 2.71 - 0.14 0.14 45.58 6.38 Machine hrs 0.02 - 0.02 7.50 0.15 - - - - - - - - - - Material (pesticide) kg 0.05 - 0.05 50.58 2.58 0.05 - 0.05 107.60 5.38 0.19 - 0.19 24.78 4.71 H.arvesting - manual MD 0.82 3.53 4.35 24.26 105.54 1.28 3.36 4.64 24.05 111.62 1.13 3.38 4.51 25.85 116.61 Collecting - manual MD 0.02 1.18 1.20 23.86 28.63 0.02 0.97 0.99 23.28 23.06 - 0.95 0.95 26.18 24.87 Threshing Manual MD 0.02 1.17 1.19 24.77 29.48 0.02 1.04 1.06 23.64 25.06 - 1.07 1.07 26.11 27.94 Animal MD - - - 213.15 0.81 - - - - - - - - - - Machine hrs - - - 102.50 0.10 - - - - - - - - - - Transporting Manual MD 0.02 1.02 1.04 26.16 27.21 0.04 1.17 1.21 24.80 30.01 - 0.82 0.82 25.64 21.03 Aniall MD 0.01 0.02 0.03 51.41 1.54 0.006 0.002 0.008 58.75 0.47 - 0.07 0.07 15.57 1.09 Machine hbs 0.12 0.01 0.13 90.17 11.72 0.08 0.01 0.09 120.31 10.83 0.06 - 0.06 116.66 7.00 Others Fuel liter 0.31 - 0.31 7.16 2.22 0.43 - 0.43 7.86 3.38 0.01 - 0.01 14.00 0.14 Equipment used B - - - - 4.74 - - - - 4.62 - - - - 4.45 Equipment maintenance E - - - - 1.27 - - - - 1.60 - - - - 1.10 Opport-nity cost B - - - - 35.77 - - - - 35.81 - - - - 34.17 Depreciation cost B - - - - 5.21 - - - - 7.08 - - - - 9.58 Total cost (excludes land used) B - - - - 637.22 - - - - 640.61 - - - - 613.27 Costs/kg B - - - - 3.22 - - - - 3.10 - - - - 3.01 Gross margins B - - - - -130.34 - - - - -133.85 - - - - -117.55 Land used B 8.71 129.74 138.45 - 138.45 7.37 131.36 138.73 - 138.73 23.25 134.02 157.27 - 157.27 /a Of agroeconomic cone 3. /b Of agroeconomic zon. 4. Note: MD - Man-day, 8 hours per day. Animal - 6 hours per day, machine 5 8 hours per day. Source: MOAC, OAE. - 144 - Table 6.15 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model Cl - Corn for the Lower North Region/a - 1980/81 (Per rai) Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Return Production kg - - 312 - - Price obtained B - - - 2.56 - Revenue B - - - - 798.72 Cost Land preparation Manual MD 0.08 0.28 0.36 30.31 10.91 Animal MD 0.04 0.35 0.39 64.74 25.25 Machine hrs 0.90 - 0.90 129.27 116.34 Irrigation control - manual MD - - - - - Planting - manual MD 0.32 1.01 1.33 30.13 40.07 Material (seeds) kg 1.42 2.85 4.27 5.38 22.97 Weeding Manual MD 0.82 1.80 2.62 31.59 82.77 Animal MD 0.03 0.08 0.11 130.27 14.33 Machine hrs - 0.27 0.27 56.56 15.27 Fertilizer application - manual MD 0.003 0.053 0.056 34.11 1.91 Material (fertilizer) kg 0.43 - 0.43 4.37 1.88 Pesticide application Manual MD - 0.12 0.12 43.51 5.22 Machine hrs - - - - - Material (pesticide) kg 0.029 - 0.029 90.69 2.63 Harvesting - manual MD 1.15 1.30 2.45 28.56 69.97 Threshing (including transporting) Manual MD 0.08 0.36 0.44 28.19 12.40 Animal MD 0.13 0.18 0.31 28.16 8.73 Machine hrs 0.17 0.06 0.23 138.00 31.74 Others Equipment used B B - - - 7.59 Equipment maintenance B - - - - 1.63 Opportunity cost B - - - - 18.86 Depreciation cost B - - - - 4.36 Total cost (excludes land used) B - - - - 494.83 Costs/kg B - - - - 1.58 Gross margins B - - - - 303.89 Land used B 6.49 63.15 69.64 - 69.64 /a Of agroeconomic zone 8. Note: MD - Man-day, 8 hours per day. Animal - 6 hours per day, machine - 8 hours per day. Source: MOAC. OAE. - 145 - Table 6.16 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model C2 - Mungbean for the Lower Northeast Region/a - 1980/81 (Per rai) Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Return Production kg - - 124 - - Price obtained B - - - 6.42 - Revenue B - - - - 796.08 Cost Land preparation Manual MD - 0.02 0.02 25.00 0.50 Animal MD - - - - - Machine hrs 0.09 - 0.09 239.11 21.52 Irrigation control - manual MD - - - - - Planting - manual MD - 0.58 0.58 24.84 14.41 Material (seeds) kg 3.95 4.81 8.76 10.26 89.88 Weeding - manual MD 0.99 1.06 2.05 24.85 50.94 Fertilizer and pesticide application Manual MD - 0.24 0.24 27.63 6.63 Machine hrs - - - - - Material Liquid fertilizer liter 0.52 - 0.52 25.00 13.00 Pesticide kg 0.06 - 0.06 193.00 11.58 Harvesting - manual MD 1.26 1.21 2.47 25.21 62.27 Collecting - manual MD - 0.10 0.10 20.30 2.03 Threshing - manual MD 0.24 0.81 1.05 24.02 25.22 Transporting Manual MD - 0.79 0.79 25.95 20.50 Machine hrs 0.08 - 0.08 80.66 6.45 Drying and packing - manual MD - 0.21 0.21 25.37 5.33 Others Equipment used B - - - - 6.72 Opportunity cost B - - - - 13.49 Depreciation cost B - - - - 1.34 Total cost (excludes land used) B - - - - 351.81 Costs/kg B - - - - 2.84 Gross margins B - - - - 444.27 Land used B 21.51 138.48 159.99 - 159.99 /a Agroeconomic zone 4. Note: MD - Man-day, 8 hours per day. Animal = 6 hours per day, machine - 8 hours per day. Source: MOAC. OAE. - 146 - Table 6.17 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model C3 - Cassava for the Northeast Region 1980/81 (Per rai) Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Return Production kg - - 2,207 - Price obtained B - - - 0.51 Revenue B - - - - 1,125.57 Cost Land preparation Manual MD 0.33 0.55 0.88 28.39 24.98 Animal MD 1.17 2.07 3.24 7.23 23.43 Machine hrs 0.70 0.05 0.75 210.64 157.98 Irrigation control - manual MD - - - - - Planting - manual MD 1.48 1.06 2.54 28.11 71.40 Material (seeds) stalks 1,041 1,880 2,921 0,0206 60.17 Weeding Manual MD 3.29 2.51 5.80 27.99 162.34 Animal MD 0.03 - 0.03 9.34 0.28 Machine hrs - - - - - Fertilizer application - manual MD 0.025 0.005 0.03 30.67 0.92 Material (fertilizer) kg 0.66 - 0.66 5.05 3.33 Harvesting - manual MD 3.30 1.93 5.23 27.74 145.08 Transporting Manual MD 0.40 0.42 0.82 27.64 22.66 Animal MD 0.05 0.01 0.06 8.34 0.50 Machine hrs 0.52 - 0.52 21.85 11.36 Others Fuel liters - - - - 4.16 Equipment used B - - - - 4.18 Equipment maintenance B - - - - 2.93 Opportunity cost B - - - - 83.48 Depreciation cost B - - - - 4.11 Total cost (excludes land used) B - - - - 783.29 Costs/kg B - - - - 0.35 Gross margins B - - - - 342.28 Land used B 9.28 103.60 112.88 - 112.88 Note: MD = Man-day, 8 hours per day. Animal = 6 hours per day, machine = 8 hours per day. Source: MOAC, OAE. TRA ILAND PRICING AND IIARKETING POLiCY FOR INTENSIFICATION OF RICE AGRICULTURE D.t&il. on Financi.1 Cost: Model C4 - Sugarcan for the Western Central Region/a - 1980/81 AveIrag .gA.r-ae /b First .ugarc... First ratoon -an Secod rat... cane Qusn tity Unit Total Quntt Unit Total Quantity Unit Total Quantity Unit Total Unit Rired O-nd Total coat (B) val.. (B) h'ired Qwned Total- -ot (B) value (8) hired O-nd Total -ot (B) v*lue (B) Hired Owne d Total cost (B) v81.. (B) Return Production t... - 6.81 - - - - 7.21 - _ 6.58 - 5 .19 Price obt.-lnd B - - 650.00 - 650.00 - - - - 650.00 - - - - 650.00 RevenueB- - - 4.426.50 - - - - 4,686.50 - - - - 4,277.00 - - -- 3,373.50 Cn t L.nd pr.epration M-nu MD 0.64 0.56 1.20 27.90 33.48 0.64 0.56 1.20 27.90 33.48 A., Mal MD ..'hine hr. 0.78 0.05 0.83 388.73 322.65 0.78 0.05 0.83 388.73 322.65 Irrig.ti.. control Manua IID 0.05 0.35 0.40 39.82 15.93 0.05 0.42 0.47 46.09 21.66 0.06 0.18 0.24 30.31 7.27 - 0.36 0.36 30.70 11.05 M chine hr. 0.03 0.72 0.75 75.44 56.58 0.02 0.77 0.79 76.98 60.81 0.06 0.64 070 77.11 53.98 _ 0.63 0.63 61.23 38.571 Planting - an-al IID 5.08 3.28 8.36 29.84 249.46 4.31 1.89 6.20 29.48 182.78 0.77 1.39 2.16 30.54 65.97 Material (eds) to.. 0.73 0.38 1.11 301.90 335.11 0.70 0.22 0.92 836.77 769.83 0.03 0.16 0.19 836.96 159.02 - - - - - 1 Weeding 4 Mnual. MD 3.79 3.80 7.59 28.82 218.74 2.64 3.9Q0 6.54 28.54 186.65 5.10 3.32 8.42 29.99 252.52 6.73 4.68 11.41 26.99 307.96 -j Anil alMD 0.46 1.41 1.87 6.61 12.36 0.71 0.76 1.47 6.30 9.26 - 3.13 3.13 6.69 20.94 0.33 0.12 0.45 8.25 3.71 M chine hra O.ll 0.07 0.18 302.18 54.39 0.05 0.11 0.16 306.54 49.05 0.26 - 0.26 297.81 77.43 - - - - - F.rtill..r *Ppli-atloo - *anu lMID 0.46 0.75 1.21 29.34 35.50 0.46 0.86 1.32 29.43 38.85 O.SS 0.52 1.07 30.14 32.25 0.21 0.81 1.02 26.42 26.95 M.terial (f.rtilis-) kg 45.50 - 45.50 4.62 210.21 48.20 - 48.20 4.45 214.49 43.08 - 43.08 5.15 221.86 36.59 - 36.59 4.02 147.09 Pesticide applil-ri.. - -Mnu1 MD 0.55 0.36 0.91 42.35 38.54 0.61 0.47 1 08 44.61 48.18 0.53 0.14 0.67 38.07 25.51 0.23 0.35 0.58 41.63 24.15 K.t.rial (pesticide) kg 0.22 - 0.22 185.83 40.88 0.24 - 0.24 226.89 54.45 0.21 - 0.21 118.17 24.82 0.15 - 0.15 142.43 21.36 N rve.ti.g - -..al MD 4.90 1.54 6.44 48.74 313.89 4.92 1.54 6.46 49.20 317.83 5.07 1.77 6.84 48.60 332.42 4.24 0.88 5.12 46.36 237.36 Transporting llanus Ml) 0.79 - 0.79 143.73 113.55 0.90 - 0.90 148.69 133.82 0.64 - 0.64 135.70 86.85 0.58 - 0.58 138.08 80.09 Ani-1l MD M.thine hr. Others Fuel lit.r. 1.50 - 1.50 6.98 10.47 1.63 - 1.63 7.29 11.88 1.28 - 1.28 6.43 8.23 1.35 - 1.35 6.73 9.09 Equip ent ...ed B - - - - 32.38 - - - - 35.75 - - - - 26.67 - - - - 29.84 Equip.ent si.t .... B - - - - 14.87 - - - - 15.10 - - - - 14.14 - - - - 14.51 Opportunity -ot 8 - - - - 192.31 - - - - 300.85 - - - - 169.19 - - - - 114.13 P Depreci-tion cost B - - - - 37.65 - - - - 38.95 - - - - 33.04 - - - - 43.70 1 Total cost (excldes - D land used) B1 _ _ _ - 2,338.95 - - - - 2,846.52 - - - - 1,612.11 - - - - 1,109.56 t Costs/tonB - - 285.78 - - - - 394.86 - - - - 245.00 - - - - 213.67t Gross -argin- 8 - - - 2,087.55 - - - - 1,839.98 - - - - 2,664.89 - - - - 2,263.94 v Land ...ed B 32.67 195.43 228.10 - 228.10 34.00 206.85 204.85 - 240.85 33.09 167.45 200.54 - 200.54 23.39 210.85 234.24 - 234.24 . C A8 Cost sod return of .g.rc-ne for Central (Western Part) gr-ec ....ic .... 12. /b Average .ug.rc.ne of the first sugarcane, first rat... c... sod sectd rot... cane and for the land prep-rtion and planting activity, we averge by spread -1le o the equal for three years, t.o years for replanting, respectively. Note: 11 - M n-d.y, 8 hoort. per day. Ani-I - 6 hour per day, -ahi-e - 8 hours per day. So'r': MDAC, OM - 148 - Table 6.19 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model C5 - Peanut for the Lower Northeast Region/a - 1980/81 (Per rai) Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Return Production kg - - 168 - - Price obtained B - - - 7.33 - Revenue B - - - - 1,231.44 Cost Land preparation Manual MD 1.00 1.80 2.80 27.81 77.87 Animal MD - 2.95 2.95 31.39 92.60 Machine hrs 0.24 - 0.24 240.00 57.60 Irrigation control - manual MD - - - - - Planting - manual MD 2.00 3.03 5.03 28.13 141.49 Material (seeds) kg 3.07 10.00 13.07 15.87 207.42 Weeding - manual MD 2.81 2.11 4.92 29.52 145.24 Fertilizer application - manual MD - 0.06 0.06 27.50 1.65 Material - manure kg - - - - - - fertilizer kg 0.97 - 0.97 5.40 5.24 Pesticide application - manual MD - 0.18 0.18 40.70 7.33 Material (pesticide) kg 0.04 - 0.04 184.75 7.39 Harvesting - manual MD 2.19 2.50 4.69 26.61 124.80 Collecting - manual MD - 0.39 0.39 29.61 11.55 Picking - manual MD 2.40 1.90 4.30 27.95 120.19 Transporting Manual MD - 0.66 0.66 28.19 18.61 Animal MD - 0.06 0.06 50.00 3.00 Machine hrs - - - - - Others Equipment used B - - - - 8.94 Equipment maintenance B - - - - 0.77 Opportunity cost B - - - - 53.13 Depreciation cost B - - - - 2.25 Total cost (excludes land used) B - - - - 1,087.07 Costs/kg B - - - - 6.65 Gross margins B - - - - 144.37 Land used B 4.02 79.62 83.64 - 83.64 /a Of agroeconomic zone 4. Note: MD - Man-day, 8 hours per day. Animal - 6 hours per day, machine - 8 hours per day. Source: MOAC, OAE. - 149 - Table 6.20 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Details on Financial Cost: Model C6 - Kenaf for the Northeast Region, 1980-81 (Per rai) Quantity Unit Total Unit Hired Owned Total cost (B) value (B) Return Production kg - - 197 - - Price obtained B - - - 3.50 - Revenue B - - - - 689.50 Cost Land preparation Manual MD 0.11 1.47 1.58 24.82 39.22 Animal MD 0.24 3.40 3.64 10.86 39.53 Machine hrs 0.58 0.12 0.70 172.49 120.74 Irrigation control - manual MD - - - - - Planting - manual MD 0.94 1.06 2.00 25.31 50.62 Material (seeds) kg 1.69 0.93 2.62 12.05 31.57 Weeding Manual MD 2.34 2.73 5.07 23.82 120.77 Animal MD 0.14 - 0.14 10.71 1.50 Fertilizer application - manual MD - 0.02 0.02 40.03 0.80 Material (fertilizer) kg 1.72 - 1.72 4.95 8.51 Pesticide application - manual MD - 0.02 0.02 40.03 0.80 Material (pesticide) kg 0.02 - 0.02 158.00 3.16 Harvesting - manual MD 1.94 2.96 4.90 24.15 118.34 Collecting - manual MD 0.46 1.15 1.61 25.57 41.17 Soaking stalk - manual MD 0.45 0.89 1.34 24.68 33.07 Transporting Manual MD 0.32 0.37 0.69 24.66 17.02 Animal MD 0.15 0.15 0.30 12.50 3.75 Machine hrs 0.28 - 0.28 15.73 4.40 Peeling, cleaning, drying - manual MD 1.75 3.19 4.94 24.36 120.34 Packing - manual MD 0.10 0.26 0.36 24.60 8.86 Others Fuel liters - - - - 4.08 Equipment used B - - - - 5.20 Equipment maintenance B - - - - 3.97 Opportunity cost B - - - - 62.32 Depreciation cost B - - - - 2.98 Total cost (excludes land used) B - - - - 842.72 Costs/kg B - - - - 4.28 Gross margins B - - - - -153.22 Land used B 8.36 99.06 107.42 - 107.42 Note: MD - Man-day, 8 hours per day. Animal - 6 hours per day, machine - 8 hours per day. Source: MOAC, OAE. - 150 - VII. Fertilizer and Agro-Pesticide use and Finance - 151 - Table 7.01 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTUYE Quantity of Fertilizer Used by Crops, 1976-82 (ha) Crop 1976 1978 1979 1980 1981 1982/a Average Rice 353,332 420,000 478,500 420,940 486,208 449,453 430,594 (53.2)/b (55.9) (60) (56.3) (58.3) (57.6) (56.9) Vegetables 80,324 81,000 79,202 92,417 84,942 90,000 76,422 (12.1) (10.8) (10) (12.4) (10.2) (11.5) (10.2) Upland crops 142,423 150,409 139,900 140,896 161,895 120,000 161,177 (21.4) (20.0) (18) (18.9) (19.4) (15.4) (21.3) Fruits, trees, 88,312 99,569 94,400 92,747 100,955 120,567 87,519 flowers (13.3) (13.3) (12) (12.4) (12.1) (15.5) (11.6) Total 664,391 750,978 792,002 746,900 834,000 780,000 755,712 (100) (100) (100) (100) (100) (100) (100) /a Estimates. /b Figures in parentheses indicate percent of the total fertilizer used. Source: Agricultural Economics Division, Office of Agricultural Economics. - 152 - Table 7.02 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Average Fertilizer Application Rate, Thailand, 1973/74 and 1978/79 Crop Years (kg of fertilizer per rai) 1973/74 1978/79 (1) (2) (3) (1) (2) (3) Rice Main rice Rice 5.20 9.96 52.25 6.40 10.67 60.00 Glutinous rice 2.78 5.13 54.23 3.40 5.76 59.00 Second rice 30.00 33.14 27.16 42.00 44.65 96.73 Maize 0.06 0.50 1.00 0.20 3.33 3.00 Cassava 1.11 2.88 12.76 2.10 21.15 10.00 Kenaf 1.05 n.a. n.a. 2.00 n.a. n.a. Sugarcane 22.91 n.a. n.a. 31.92 n.a. n.a. Tobacco 29.31 n.a. n.a. 30.00 n.a. n.a. Cotton 0.07 n.a. n.a. 0.10 n.a. n.a. Soybeans 0.22 n.a. n.a. 0.25 n.a. n.a. Vegetables 31.80 n.a. n.a. 35.36 n.a. n.a. Rubber 29.50 n.a. n.a. 30.00 n.a. n.a. Notes: (1) Average fertilizer application rate to total cultivated area. (2) Average fertilizer application rate to fertilized area. (3) Percent of fertilized area to total cultivated area. Source: Office of Agricultural Economics. - 153 - Table 7.03 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTUF.E Fertilizer Consumption by Crop and by Region, 1981 (ton) Upland Fruit trees Total Region Rice crops & flowers Vegetables Amount Percent North 15,946 22,422 1,262 6,697 46,327 5.56 (34)/a (48) (3) (15) (100) Northeast 170,149 19,606 664 7,613 198,032 23.74 (86) (10) (n.s.) (4) (100) Central 280,499 118,248 42,859 65,814 507,420 60.84 (55) (23) (9) (13) (100) South 19,614 1,619 56,170 4,818 82,221 9.86 (24) (12) (68) (16) (100) Total 486,208 161,895 100,955 84,942 834,000 100 (58) (20) (12) (100 (100) /a Figures in parentheses indicate percent of total fertilizer used in region/country. Source: Office of Agricultural Economics, Ministry of Agriculture and Cooperatives. n.s. - not significant. - 154 - Table 7.04 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Fertilizer Used in Thailand, 1969-83 (tons) Agricultural use Industrial use Total/a N P205 K20 Total N 1969 273,686 47,339 61,294 10,950 5,000 2,300 1970 280,279 48,590 53,814 10,300 5,900 2,714 1971 261,479 47,929 40,625 9,650 8,507 3,913 1972 407,950 69,541 82,482 16,100 9,352 4,302 1973 418,396 67,472 76,602 17,500 10,342 4,757 1974 390,332 66,876 57,334 14,910 12,098 5,465 1975 506,428 83,949 76,670 17,930 12,283 5,550 1976 664,391 115,961 59,482 20,452 '10,664 4,802 1977 764,113 140,726 79,972 30,517 11,362 5,127 1978 750,978 130,352 105,747 26,390 12,500 5,625 1979 792,002 124,919 121,355 44,132 13,000 5,855 1980 746,900 126,670 106,742 36,672 14,000 6,300 1981 834,000 136,819 117,971 31,400 19,300 8,878 1982/b 780,000 125,821 102,511 20,851 20,000 9,200 19837 820,000 n.a. n.a. n.a. n.a. n.a. /a Calculated on import + last year carry-over + local manufacture - raw materials - industrial use - next year carry-over. /b Estimates. n.a. = not available. Source: Division of Agricultural Economics, OAE. - 155 - Table 7.05 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Projection of Thailand's Fertilizer Demand - By Nutrient, 1982-92 /a ('000 tons) N P205 K,O Total Total material OAE/c F.S./d OAE F.S. OAE F.S. OAE F.S. OAE F.S./b 1982 138 170 125 133 33 37 297 340 861 756 1983 145 177 132 140 35 39 312 356 903 791 1984 151 185 139 147 36 41 326 373 944 829 1985 158 194 146 154 37 43 341 391 985 869 1986 165 203 152 162 39 45 355 410 1,025 911 1987 171 212 159 171 40 47 369 430 1,065 956 1988 179 222 167 180 41 50 386 451 1,104 1,002 1989 356 231 174 189 41 52 571 473 1,143 1,051 1990 192 242 177 199 42 55 411 496 1,181 1,102 1991 199 253 188 209 42 58 428 520 1,219 1,156 1992 N/A 265 N/A 220 N/A 60 - 545 N/A 1,211 /a Figures are average for the range of projections given by each source. /b Assuming same proportion of nutrient to product as for fertilizer complex (i.e., 0.45). /c OAE - Future Demand for Fertilizer, Economic Bulletin No. 35, 1983, p. 7. /d Foster Wheeler International. - 156 - Table 7.06 THAILAND PRICING AND MARRETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Use of Farm Pesticides Classified by Type of Use, 1973-81 (Unit: tons) Eradication Pesticide aphides Mollus- Year Insecticide Fungicide Herbicide rodenticide & spiders ticide Fumigants 1973 6,446.23 1,500 1,945.24 3.60 60.3 3.60 41.03 1974 5,945.35 1,400 1,397.35 4.00 60.0 3.30 190.00 1975 7,784.03 1,600 1,344.07 4.65 67.3 3.95 196.00 1976 8,181.62 1,700 2,224.13 6.35 81.6 4.30 202.00 1977 9,743.23 2,000 4,448.62 10.00 153.4 4.70 230.00 1978 13,853.50 2,900 5,800.00 5.50 200.0 1.00 240.00 1979 13,658.00 3,000 5,700.00 26.00 310.00 6.00 300.00 1980 13,564.50 3,000 7,000.00 12.50 50.0 3.00 370.00 1981 13,000.00 3,000 10,000.00 20.00 400.00 7.00 400.00 Source: Division of Agricultural Economic Research, OAE. - 157 - Table 7.07 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Estimated Fertilizer Use on Rice, 1981 Area Fertilizer /a Total fertilizer ('000 ha) (kg/ha) ('000 ton) Irrigated Reasonable water control 1,000 156 156 Dry season Reasonable water control 500 190 95 Irrigated Inadequate water control 1,000 60 60 Favorable rainfed 1,100 50 55 Seedbeds Total transplanted area 8,000 5 40 Total Planted Rice Area 9,600 42 406 /a Ammonium phosphate. Source: World Bank, "Thailand - Program and Policy Priorities for an Agricul- tural Economy in Transition," Report No. 3705a-TH, December 3, 1982, Annex 1. - 158 - Table 7.08 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Use of Fertilizer on Paddy, 1967-82 (Unit: tons) Year Major rice Second rice Total 1967 171,092 10,050 181,142 1968 198,928 11,390 210,318 1969 199,505 13,400 212,905 1970 168,415 14,740 183,155 1971 164,696 15,500 180,196 1972 228,038 25,000 253,038 1973 192,940 39,310 232,250 1974 132,597 61,145 192,742 1975 172,462 70,310 242,772 1976 240,802 82,530 353,332 1977 265,662 104,338 370,000 1978 291,365 128,635 420,000 1979 300,000 178,500 478,500 1980/a 320,000 100,940 420,940 1981 332,116 154,092 486,208 1982 280,000 169,453 449,453 /a The acreage of second rice crop declined due to drought late in the year. Hence, the fertilizer use is reduced. Source: Division of Agricultural Economics, OAE. THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE The Use of Fertilizer under BAAC Credit in Kind Program, 1980-83 1980 1981 1982 Forecast 1983 Quantity Value Quantity Value Quantity Value Quantity Value Grade Crop From (ton) (W) (ton) (W) (ton) (W) (ton) (W) 16-20-0 Rice F.M.O 13,514 63,515,800 51,485 241,979,500 59,745 280,801,500 60,000 258,000 16-20-0 Rice T.C.C.C. - - 12,689 59,638,300 14,391 64,759,500 16,000 68,800,000 16-20-0 Rice C.T. - - - - 1,670 7,515,000 1,400 6,020,000 18-12-6 Rice T.C.C.C. - - 1,349 6,475,200 5,114 23,524,400 8,000 34,400,000 Subtotal 13,514 63,515,800 65,523 308,093,000 80,920 376,600,400 85,400 367,220,000 H 15-15-15 Others T.C.C.C. - - 1,090 5,995,000 3,192 16,917,600 3,500 18,200,000 1 15-15-15 Others R.F - - 746 4,364,100 3,613 21,136,050 4,000 23,400,000 13-13-21 Others T.C.C.C. - - 2,314 12,495,600 2,691 14,127,750 2,500 13,000,000 21-0-0 Others T.C.C.C. - - 392 980,000 3,424 7,875,200 5,000 11,750,000 21-0-0 Others C.T. - - - - 821 1,970,400 800 1,840,000 21-0-0 Others R.F. - - - - 152 425,600 300 840,000 Other Others Others - - 1,954 10,356,200 15,782 83,579,365 20,000 104,000,000 Total 13,514 63,515,800 72,019 342,283,900 110,595 522,632,365 121,500 540,250,000 - ~~~~_ - - Legend: F.M.O. = Farmers Marketing Organization R.F. = Rojanakasikit Fertilizer Ltd. X T.C.C.C. = Thai Central Chemical Co., Ltd. C.T. = Chia Tai Songserm Kasettagam Ltd. Others Grade = 18-22-0,20-20-0,14-14-21, etc. Others From = T.C.C.C., C.T., R.F. and Seri Chemical Ltd. o Others Crop = Sugarcane, Maize, Cassava, Rubber, etc. Source: BAAC THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Fertilizer Quantities Financed through Institutional Credit in Thailand, 1975-79 (metric tons of 16-20-0) Per- Per- Per- Per- Per- Source 1975 centage 1976 centage 1977 centage 1978 centage 1979 centage Marketing Organization of Farmers (MOF) 126,000 49.0 29,804 15.6 51,930 16.7 110,760 21.3 119,572 28.3 Agricultural Cooperative Feder- ation of Thailand (ACFT) 31,727 12.4 20,660 10.8 52,637 17.0 64,504 12.4 47,134 11.4 1 Bank for Agriculture and Agricul- 0% tural Cooperatives (BAAC) /a 37,141 14.5 49.114 25.8 87,027 28.0 91,891 17.6 90,520 21.9 0 Cooperatives /a 19,500 7.6 24,270 12.7 41,730 13.4 47,175 9.0 41,200 10.0 Commercial Banks /a 41,320 16.2 66,940 35.1 77,486 24.9 206,866 39.7 115,180 27.8 Total 1 (Fertilizer Financed by Institutional Credit) 255,688 100.0 190,788 100.0 310,810 100.0 521,195 100.0 413.606 100.0 Total 2 (Fertilizer Consumed)/b 506,313 644,391 764,113 780,978 850,288 Total 1 as Percentage of Total 2 50.5 28.7 40.7 66.7 47.6 /a Calculations based on prices for 16-20-0 7b Figures from the Office of Agricultural Economics. Sources: 1. Agricultural Cooperative Federation of Thailand (ACFT). 2. Cooperative Auditing Department. 3. Bank of Thailand, Bangkok Bank. 4. Marketing Organization of Farmers (MOF). 5. National Economic and Social Development Board (NESDB). o - 161 - TaJle 7.11 Page 1 of 2 THAIJ,AND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE ACRICULTURE MOF Fertilizer Distribution by Prgvinge and Agro-Economic Zone, 1977-82 (tons) Province and agro-economic zone 1977 1978 1979 1980 1981 1982 Whole Kingdom 50,643.45 122,975.80 134,376.40 105,523.00 188,347.66 125,445.75 Zooe A 252.75 2,449.75 2,560.20 1,179.80 3,191.25 855.95 Nakhon Phanom 123.05 766.10 633.35 654.05 628.40 343.15 Sakon Nakhon 23.50 455.00 1,041.55 184.00 826.00 33.00 Nong Kai 12.10 312.00 447.80 146.30 456.15 26.75 Udon Thani 94.10 916.65 437.50 195.45 1,280.70 453.05 Loei - - - - - - Zope 2 2,266.75 3,669.65 5,290.00 4,813.00 9,976.45 4,567.40 Yasothon 1,138.15 626.25 1,471.75 1,194.90 3,498.85 1,435.80 Ubon Ratchathani 1,128.60 3,043.40 3,818.25 3,618.10 6,477.60 3,131.60 Zone 3 2,004.35 4,848.95 6,335.25 7,412.50 11,334.05 2,467.95 Kalasin 219.30 720.15 632.70 764.75 948.25 259.85 Khon Kaen 224.50 1,287.70 1,414.80 2,088.95 3,323.40 126.70 Mahasarakham 335.65 454.50 732.90 515.95 1,641.85 1,589.45 Roi Et 1,224.90 2,386.60 3,554.85 4,042.85 5,420.55 491.95 4pne 4 4,717.75 7,486.10 10,907.80 8,059.15 13,750.10 4,926.40 Buri Ram 1,046.25 3,205.90 2,046.20 3,021.70 5,221.10 159.00 Si Sa Ket 909.20 1,838.05 3,029.95 1,922.65 2,531.60 1,254.00 Surin 2,762.30 2,442.15 5,831.65 3,114.80 5,997.40 3,513.40 Zong 5 487.20 2,202.20 3,092.40 1,609.70 2,043.70 326.90 Chaiyaphum 183.70 609.25 797.55 705.20 723.15 13.00 Nakhon Ratchasima 303.50 1,592.95 2,294.85 904.50 1,320.55 313.90 Zone 6 1,608.00 2,008.70 1,901.10 1,833.70 2,762.51 2,136.25 Nakhon Sawan 1,548.90 1,992.95 1,801.75 1,714.95 2,586.11 2,000.70 Phetchabun - - 8.65 - - - Uthai Thani 59.10 15.75 90.70 118.75 176.40 135.55 Zone 7 1,039.75 2,233.15 5,584.80 3,702.15 5,594.20 1,885.30 Lop Buri 406.40 810.15 1,846.60 680.95 1,565.15 627.70 Saraburi 633.35 1,423.00 3,738.20 3,021.20 4,029.05 1,257.60 Zone-8 1,170.50 2,095.25 3,233.70 3,469.60 4,787.95 2,738.20 Kamphaeng Phet - 512.50 253.20 138.70 900.45 60.00 Tak 60.00 120.00 154.45 262.40 344.50 137.30 Phichit 802.40 1,404.50 2,472.60 2,755.35 2,852.05 2,080.80 Phitsanulok 245.10 58.25 353.45 313.15 690.95 460.10 Zone 9 143.10 12,544.30 535.25 412.10 368.70 699.85 Nan 35.00 70.65 44.60 - 10.00 36.70 Phrae - 12,059.05 67.55 102.05 20.00 108.60 Lampang 97.60 83.30 187.30 129.25 146.75 52.95 Sukhothai 10.50 14.60 29.75 10.50 15.00 36.10 Uttaradit - 316.70 206.05 170.30 176.95 465.50 Zone 10 1,845.40 3,541.55 4,487.45 3,669.15 3,929.00 4,248.05 Chiang Mai 1,013.45 1,445.50 1,913.35 1,808.85 1,565.20 1,911.10 Chaing Rai 538.55 727.15 1,538.10 921.50 1,252.00 1,147.45 Mae Hong Son 33.70 31.45 14.40 27.10 67.80 167.10 Lamphun 259.70 649.20 492.65 766.60 880.35 709.30 Payao - 688.25 528.95 145.10 163.65 313.10 - 162 - Ta,le. 7.11 Page 2 of 2 Province and agro-economic zone 1977 1978 1979 1980 1981 1982 Zone 11 20,921.95 50,428.35 63,880.45 38,161.80 92,279.65 81,182.10 Chai Nat 1,268.60 766.70 2,929.25 2,087.35 5,246.45 2,501.35 Nakhon Nayok ,284.95 1,837.00 2,670.10 3,434.05 4,750.50 742.85 Nakhon Pathom 9,038.05 10,652.55 3,939.10 3,670.60 3,963.50 3,255.00 Nonthaburi 2,780.60 3,938.30 1,353.70 1,833.70 3,680.25 1,164.70 Pathum Thani 778.65 2,472.90 6,442.70 2,626.55 1,869.20 1,775.15 Ayutthaya 217.80 6,335.65 6,648.25 5,826.45 4,743.05 775.95 Sing Buri 193.35 424.50 1,996.45 1,388.30 1,922.65 842.20 Suphan Buri 2,862.05 10,743.95 13,375.25 12,608.15 10,134.10 5,882.80 Ang Thong 556.40 1,090.40 2,054.40 891.50 3,159.55 725.95 Bangkok Metropolis 1,941.50 12,166.40 22,471.25 3,795.15 52,810.40 63,516.15 _o_e__2 336.10 733.15 986.40 1,612.15 1,836.85 1,590.20 Kanchanaburi 29.75 83.80 245.65 233.45 243.30 186.55 Prachuap Khiri Khan 10.00 - 8.55 15.50 - - Phetchaburi 24.50 129.00 198.15 797.10 770.20 694.15 Ratchaburi 271.85 520.35 534.05 566.10 823.35 709.50 Zone 13 6,672.55 17,541.00 13,881.85 17,097.20 21,854.40 6,367.20 Chachaengsao 4,994.75 13,801.35 9,926.60 11,864.55 15,812.05 3,307.55 Prachinburi 1,677.80 3,739.65 3,955.25 5,232.65 6,042.35 3,059.65 Zone ,4 1,184.45 2,033.05 1,465.95 1,221.95 2,090.80 930.00 Samut Prakan 788.90 1,216.60 1,355.15 598.75 1,213.75 392.40 Samut Sakhon 395.55 816.45 110.80 614.95 842.40 537.60 Samut Songkhram - - - 8.25 34.65 - ZoaeA,L5 639.10 1,255.75 1,243.85 1,234.60 1,838.65 1,944.00 Chon Buri 463.25 893.75 877.55 975.90 1,424.65 1,527.95 Rayong 175.85 362.00 366.30 258.70 414.00 416.05 Zone 16 490.00 1,274.45 825.15 761.05 648.80 437.00 Chanthaburi 417.65 1,017.75 618.40 526.25 439.70 392.40 Trat 72.35 256.70 206.75 234.80 209.10 44.60 Zove.17 4,227.80 6,000.15 7,341.20 8,235.50 9,449.95 7,026.55 Chumphon 402.50 775.90 811.20 824.00 621.95 783.50 Nakhon Sri Thammarat 1,129.10 1,264.80 2,571.60 1,830.95 2,897.40 2,813.55 Phatthalung 960.95 2,417.15 771.35 2,070.20 2,260.70 1,447.25 Songkhla 1,274.95 1,130.05 2,641.65 3,102.85 3,476.20 1,728.55 Suratthani 460.30 412.25 545.40 407.50 193.70 253.70 ZQ1e^18 372.85 368.25 543.65 510.40 550.55 1,058.95 Krabi 156.20 118.20 21.30 65.10 34.70 60.75 Trang 117.20 119.50 302.30 275.10 286.60 - Phangnga 25.05 11.00 42.35 59.00 62.40 102.70 Phuket - - 48.00 48.15 70.75 895.50 Ranong - - - - - - Satun 74.40 119.55 129.70 63.05 96.10 - Zone 19 326.10 262.05 279.95 527.50 60.10 57.50 Narathiwat 171.20 115.65 247.80 328.05 5.00 4.10 Pattani 154.90 146.40 - 179.55 40.10 53.40 Yala - - 32.15 19.90 15.00 - Source: Marketing Organization for Farmers. THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Components of Short-Term Production Loans to Individual Farmers by Bank of Bangkok, 1970-82 (thousand baht) Short-term As percentage production loans of total Component Loans and as Percentage of Short-Term Production Loans to individual short-term Per- Per- Per- Per- Year farmers loans Labor centage Fertilizer centage Seeds centage Fuel centage 1970 49,942 53.6 39,645 79.4 5,142 10.3 1,155 2.3 6,382 - 1971 30,810 39.9 23,397 75.9 5,635 18.3 1,778 5.8 - - 1972 29,975 33.4 22,194 74.0 5,322 17.8 2,459 8.2 - - 1973 38,069 38.9 27,019 71.0 7,406 19.4 3,644 9.6 - - 1974 64,587 37.2 47,390 73.4 11,245 17.4 5,952 9.2 - - 1975 281,740 45.7 202,283 71.8 57,775 20.5 21,682 7.7 - - 1976 467,317 45.9 362,906 79.4 65,613 15.2 24,798 5.4 - - 1977 876,758 53.6 746,340 85.1 88,854 10.1 35,182 4.0 6,382 0.8 1978 1,337,297 67.0 1,029,120 77.0 229,536 17.2 62,873 4.7 15,768 1.1 1979 1,292,296 55.4 1,113,115 86.1 149,784 11.6 17,265 1.3 12,132 1.0 1980 1,697,342 59.5 1,506,789 88.8 166,306 9.8 24,247 1.4 - 1981 2,569,037 61.1 2,399,308 93.4 125,616 4.9 44,113 1.7 - 1982 2,948,404 49.9 2,618,637 88.8 282,489 9.6 47,278 1.6 - Source: Bank of Bangkok. '-3 ,.. rD -J _,. - 164 - Table 7.13 THAILAND PRICING AND MARKETING POLICY FOR INTENSIFICATION OF RICE AGRICULTURE Accumulated Irrigable Crop Area in Thailand, 1968/69-1985/86 ('000 ha) North- South- Northern eastern Central ern Total Year Wet Dry Wet Dry Wet Dry Wet Wet Dry Total 1968/69 1,224 600 1,173 170 8,825 1,200 416 11,638 1,970 13,608 1969/70 1,850 900 1,216 201 8,829 1,500 452 12,347 2,601 14,948 1970/71 1,938 950 1,265 300 8,974 2,000 502 12,679 3,250 15,929 1971/72 2,087 1,000 1,282 300 9,363 2,000 586 13,318 3,300 16,618 1972/73 2,187 1,090 1,288 300 9,635 2,000 626 13,736 3,390 17,126 1973/74 2,248 1,120 1,368 300 10,062 2,000 677 14,355 3,420 17,775 1974/75 2,344 1,200 1,444 400 10,240 3,000 833 14,861 4,600 19,461 1975/76 2,374 1,200 1,492 400 10,332 3,000 922 15,120 4,600 19,720 1976/77 2,407 1,200 1,512 450 10,346 4,000 1,034 15,299 5,650 20,949 1977/78 2,656 1,300 1,639 450 10,665 4,000 1,139 16,099 5,750 21,849 1978/79 2,932 1,450 1,849 500 10,925 5,000 1,433 17,139 6,950 24,089 1979/80 3,063 1,500 1,879 500 11,072 5,000 1,896 17,910 7,000 24,910 1980/81 3,089 1,500 2,592 600 11,305 5,000 1,998 18,984 7,100 26,084 1981/82 3,130 1,500 2,894 600 11,655 5,000 2,043 19,722 7,100 26,822 1982/83 3,230 1,600 2,974 800 11,958 5,000 2,088 20,250 7,400 27,650 1983/84 3,360 1,600 3,024 800 12,586 5,000 2,138 21,108 7,400 28,508 1984/85 3,560 1,700 3,124 800 12,636 5,000 2,188 21,508 7,500 29,008 1985/86 4,142 2,000 3,174 900 12,686 5,000 2,238 22,240 7,900 30,140 Source: Various data from the Royal Irrigation Department, Ministry of Agricul- ture as compiled by Foster Wheeler and Associates in the Feasibility for the NFC Fertilizer Complex, Final Report, August 1983. W ord k The Agricultural Development their proeuctiviqt. Valuable tc policy- Experience of Algeria, makers, project designers, roral sociol- Publcatiotus Morocco, and Tunisia: A ogists, extension workers, and other of Related Comparison of Strategies for agricultural researchers. of Reftted ~ ~~~~Growth 1984. 176 pages. Interest Kevin M. Cleaver ISBN 0-8213-0301-5.StockN o BK 0301. Compares agricultural experience of $13.50. Algeria, Morocco, and Tunisia. Pro- vides insights into the importance of food and agriculture for development, N and determinants of agricultural NEW Adoption of Agricultural growth. Agricultural Extension: The Innovations in Developing Staff Working Paper No. 552. 1983. 55 Training and Visit System Countries: A Survey pages. Daniel Benor, James Q. Harrison, Gershon Feder, Richard Just,and ISBN 0-8213-0120-9. Stock No. WP 0552. and Michael Baxter David Silberman $3. Contains guidelines for reform of ar- Staff Working Paper No. 542. 1982. 65 cultural extension services along th. pages. lines of the training and visit system. ISBN 0-8213-0103-9. Stock No. WP 0542. . A The central objective-making the 3. The Agrcultural Economy of most efficient use of resources avail- Northeast Brazil able to governments and farmers-is Gary P. Kutcher and Pasquale L. achieved through encouraging and fa- Agrarian Reform as Unfinished Scandizzo cilitating feedback from farmers to re- Business-the Selected Papers This studv, based on an agricultuial search workers through extension per- of Wolf Ladejinskv survev of 8,000 farms, assesses the ex- sonnet who visit and advise farmers Louis J. Walinsky, editor tent and root cauises of pervasive rural on a regular, fixed schedule, thus Studies in agranan policy and land re- poverty in northeast Brazil. The au- help ing research to solve actual p- form spanning four decades, grouped thors review a number of policy and farmer. clhroiiologically according to Ladejin- project options, they conclude that skv's years in Washingon, Tokyo, and courageous land reform is the onlv ef- Explains the complex relationiships i-t Vietnam and while at the Ford Foun- fective means of dealing with the training and visit extension and draws dation and the World Bank.Oxford problem. attention to the range of considera- University Press, 1977. 614 pages (in- The Johns Hopkinu University Press. 1982. tions that are important to implement- cluding appendixes, index). 288 pages. ing the system. 'C 77-24254. ISBN 0-19-920095-5, Stock LC 81-47615. ISBN 0-8018-2581-4, Stock 1984. 95 pages. No. OX 920095, $32.50 hardcover; ISBN No. IH 2581. $25.00 hardcover. ISBN 0-8213-0140-3. Stack No. BK 0140. 0-19-920098-X. Stock No. OX 920096, $5. $14.95 paperback. Agrarian Reforms in Agricultural Land Settlement Developing Rural Economies NEW Theodore J. Goering, coordinating Characterized by Interlinked author Ciedit and Tenancy Markets Agricultural Extension by Examines selected issues related to the Avishay Braverman and T.N. Training and Visit: The Asian World Bank's lending for land settle- Srinivasan Experience ment and gives estimates of the global Edited by Michael M. Cernea, rate of settlement andthe world's ulti- Staff Working Paper No. 433. 1980. 32 John K. Coulter, and John F.A. mate potentially arabie land. pages (including references). Russell A World Bank Issues Paper. 1978. 73 Stock No. WP-0433. $3. Russ pages (including 4 annexes). English, Captures nearly ten years of experinrnh adSaih ence with the Training and Visit Ex- French, and Spanish. Agricultural Credit tension System. Addresses five issues: Stock Nos. BK 9054 (Eng!ish), BK 9055 Outlines agricultural credit practices farmer participation, the research-ex- (French). BK 9056 (Spanish). $5 paper- and problems, programs, and policies tension linkage, training, system man- back. in developing countries and discusses agement, and monitoring and evalua- their implications for World Bank op- tion. Within this framework, extension erationsr system managers and evaluators from Agricultural Price Management A World Bank P-laper. 1975. 85 pages (in- six Asian countries and six discussants in Egypt cluding 14 annex tables). present their experience and analyses. William Cuddihy Notes the World Bank's strong com- Stock NJo BK 9039 (English). BK 9052 mitment to agricultural development Staff Working Paper No 388. 1980. 174 (French), BK 9053 (Spanish). $5 paper- in its member countries and to helping pages (including annex, bibliographi, ). back. least advantaged farmers to improve Stock No. WP-0388. $5 Agricultural Price Policies and Stock Nos. BK 9074 (English),BK 0160 NEW the Developing Countries (French), BK 0161 (Spanish). $5 paper- George Tolley, Vinod Thomas, and back. Chung Ming Wong Agroindustrial Project Analysis This book first considers price policies James E. Austin %P- n. o Pt-tn. in Korea, Bangladesh, Thailand, and Provides and illustrates a framework Venezuela, bringing out the conse- for analyzing and designing agro-in- quences for government cost and reve- dustrial projects. nue, farn income, and producer and consumer welfare. Other effects, in- EDI Series in Economic Deve!opment. cluding those on agricultural diversifi- The Johns Hopkins University Press, cation, inflation, economic growth, 1981.2nd printing, 1983. 224 pages (in- and the balance of payments are also cluding appendixes, bibliography, and discussed. The second part of the book ndex). . - provides a methodology for estimating LC 80-550. ISBN 0-8018-2412-5,Stock l I these effects in any countrv. Opera- No. IH 2412. $16.50 hardcover; ISBN 0- , tional tools for measuring the effects 8018-2413-3, Stock No. jH 2413, $7.50 on producers, consumers, and govern- paperback. ment are developed and applied, French: L'Analyse des projets agroindus- I . The Johtns Hopkins University Press. 1982. trels. Economica, 1982. ISBN 1-7178- 256 pages 0480-3, Stock No. IB 0537. $7.50 paper- Appraising Poultry Enterprises LC 81-15585. ISBN 0-8018-2'704-3, Stock back, for Profitability: A Manual for N\o. IH 2704, $25 hardcover; NEW: ISBN Spanish: Analisis de proyectos agroindus- Potential Investors 0-8018-3124-5, Stock No. IH 3124, $9.95 triales Editorial Tecnos, 1981. ISBN 84- International Finance Corp. paperback. 309-0882-X, Stock No. IB 0520, $7.50 pa- Decisionmaking tool for entrepreneurs perback. and project managers considering in- NEW vestments in integrated poultrv pro- NEW jects. Use this guide to conduct on-site Agricultural Prices in China investigation of proposed project. Fig- Nicholas R. Lardy Alternative Agricultural Pricing ure production costs and determFine Analyzes recent adjustments to Policies in the Republic of fixed asset and working capital for China's agricultural pricing systems Korea: Their Implications for broiler operations. Analvze market and and its effects on urban consumers Government Deficits, Income accurately forecast market pnces. This and overall production patterns. De- Distribution, and Balance of comprehensive guide tells how to fines pvce ralos from kev iputs and manage integrated broiler operations, outputs and examines price/cost rela- Payments gives specifications for broiler and tions in view of the institutional set- Avishay Braverman, Choong Yong breeder houses and summarizes pro- ting for price policy. Ahn, Jeffrey S. Hammer duction costs. Staff Working Paper No. 606.1983. 84 Develops a two-sector multimarket Technical Paper No. 10. 1983. 110 pages. pages. model to evaluate agricultural pricing ISBN 0-8213-0165-9.Stock No. BK 0165. ISBN 0-8213-0216-7. Stock No. WP 0606. policies, replacing insufficient standard $5 53. operational methods. Measures the impact of alternative pricing policies The Book of CHAC: Agricultural Research on production and consumption of rice Programming Studies for Points out that developing countries and barley, real income distribution, Mexican Agricultural Policy must invest more in agricultural re- import levels of rice, self-sufficiency in Edited by Roger D. Norton search if they are to meet the needs of rice, and public budget. Provides a adLeopbyoRolis M. their growing populations. Notes that valuable synthesis of the work that has andLeopoldo Solis M. studies in Brazil, India,Japan, Mexico, been done to date on agricultural The principal tool of analysis is the and the United States show that agri- household models. Helps economists sector model CHAC, named after the cultural research yields a rate of return evaluate the impact of alternative pric- Mavan rain god. This model can be that is more than two to three times ing policies aimed at reducing deficits. used throughout the sector to cover greater than returns from most alter- Based on the experience of the Grain short-cycle crops, their inputs, and native investments and cites some of Management Fund and the Fertilizer their markets. It can also be broken the successes of the high-yielding vari- Fund in Korea. down into submodels for particular lo- eties of rice and wheat that were de- 5Saff Working Paper No. 621. 1983. 174 calities if more detailed analysis is re- veloped in the rrid-1960s. Discusses pages. quired. The model helps planners the World Bank's plans to expand its ISBN 0-8213-0275-2. Stock No. WP 0621. weigh the costs among policy goals, lending for agricultural research and 55 which can vary from region to region. extension, particularlv for the produc- This volume reports the experience of tion of food and other commodities Argentina: Country Case Study using the CHAC model and also pre- that are of mnportance to low-income of Agricultural Prices, Taxes, sents purely methodological material. consumers, small farmers, and re- and Subsidies The Johns Hopkins University Press, 1983. source poor areas. ILucio G. Reca 624 pages (including maps, bibliographies, Sector Policy Paper. 1981. 110 pages (n- Staff Working Paper No.386. 1980. 72 index). cluding annexes). English. French. and pa,yes (including 3 annexes), LC 80-29366. ISBN 0-8018-2585-7, Stock Spanish. Stock N:o WP-0386. $3. No. JH 2585. $35 hardcover Building National Capacity to The Design of Rural Economic Aspects and Policy Develop Water Users' Development: Lessons from Issues in Groundwater Associations: Experience from Africa Development the Philippines Uma Lele Ian Carruthers and Rov Stoner Frances F. Korten Analyzes new ways of designing rural Staff Working Paper No. 496. 1981. 110 Staff Working Paper No. 528, 1982. v + development projects to reach large pages (including annex, bibliLpgraphy). 69 pages (including references). numbers of low-income subsistence Stock No. WP-0496. $5.. ISBN 0-8213-0051-2. Stock No. WP 0528. populations. The third paperback Economic Return to Investment printing contains a new chapter by the EcnmcRtrtonv tet $3, author updating her findings. in Irrigation in India Bureaucratic Politics and The Johns Hopkins University Press, 1975; Leslie A. Abbie, Jarnes Q. Incentives in the Management 3rd printing, 1979. 260 pages (including Harrison, and John W. Wall of Rural Development glossary, appendix, maps,bibliography, in- Staff Working Paper No. 53b. 1982. 52 fRihard Deavelopmert dex). pages. Richard Heaver ISBN 0-8018-1769-2 Stock No. JH 1769, ISBN 0-8213-0083-0. Stock No. ViP 0536. Analyzes management problems in $9.95 paperback. 3 implementing rural development from French: Le developpement rural: 1experi- a bureaucratic political standpoint. ence deveconoement rural: I 2- Farm Budgets: From Farm Emphasizes the need to take account 7e78-0006-9, Stock No. IB 0145, S9.95 Income Analysis to of informal interests in managing pro- pa78-0006-9 Stc o B04,$.5Agricultural Project Analysis grams. Suggests possible methods for paperback. Maxwell L. Brown assessing incentives. Economic Analysis of Clarifies the relation between simple Staff Working Paper No. 537. 1983. 74 Agricultural Projects farm incomte analysis and the broader pages. Second edition, completely revised field of agricultural project analvsis ISBN 0-8213-0084-9. Stock No. WP 0537. and expanded and emphasizes the more practical as- $3. J. Price Gittinger pects of project preparation. Gives Sets out a careful and practical mneth- guidance to those responsible for plan- NEW odology for analyzing agricultural de- ning in agriculture. velopment projects and for using these EDI Series in Econom!c Development. The Common Agricultural analyses to compare proposed invest- The Johns Hopkins University Press, Policy of the European ments. It covers what constitutes a 1980. 154 pages. Community: A Blessing or a "project," what must be considered to LC 79-3704. ISBN 0-8018-2386-2,Stock Curse for Developing identify possible agricultural projects, No. JH 2386, $15 hardcover; ISBN 0- Counrse forDevelopingthe life cycle of a project, the strengths 8018-2387-0, Stock No, R. 2.387, 56.50 Countries? and pitfalls of project analvsis, and the paperback. Ulrich Koester and Malcolm D. calculations required to obtan financial r. Bale and economic project accounts. Spanish: I're.supuestos 8e 0intas. EdStorial 1ecnoD, 1982. ISBN 84-309-0886-.. Stock Examines the importance of the Euro- The methodology reflects the best of No. .'B 0522, $6.50 rpaperback. pean Community (EC) in global agri- contemporarv practice in government cultural trade. Points out that the EC agencies and international develop- Fishery is the leading importer of agricultural ment institutions concerned with in- Highlights the importance of fisheries goods and is the dominant exporter of vesting in agriculture and is accessible to the economies of developirng coun- a number of agricultural products. Em- to a broad readership of agricultural tries and recommends that the World phasizes that policymakers in develop- planners, engineers, and analysts. Bank provide assistance to those coun- ing countries must understand the im- This revision adds a wealth of recent tries that have the fishery resources plications of the EC's common project data; expanded treatment of and are willing to develop them fur Agricultural Policy. Spells out how this farm budgets and the efficiencv prices ther. policy operates and categorizes impor- to be used to calculate the effects of an Sector Polici Paper.1982. tant comnmodities. investment on national income; a glos- ISBN 0-8213-0138-1. Stock No. BK 0138, Staff Working Paper No. 630. 1984. 64 sary of technical terms; expanded ap- $5 -1 paperback. pages. pendixes on preparing an agricultural Stock No. WP 0630. $3. project report and using discounting Forestry tables; and an expanded, completely Graham Donaldson, coordinating The Design of Organizations annotated bibliographv, author for Rural Development EDI Series in Economic Development Examines the significance ot forests in Projects: A Progress Report The Johns Hopkins University press. July economic development and cGncludes William E. Smith, Francis J. 1982 2nd printing, March 7984. 528 that the World Bank should greatly in- Lethem, and Ben A. Thoolen pa,es (including appendixes and glossarw/ crease its role in forestrv development. Staff Working Paper No. 375. 1980. 48 index). both as a lender and adviser to gov- pages. English and French. LC 82-15262. ISBN 0-8018-2912-7. Stock ernments. Stock Nos. WP 0375 (English). BK 9247 .0o. jH 2912, $37.50 hardcover; ISBN 0- Sector Policy Paper. 1978 63 pic'es (in- (French). $3. 8018-2913-5, Stock No. IH 2913, $13 50 luding 7 annexes). English. French, and paperback. Spanish. 5panish: .4nalisis economico de prouectos Stock Nos. BK 9063 (Fnglish). BK 9064 Prices subject to change without notice agricolas. Editorial Tecnos, S.A ISBN 84- (French), BKL 9065 (Spanish). S5 Paper- and may vary by country. 309-0991-5. $13.50. back. ________-- major policy options open to the pages (including 3 annexes, appendix, TNEW World Bank in this field. map). Forestry Temris-Terminologie A World Bank Plaper. 1975. 73 pages (in Stock No. WP-0332. $5. forestiere ci uding 2 annexes). Monitoring and Evaluation of English-French; Francais- Stock No. BK 9042. $5 paperback. Agriculture and Rural Anglais. Land Tenure Systems and Development Projects Presents terminology related to for- Social Implications of Forestry Dennis J. Casley a;.d Denis A. estry development and erosion control Development Programs Lurv in and and semiarid lands. Since fuel- Michael M. Cernea This book provides a how-to tool for wood problenms and desertification the design and implementation of have bpcome serious, particularly in Staff Working Paper No 452. 1981. 35 monitoring and evaluation systems in Western Africa, the World Bank has pages (including references, bibliographw). rural development projects. Because become increasingly involved in wood- Stock No. WP-0452. $3. rural development projects are com- based energy and erosion-control and plex, they seek to berefit large num- in foresk-m'.anagement projects. Assists NEW bers of people in remote rural areas, translators and researchers who work and they involve a variety of invest- in this field. F ments. The need for monitoring and A WAorld Bank Glossary-Glossaire de . , . evaluating them during implementa- la Banque mrondiale I p"'" tion has been accepted in principle, 1984. 48 Pages. but efiective systems have not hereto- ISBN 10-8213-0175-6 Stock No. BK 0175. _ - . ~fore been formulated. The concepts of ISB.,'q 0-8213-0175-6 Stock No. BK 01 75. ~~monitoring and evaluation are differ- SE l 2 , ^ l entiated and issues that need to be iconsidered in designing systems to Iimproving Irrigatedco Agriculture: Institutional .monitor ainid evaluate speciic projects Refriclt a ndsthe utSm all Fre -'are outlined, emiphasizing the tim-eli- Refonan and the Small Farmer 1 ness of the monitoring functions for Daniel W. Bromlev cffective management. Elaborates on Staff :E. 'in. Paper No. 531. 1982. 96 such technical issues as selection of in- pege,. _dicators, selection of survey methodol- ogy data analysi3., ind presentation. It ISBN 0-v213-0u64-4.Stock No. WP 0531. Managing Elephiant is directed primr-arilv to those vw/orking $3. Depredation in Agricultural with specific projects and will be use- India: Demand and Supply and Forestry Projects ful to project appraisal teams, to de- Prospects for Agriculture John Seidensticker signers of monitoring and evaluation James Q. Harrison, Jon A. Outlines procedures for managing ele- systems, and to project staff who work phants in and around Project areas as with these svsterns. Hitchings, antd John W11. Wall phantsHpi?; nwriy rs. 92 Staff Working Papey No. 50u. 1981 133 part of the proi2ct dlesign. tieips proj- The 1 ohns Hopkie s Un,uersity Press. 1982. Staffs Workluing Pappeno.i500. 1981ren133 ect designers plan activit'cs that will 15pgs pages (including 5 appendixes, references, protect wildlife and prevent financial LC 82-71226. ISBN 0-80?8-7910-0, Stock annex). loss from damage by animals. Illus- No. IH 2910. $8.50 paperback. Stock No. WP-0500. $5. trates methods used to irvestigate ele- Monitoring Rural Development phant behavior and ecology. NotesEatAi that carefu! scheduling of project activ- in East Asia ffimgation Management in ities is required to ensure that ele- Guido Deboeck and Ronald Ng China: A Review of the phants are not isolated in production Staff Working Paper No. 439. 1980. 91 Literature areas. pages (in{luding annexes). James E. Nickuns Technical Paper No. 16. 1984.50 pages. Stock No. WP-0439g 53. Analyzes irrigation management in the ISBN 0-8213-0297-3. People's Republic of China. Major top- Stock No. BK 0297. Li NEW ics covered are the instiltutonal envi- -- - ronment, the organizaiional structure, Managing Information for Monitoring Systems and water fees Ind funding, and water al- Rural Development: Lessons Irrigation Management: An locatiorn. The report is boased on Chinese-language materials published from Eastern Africa Experience from the in China and now available in the Guido Deboeck and 8iil Kinsey Philippines United States. Staff Working Paper No. 379. 1980. oii X Agricultural economists, planners, and Staff Working Paper No. 545. 1983. 106 ,0 pages uncluding 5 annexes, Index) field workers will fird this 1983 case pages. Stock No WP-0379 $3. study report a practical guide for de- ISBN 0-821.3-0110-1. Stock No. WP 0545. signing efficient montIetong and evalu- $5 Measua-ing Project !rripact: ation systeins f.'r irriatiorn and similar Monritoring and Evaluation in projects. It i'lustrates the -ractical ap- Land Reform the PIDER Rura' Development plication of the principles covered in the 1982 publicatI"on M1vonitoring and Examines 'he charactenstics of land re- Project-Mexico Evhalation of A,r.. itir. o aon Piral `J- form, its implications for the econom- Michael M. Cernea velormne-.t rok&.ts. Highligh&s be prob- ies of developing counties, and the 5-;, ;.V . .. Paper ''Jo. 332. 79-9. 137 lems as well as the suc-esses 1983. 162 pages. World Bank Staft Working Paper No. 387. permitting a full social cost-benefit IS8N 0-8213-0059-8. Stock No. BK 1980. 108 pages. analysis of the projeci. 0059.$5. Stock No. WP-0387. $5. The Johns Hopkins University Press. 1982. 336 pages (including maps and index). NEW Project Evaluation in Regional LC 81-48173. ISBN 0-8018-2802-3, Stock Perspective: A Study of an No IH 2802, $30 hardcover. Opportunities for Biological Irrigation Project in Northwest Control of Agricultural Pests in Malaysia Rethinking Artisanal Fisheries Developing Countries Clive Bell, Peter Hazell, and Roger Development: Western D. J. Greathead and J. K. Waage Slade Concepts, Asian Experiences Describes how to use living orgenisms This innovative study develops quanti- Staff Working Paper No. 423. 1980.107 as pest control agents, either alone or tative methods for measuring the di- pages (including references). as one component of pest manage- rect and indirect effects of agricultural Stock No. WP-0423. $5. ment. Biological control offers hope of projects on their surrounding regional long-term-permanent-results, causes and national economies. These meth- Rural Development no pollution, poses no risk to human ods are then applied tw a studv of the Discusses strategy designed to extend health and is often cheaper than Muda irrigation project in northwest the benefits of development to the ru- chemical controls. Gives methods and Malaysia. A linear programming ral poor and outlines the World Bank's costs. Specifies controls for specific model is used to analyze how a project plans for increasing its assistance in crops found in developing countries. changes the farm economy, and a so- this sector. Technical Paper No. 11. 1983. 55 pages. cial accounting satrix ot the regional Sector Policy Paper, 1975, 89 pages (in- ISBN 0-8213-0164-0. Stock No. BK 0164. vides the basis thor a semi-input-output cluding 14 annexes). $3. model, which is used to estimate the Stock No. BK 9036 $5 paperback. indirect effects of the project on its re- Prices, Taxes, and Subsidies in gion. Thereafter, a similar methodol- Pakistan Agriculture,1960-1976 ogy is used to estimate the project's NEW Carl Gotsch and Gilbert Brown effects on key national variables, thus Rural Financial Markets in Developing Countries NEW J. D. Von Pischke, Dale W. NEW Adamrs, and Gordon Donald Rural Development in China Selected readings highight facets of rural financial markets ofter neglected Dwiglht H. Perkins and Shahid Yusuf in discussions of agricultural credit in developing countries. Considers the Looks at China's rural development China's rural development policv. performance of rural finanicial markets experience as a whole since 1949. Ana- Helps clarifv both the stre-ngths and and ways to improve the quality and lyzes China's agricultural performance weaknesses of a self-reliant strategy range of financial services for low-ini- and traces it back to the technology of nrral development. come farmers. Also reflects new thirk- and other sources that made that per- ing on the design, administrator, formance possible. Goes bevond the ^.'. evaluation, aid policv framework cf conventional sources of growth analv- . rural finance and credit programs in sis to examir.e the political and organi- developiiig countries. zational means that enabled the , . The Johns Hopkins lTUiiersit, Press. 1983. Chinese to mobilize so much labor for ! - 4 430 pages. development purposes. ISBN 0-8018-3074-5.Stock NVo. Irn 3074 Describes the successes and f.ilures of $- _ _ 532.50 hardcover. Rural Poverty UJnperceived: Problems and Remedies Robert Chambers, Staff Working Pcper Nc. 400. 1980. 51 pages (including references) Stock No. WVP-0400. S3. Rural Projects through Urbarn . -s . . ,, ^ .......Eyes: A.n Interpretation of the ,k * 'World Bank's New-Style Rural Eft ^ > . Development I [ojecti The Johns Hopkins Llniversity Press. 984. - Judith Tendler 232 pages World Ba?,k ,btff Working Paper No. 532. LC 83-049366. ISBN 0-8018-3'67-6. Stock , 1982. 200 pages. No. IH 3261. $25 har`'7ot,'r. L ISBN 0-8213-0028-8. Stock No. VVP 0532. $3. NVE W most important determinant of overall ISBN 0-8213-0168-3. Stock No. WP 0561 economic growth, has been sluggish in (En glzsh) $3. Sheep and Goats in Sub-Saharan African countries during ISBN 0-8213-0269-8. Stock No. BK 0269 the past two decades. This overview 'French) $3. Developing Countries: Their takes a three-pronged approach to un- Present and Potential Role derstanding the problems of agricul- Winrock International Livestock tural production in the 47 countries Research and Training Center thiat make up the region. It outlines NEW Sheep and goats are viewed as an in- domestic and global constraints; sum- tegral component of complex agricul- marizes price, trade, and consumption Training and Visit Extension tural svstems. This comprehensive forecasts for major agncultural exports; Daniel Benor and Michael Baxter analysis leads to recommendations on and project trends. Contains a comprehensive explanation the need for a balanced production Staff Workinig Paper No. 608. l983. 272 of the organization and operation of svstem approach for research. training, pages (including more thlan 75 tables and the training and visit system of agri- and development programs. Assesses charts). cultural extension. Emphasizes simn- the role of sheep and goats in food ISBN 0-821.3-0221-3.Stock No. VVP ()608. plicitv and decisiveness. Defines or- production svstems by examining ad- $5. ganization and mode of operation and vantages and disadvantages, aid/donor allows continuous feedback from farm- support, constraints on contributions, ers to extension and research workers. and overcoming constraints. Empha- A System of Monitoring and rhis method has been adopted in sizes the need for a combination of Evaluating Agricultural some 40 countries in Asia, Africa, Eu- support activities and marketing and Extension Projects rope, and Central and South America. pncdtg podctes for small rumoriants Michael M. Cernea and Benjamin Useful to extension staff at all levels, and their products. Reviews ongoing ~~~~~~~agricultural research personnel, train- projects. J. Tepping ers, and staff of agricultural organiza- Technical Paper No 15.2983. 109 pages. Staff Working Paper No 72. 21977. 121 tions, as well as universities and train- ISBN 0-821.3-0272-8. pages (including 9 annexes. bibliography). ing institutions involved in agricultural St*ck No. BK 0272. $5. Stock No. WP-02 72. $5. and rural development and public ad- Stock No. BK 027/2 $5. ministration. Sociocultural Aspects . 1984. 214 pages. ofDlelveloping Small-Scale Thailand: Case Study of ISBN 0-8213-0121-7 Stock no. B 01221. Fisheries: Delivering Services Agricultural Input and Output $15. to the Poor Pricing Richard B. Pollnac Trent Bertrand Staff Working Paper No. 490. 1981. o4 Staff Working Paper o'. 385. 1980. 143 Women and the Subsistence pages (including references). pages (including 2 appendixes). Sector: Economic Participation Stock No WP-0490. $3. Stock No. WP-0385. S5.NEWV and Household Decisionmaking In Nepal Some Aspects of Wheat and Traditional Land Tenure and Meena Acharya and Lvnn Bennett Rice Price Policy in India Land Use Systems in the Fascinating analysis of the complex so- Raj. Krishna and S., of,> ... cial, demographic,and economic fac- Rsai tKrishna and G.S. Design of Agricultural Projects tors that affect women's decisionmak- Raychaudhuri Raymond Noronha and Francis J. ing role in the subsistence sector. Data Staff Working Paper No 381. 1980. 62 Lethem collected from seven villages show pages tincluding 2 appendixes. 6 tables, Ihe feasibilitv of agricuitural projects women play a major role in agricul- bibliography) and their intended impact are often tural production, both as laborers and Stock No. WP 0381. $3. determined by traditional patterns of managers. Bringing womnen into the tenure and land use. This paper pro- market economy would make~ better EW xvides agricultural project designers use of local resources and improve NEW with an analvtical basis and rationale their status and economic security in for examining systems and suggests Nepal. Sub-Saharan Agriculture: how to use sucih information in de- Staff Working Paper No. 526.1983. 2i0 Synthesis and Trade Prospects signing projects. pages. Shanisher Singh Staff Vorking Paper No. 561. 1983. 54 ISBN 0-8213-0024-3. Stock No WP 0526. Agricultural production, the single plages. $5. The World Bank Publications Order Form SEND TO: YOUR LOCAL DISTRIBUTOR OR TO WORLD BANK PUBLICATIONS (See the other side ol this Jorm) P.O. BOX 37525 WASHINGTON, D.C. 20013 U.S.A. Date Name Ship to: (Enter if different from purchaserj Title Name ___ Firm Title Address_ Firm City _ State_ Postal Code - Address_ . __ Country - . Telephone City State_ Postal Code Purchaser Reference No. _ Country Telephone Check your method of payment. 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