w. '7. . . "u , _ . c fifiafia aw .3?t..§..é . , . . x . .. , 1 . ., . .. v o _ . r . . ‘ . M. .. ‘ T _ . » , u . _ . A. ‘u ... _ . fin X at 15; , VERSITYV .‘ }. D. ..g. 4 ... 4n.“ 1497 U‘ A ..D, D. D . "'the iRN-‘AN mm; ' or i. “rmemsms m . me In ‘ . bi x. ET 'Mpc .4. .V mum fl . . .. , . , a < a 4;,:L.\w..n, . 75“.. 1.. .... ...... ."Ln .....fixhi... .. ... 1-3.13, V ...;s:;...~ .13rwfi.£ruvaflaflfl ; . is ...}...wfa 133“. m7 .1 Zen? 5.: .3. ...a...3_$.zra , ' I ti. 1.11M R ‘1’ D/lldligau Stilts: Uni-mm}. ... -—v— v1.75“: 'W' fr; 0"“ '-~ w‘v massa This is to certify that the thesis entitled THE EFFECT OF CHANGING AREAS AND LEVELS OF TECHNOLOGY OF CORN AND COTTON PRODUCTION ON THE NET FOREIGN EXCHANGE IN THAILAND presented by Bunloe Sutharomn has been accepted towards fulfillment of the requirements for Ph. D. degree mAgricultural Economics {f/éééétc//¢~ [-44%(2/7MZ: Major professor a Date auguat 07¢], /77% M 0-7 639 ABSTRACT THE EFFECT OF CHANGING AREAS AND LEVELS OF TECHNOLOGY OF CORN AND COTTON PRODUCTION ON THE NET FOREIGN EXCHANGE IN THAILAND By Bunloe Sutharomn The primary objective of this study was to evaluate the net foreign exchange position of the country with major emphasis on shifting production patterns and technology levels of crop production in Thailand. Five alternative strategies involving shifts in production patterns and technology levels for corn and cotton were evaluated. To evaluate the alternatives, costs, returns and net returns per rai were calculated based on survey data and related information, then foreign exchange components of inputs were disaggregated to calculate the foreign exchange costs and returns per rai of rice, corn and cotton, then these results were aggregated for a major production zone as a basis for evaluating the alternative strategies. The results of the analysis showed that shifting cotton area to traditional corn production with a rapid increase in modern corn production would improve farmers' income and net foreign exchange and would be feasible with regard to Bunloe Sutharomn current labor supplies in the region. On the other hand, rapid expansion of modern cotton production relative to modern corn production would result in the highest net return for the alternative considered but would not be feasible with current labor supplies. Considering the alternative of rapid expansion of modern corn production leaving cotton areas and technology unchanged, the results indicated the highest net foreign exchange but this alternative also would result in labor shortage. Finally, a compromise alternative with a slow increase of modern corn and cotton production would result in a small increase in total net return and net foreign exchange as well as leaving some labor surplus. In evaluating these alternatives the approach was to measure the effects on farm earnings and net foreign exchange from strategies which would consider different rates of technological growth and shifts in the production pattern for the major crops under study. The methodology did not include a search for the optimum.solution. The "best" solution depends on the weighting of alternative national goals, the time period within which national goals should be fulfilled, and the extent of the national commitment to fulfill these goals. To the extent that both improved net foreign exchange earnings and improved net earnings for farmers in a production Bunloe Sutharomn area suitable for both corn and cotton production are goals of high priority this study is offered to provide tentative guidelines for policy making and for specifying further research. THE EFFECT OF CHANGING AREAS AND LEVELS OF TECHNOLOGY OF CORN AND COTTON PRODUCTION ON THE NET FOREIGN EXCHANGE IN THAILAND BY Bunloe Sutharomn A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1974 To my parents. ii ACKNOWLEDGMENTS I wish to express my sincere appreciation to the members of my guidance and dissertation committee: Dr. Warren H. Vincent (Chairman), Dr. Vernon L. Sorenson, Dr. Lester V. Manderscheid, Dr. James D. Shaffer and Dr. Milton H. Steinmueller for their helpful guidance, constructive criticisms and valuable suggestions throughout my graduate program.at Michigan State University. I wish to express my deep gratitude and indebtedness to Drs. Lawrence W. Witt _and warren H. Vincent. Dr. Witt was chairman of my guidance committee before he left the campus. Dr. Vincent provided continued guidance and encouragement and boosted my morale while I was doing my field work in Thailand. Their guidance, encouragement and confidence in me played a very important part throughout my graduate program. The help and cooperation received from Drs. Delane E. Welsch, Sopin Tongpan, Chamnean Boonma, Kampol Adulvidhaya, ‘Mr. Prayong Saiprasert and other friends in the Agricultural Economics Division and the Department of Agriculture are recognized for providing me with much valuable information. I am grateful to FORD/MUCIA/NIDA for financing my entire graduate program. Thanks are also extended to many friends, faculty and iii staff in the Department who made the stay in East Lansing so rewarding and enjoyable. Finally, I wish to express my heartfelt appreciation to my wife, Nari,for her patience and encouragement. iv Chapter TABLE OF CONTENTS INTRODUCTION . The Problem . . Objectives of the Study Plan of this Study . METHODOLOGY AND DATA SOURCES . Overview of Analytical Procedures Measurement Units Sources of Data Selection of Crops . Selection of Areas . . . Background of Selected CrOps . Rice . . Corn (Maize) Cotton . ESTIMATES OF PRODUCTION COSTS Labor Requirement and Production Costs of Traditional Rice . . . Critical Inputs and Additional Labor Required Under Mbdern Method of Rice Production . . Labor Requirement and Production Costs of Traditional Corn . . Critical Inputs and Additional Labor Required Under Medern Methods of Corn Production . Labor Requirement and Production Costs of Traditional Corn . . Critical Inputs and Additional Labor Required Under Mbdern Method of Cotton Production . Labor and Fuel Requirement in Spraying Input Cost . 29 33 35 37 41 43 49 50 Chapter IV Production Costs of Rice, Corn and Cotton . Bangkok Wholesale and Local Market Prices . . Farmers' Revenue and Marketing Margin . FOREIGN EXCHANGE COSTS AND RETURNS . Foreign Exchange Components of Imports Inputs . . . . . . . . . . . . . . Fertilizers and Insecticides . Tractors and Attachments . Spraying Machines Oil (Fuel) . Foreign Exchange Costs of Imported Inputs . Import and Export Prices of Commodities: Foreign Exchange Earnings or Savings Per Rai Among the Commodities . . Aggregation of Corn-Cotton Production Areas . Total Net Farm Return and Net FOreign Exchange Earnings and Savings Under Corn and Cotton Production with Projections to 1977 Alternative Alternative Alternative Alternative Alternative MUGU?’ SUMMARY AND CONCLUSIONS, AND IMPLICATIONS. Summary . . Conclusions and Implications . . . Implications for Policies and Future Research . Limitation of the Study . Labor Supply ImplicatiOns . Cost Accounting Implications . Summary and Policy Implications Short- Run Policy Consideration for Cotton . . . . . . . vi Page 57 58 62 69 91 92 94 97 I 100 . 100 108 108 110 113 113 ' 113 116 119 . 122 Chapter APPENDICES F. BIBLIOGRAPHY Short- Run Policy Consideration for Corn . . . . Long-Run Policies fOr Corn and Cotton . Planted Areas, Harvested Areas, Yield per Rai and Market Value of Rice, Corn and Cotton, 1949-1972. Summary of Net Returns and Net Foreign Exchange Per Rai of the Selected Commodities . . . Power Utilization in Producing Rice and Corn. Comparison by Weight and Volume Among Different Insecticides . Foreign Trade, Import and Export Price of Rice, Corn and Cotton and Balance of Trade, 1962-1972 Employment in the Agricultural Sector of Thailand . . vii Page 125 126 130 133 134 135 136 137 138 LIST OF TABLES Table Page 1.1 Kilograms of Commodities needed to Purchase 1 Kg. of Amophos (Analysis 16-20-0), 1967-72. 6 2.1 Number of Rice, Corn and Cotton Farms Found in Random Sub-Sampling of 1972 Survey . . . . 13 3.1 Hours of Labor and Power Sources Required to Produce One Rai of Traditional Rice, 1972. . . 31 3.2 Average Variable Costs of Traditional Rice Production Per Rai in Selected Changwats, 1972 32 3.3 Hours of Labor Required to Produce One Rai of Traditional Corn, 1972. . . . . . . . . . . 38 3.4 Average Variable Costs of Traditional Corn Production Per Rai in Selected Changwats, 1972 39 3.5 Hours of Labor and Power Sources Required to Produce One Rai of Traditional Cotton in Changwats, Sukhothai, Loei and Phetchabun, 1972 44 3.6 Average Variable Costs of Traditional Cotton Production Per Rai in Selected Changwats, 1972. 45 3.7 Costs and Yields of Cotton Resulting From Different Spraying Times, 1972 . . . . . . . 48 3.8 Labor Required in Spraying at Different Ages of Cotton . . . . . . 51 3.9 Average Cost of Tractor Power for Land Preparation, 1972. . . . . . . . . . . . . . . 53 3.10 Fertilizer Prices in Bangkok and Local Market, 1971-1973. . . . . . . . . . . . . . . 55 3.11 Recommended Insecticides and Quantity Use Per Rai. . . . . . . . . . . . . . . . . . . . 56 3.12 Bangkok' 3 Retail Prices of Insecticides, 1971- 1973. . . . . . . . . . . . . . . . . . 58 viii Table Page 3.13a Weighted Average Prices of Insecticides Commonly Used in Rice, Corn and Cotton, 1972. . 59 3.13b Mark-up Price in Local Shops. . . . . . . . . . 59 3.14 Production Costs of Rice Under Traditional and Mbdern Practices. . . . . . . . . . . . . . 60 3.15 Production Costs of Corn Under Traditional and Modern Practices. . . . . . . . . . . . . . 60 3.16 Production Costs of Cotton Under Traditional and Modern Practices. . . . . . . . . . . . . . 61 3.17 Average Local Price by Changwats 1970-1972. . . 63 3.18 Average Price Received by Farmers for Rice, Corn and Cotton, 1972 . . . . . . . . . . 64 3.19 Average Wholesale Prices in Bangkok, 1970-1972. 64 3.20 Farmers' Revenue and Marketing Margins at Two Levels of Technology. . . . . . . . . . . 66 3.21 Costs and Return Per Rai to Farmers at Two Levels of Technology. . . . . . . . . . . . 67 4.1 Quantities and Values of Different Insecticide Imports, 1970-1972. . . . . . . . . . . . . . . 72 4.2 Average C.I.F. Price of Insecticides in 1972 . 73 4.3 Quantities and Values of Tractors and Attachment Imports, 1970-1972 . . . . . . . . . 75 4.4 Average Import Price of Tractors and Attachments, 1972 . . . . . . . . . . . . . . . 76 4.5 Quantities and Values of Knapsack Sprayers and Mbtorized Sprayers. . . . . . . . . . . 79 4.6 Life Expectancy of Farm Machines and Total Numbers of Hours WOrked . . . . . . . . . . . . 80 4.7 Conversion Rate of Crude Oil From Three Different Sources . . . . . . . . . . . . . . . 81 4.8 Quantities and Values of Oil Products Imports, 1971-1972 . . . . . . . . . . . . . . . . . . . 83 ix Table Page 4.9 Average C. I. F. Prices of Oil Products Imports, 1972.. . . . . . . . . . . . . . 84 4.10 Foreign Exchange Cost in Producing One Rai of Rice, Corn and Cotton Under Two Levels of Technology. . . . . . . . . . . . . . . . . 85 4.11 Foreign Exchange Revenues Per Rai Under Two Levels of Technology . . . . . . . . . . . . . 87 4.12 Foreign Exchange Earnings or Savings Under Two Levels of Technology . . . . . . . . . . . 88 4.13 The Cultivated Areas of Rice, Corn and Cotton in Selected Changwats, 1969-1972. . . . 90 4.14 The Total Areas of Rice, Corn and Cotton in Selected Changwats, 1969-1972 . . . . . . . 91 4.15 Labor Requirements, Cost, Revenue, Net Return and Net Foreign Exchange Earnings Per Rai Under Two Levels of Technology . . . . . . . . . . . 93 4.16a Land and Labor Requirement Under Alternative A 95 4.16b Net Return and Net Foreign Exchange Under Alternative A. . . . . . . . . . . . . . . . . 96 4.17a Land and Labor Requirement Under Alternative B 98 4.17b Net Return and Net Foreign Exchange Under Alternative B. . . . . . . . . . . . . . . . . 99 4.18s Land and Labor Requirement Under Alternative C 101 4.18b Net Return and Net Foreign Exchange Under Alternative C. . . . . . . . . . . . . . . . . 102 4.19a Land and Labor Requirement Under Alternative D 103 4.19b Net Return and Net Foreign Exchange Under Alternative D. . . . . . . . . . . . . . . . . 104 4.20a Land and Labor Requirement Under Alternative E 106 4.20b Net Return and Net Foreign Exchange Under Alternative E. . . . . . . . . . . . . . . . . 107 5.1 Assumptions and Results of Alternatives A Through E. . . . . . . . . . . . . . . . . . . 111 Table Page A.1 Areas Production and Market Value of Rice, 1949-1972. . . . . . . . . . . . . . . . 130 A-2 Areas, Production, and Market Value of Corn, 1949-1972. . . . . . . . . . . . . . . . 131 A.3 Areas, Production and Market Value of Cotton, 1949-1972. . . . . . . . . . . . . . . 132 3.1 Summary of Net Returns and Net Foreign Exchange Per Rai of the Selected Commodities . 133 C.1 Power Utilization in Producing Rice and Corn from Changwats, Chainat, Saraburi and Lopburi. . . . . . . . . . . . . . . . . . . 134 D.1 Comparison by Weight and Volume Among Different Insecticides . . . . . . . . . . . . 135 E.1 Foreign Trade and Payments . . . . . . . . . . 136 F.1 Employment in the Agricultural Sector of Thailand . . . . . . . . . . . . . . . . . . . 137 xi CHAPTER I INTRODUCTION Thailand is an agricultural country. She has long been food self-sufficient and a leading rice export country in South-East Asia. Although other sectors of the economy are rapidly gaining in importance, roughly 86 percent of the population live in rural areas and mostly as farm households. Agriculture employs at least 76 percent of the labor force and provides some 73 percent of total export earnings. The rate of growth of Thai agriculture is high, even on a per capita basis. From 1961-62 to 1969-70, the annual increase in total farm output averaged 4.9 percent, or 1.5 percent per capita.1 Thai agriculture consists primarily of crop production. Rice is the most important crop not only for domestic consump- tion but also for export. Rice has long been the traditional export of Thailand (since 1855) and still remains preeminent, but corn, rubber, cassava, kenaf, oilseeds and cotton have gained importance in the past 10-15 years. The main factors 1Omero Sabatini. The Agricultural Economy of Thailand. ERS-Foreign 321, Washington, D.C.: U.S. Department of Agriculture, Economic Research Service, 1972, p. 2. stimulating increased production of these crops have been the government efforts to develop an agricultural infra- structure, training, research and extension activities coupled with increased foreign demand for these crops. The success of Thai agriculture in expanding and diversifying its production has contributed to the remarkable economic development of the country over the past decade. Not only did agriculture provide a steady and sometimes expanding flow of foreign exchange resources, but it also was able to absorb many of the new entrants into the labor force productively and thereby expand the internal demand for the products of the urban sector. The relative increase in agricultural production was brought about by increases in the area cultivated. The increase in yields has not been significant for the last two decades. There were obstacles in the methods of production, availability of inputs, knowledge among the farmers and fluctuation of output prices. Historically, the production increase was largely due to opening up new land. As the population and demand increased, more land was brought under cultivation. At the present time, the virgin lands are almost completely exploited except for an area under forest reserve law. The opportunity to open up new lands no longer exists. Thus further increases in overall production must rely heavily on yield increases through new technology such as using new seed varieties, fertilizers, insecticides, herbicides and production practices. The Problem Thailand, like other developing countries undergoing the process of economic development, needs foreign exchange to import capital inputs as well as certain raw materials needed to facilitate economic growth. For several years before 1969, Thailand was able to offset a large trade deficit and maintain a favorable balance of payments through capital transfers resulting largely from foreign aid, U.S. government expenditures in Thailand (mostly military), tourist revenues, and foreign investments. The surplus in the balance of payments allowed Thailand to keep its imports essentially free of any restriction. However, the trade deficit widened rapidly in the late 19608, primarily because of a rapid increase in the importation of consumer goods both durable and nondurable; they were increased more than 48 million dollars in 1972.2 In 1969, the balance of payments showed its first deficit (some $48 million) in about a decade. In 1970, the deficit was con- siderably higher, amount to $137 million, it declined to $86 million in 1971 but was a surplus in 1972 amounting to $98 3 The trade deficit was reduced in 1972 over 1971 million. by $34 million due to increased value of exports. Prospects for a stable surplus position in the balance 2Department of Customs. 3Bank of Thailand, Monthly Report, May 1973, p. 68-9. of payments are not favorable for several reasons. The world demand for a number of Thai export commodities are weak and rely heavily on the performance of other countries; nonfarm.commodity imports are likely to continue at high levels; and imports of capital inputs for agriculture and industry will continue to rise as Thailand sustains its process of economic development. The government has begun taking action aimed at improving the balance of payments. One attempt is to inten- sify its export promotion activities, as well as the effort to increase foreign sales through negotiated international agreements. The major exports from Thailand are mainly agriculture products, although the relative importance in total trade has declined from 86 percent in 1961 to 73 percent in 1969.4 The domestic demand increase due to popu- lation increases overrode the slower growth in productivity. The government's strategies are to increase research to I encourage farmers to use modern inputs, modern practices and to diversify agricultural production. These strategies are aimed not only at increased productivity for domestic and export use but also to improve income of the farmers. At present, increased yields for existing crops are essential whether additional land is brought under cultivation or not. This is necessary to maintain or gain competitive position amongst competing exporters, as well as to meet 4Sabatini, 92. 915., p. 67. the demand of Thai farm families for increased incomes and level of well being. The response of various crops to fertilizer has been studied, and it seems clear that increased yields justify the use of large amounts of fertilizers. However, certain crops like cotton can be grown successfully without fertilizer, requiring instead careful and efficient insect control. The ratio between the price of fertilizer price and crop price varies by crops from quite high for rice and corn to quite ' low for cotton (see Table 1.1). In 1972, it required 7.48 kg. of rice to obtain 1 kg. of fertilizer and 8.01 kg. of corn to obtain 1 kg. of fertilizer. Thus, the utilization of fertilizer as well as other modern inputs in producing these crops need to be evaluated in terms of foreign exchange cost and foreign exchange earnings or savings. Agriculture production in Thailand is expected to continue increasing in view of the government's growing involvement in agricultural planning, anticipated technolo- gical advance, improvements in the infrastructure and increased commercialization. However, the alternative crops which should be emphasized is a problem facing government policy makers. Mbreover, it is likely that changes in emphasis will be necessary from time to time as shifts in world supply and demand occur. New methods of production will provide an opportunity to expand production and exports but will require additional imported inputs. It appears that fOr cotton, import substitution may not expand fast enough to meet domestic demand. Rice and corn expansion could, under some circumstances, require foreign exchange expendi- tures which use up a significant fraction of the exchange which the increased exports earn. Thus, as Thailand responds to the need to maintain her foreign exchange situation, it appears that it needs to evaluate among commodities, the net contribution to exchange earnings. Table 1.1. Kilograms of Commodities Needed to Purchase 1 Kilogram of Amophos (Analysis 16-20-0), 1967-1972. Commodities 1967 1968 1969 1970 1971 1972 Rice 5.97 5.92 6.58 8.68 10.40 7.48 Corn 9.88 9.38 7.98 8.15 8.32 8.01 Cotton 2.03 1.60 1.62 1.76 1.62 1.66 Source: Agricultural Economics Division,"Problems of Fertilizers to Increase Agriculture Productivity," Bangkok: Ministry of Agriculture, 1973 (unpublished report in Thai). Objectives of the Study The broad objective of this study is to organize empirical evidence on the selected crOps, significant to Thailand's international trade, so as to evaluate more effectively the effect of changes in production upon farm earnings and net foreign exchange earnings. This will require the accumulation of farm production cost data for the selected crops under two alternative levels of technology and foreign exchange cost as well as the returns in producing these crops. Then an attempt will be made to convert these unit calculations to a regional basis in order to compare the net farm earnings and net foreign exchange among crops, under certain alternative sets of assumptions regarding changes in production areas and expansion rate of adopting modern practices. The specific objectives of the study are as follows: 1. To determine the cost and return per rai on the production of rice, corn and cotton under two levels of technology. 2. To calculate farm returns over variable costs and farm labor and foreign exchange earning per rai for the three commodities included. 3. To compare the farm returns and net foreign exchange earning on a regional basis under alterna- tive sets of assumptions. 4. Analyze the conclusions for their policy implications. Plan of this Study Chapter II will focus on the methodology selected for analysis and sources of data. The selection of commodities, location of production for selected crOps and other background information pertaining to these crOps will also be discussed. Chapter III will focus on the assembling of physical units of inputs required in producing one rai of the selected crops under two levels of technology. With the going market price of inputs and outputs, the cost and returns per rai and farm earnings per rai can be determined. Chapter IV will focus on the disaggregation of foreign exchange component on import inputs required in the production The c.i.f. and f.o.b. price of imports and exports will be used to determine the foreign exchange revenue per rai. Then the production areas will be aggregated to the dominant production region for the selected crops. Considering alter- native sets of assumptions, several solutions regarding possible crop production patterns will be analyzed. The total net returns and net foreign exchange will be compared among the several assumption sets. Chapter V will summarize the findings and offer policy recommendation which follow from the analysis. CHAPTER II METHODOLOGY AND DATA SOURCES Recent technological advances have led to sweeping changes in the agricultural situation in Asia, particularly where recent food grain deficits have been transformed into actual or potential surpluses. Thailand, utilizing a majority of its cultivated land holding in rice production, has long been a rice exporting nation. However, in the long run, if rice production cannot be accelerated, many problems will arise. Rice surplus for export will decline as domestic demand increases due to increased population. This with other factors held constant, will decrease foreign exchange earnings. As a result, one of the major policy problems currently facing Thailand is to evaluate the merits of pro- moting alternative crops for the purpose of earning foreign exchange through increased exports or by saving foreign exchange through import substitution. The increased corn production of Thailand has been an amazing development to all interested in agricultural growth. From a "zero" level in the early 19503, corn production expanded very rapidly, increasing from 3.6 million rai in 1965 to 6.2 million rai in 1972. Today, Thailand ranks as the world's third or fourth largest corn exporter. In 1972 alone, Thailand sold 9 10 corn valued at 1.9 million baht on the world market. The only other crops which are more important in terms of export are rubber, kenaf, cassava and soybeans. Cotton production is insufficient for domestic requirements. Thailand must import cotton every year as a result of rapid expansion in textile industries. In 1971, approximately 150 tons of cotton were imported with a value of more than 500 million baht.l The government, realizing the need to increase foreign exchange spending on cotton imports, launched a program of study to identify problems and bottlenecks with regard to increased cotton production.2 The overriding problem facing the cotton industry in Thailand is to reverse the setbacks in cotton production and, in the years ahead to produce enough of the crop to meet the needs of a growing demand from the textile industries. Overview of Analytical Procedures For reasons which will be explained later, this study focuses attention on the production of rice, corn and cotton in the upper portion of Central region. To fulfill the research objective information on cost of production and return per rai for each crop will be assembled. The average physical units of inputs required on each stage of farm 1Suthat Supinachareon, "Economics of Cotton Production in Sukhothai and Loei Provinces," Agricultural Economics Division, Ministry of Agriculture Bangkok, Thailand, June 1972, p. 2. (Mimeograph in Thai). 2R. J. Grimble, The Economics of Cotton Production. London: Overseas Development Administration, 1971, p. 8. ll operation namely, land preparation, planting, weeding and cultivation, fertilizing, spraying harvesting and packing, also the power requirements during farm operation will be gathered at two levels of technology. Using information on going market price of inputs and outputs in 1972, the costs and returns per rai as well as farm returns can be determined. Disaggregation of foreign exchange components on required import inputs in production will be undertaken. Assumptions on life expectancy and import parts of farm machinery will be made. Also, the total number of hours‘ needed for field work will be determined in order to calcu- late the cost of foreign exchange per hour of work expended. For other imported inputs such as fertilizers, insecticides and fuel, the average c.i.f. price of those inputs in 1972 will be used. Thus the foreign exchange cost and revenue per rai can be determined. At this point, the performance of each crop can be examined on the basis of net return and foreign exchange earning per rai. Rice does not compete with corn and cotton for land utilization due to different growing seasons and rice is a lowland crop while corn and cotton are upland crop (assuming no irrigation). The production zone, which is characterized as a pre- dominately corn-cotton producing area will be aggregated. Thus, the net farm.returns and net foreign exchange can be calculated based on alternative assumptions regarding land and labor utilization, rate of expansion, adoption rate of 12 modern practice, etc. Results from the analyses of these alternatives will provide certain guidelines for policy recommendations. Measurement Units Units of measurement used throughout the thesis are those common in Thailand. Rai is a measurement of land area equivalent to 1,600 square meters or approximately 0.4 acre. Baht is a unit of currency which is approximately equivalent to 5 U.S. cents. Kilogram is a unit of weight approximately equivalent to 2.2 pounds (abbreviated as Kg.). 292.13 a unit of weight equivalent to 1,000 kilograms or 2,200 pounds. Changwat is the largest territorial subdivision class corresponding to the states in the U.S. or provinces in Canada. Sources of Data It was hoped when the study was initiated to obtain all farm-level data from.a 1972 survey conducted by the Agricultural Economics Division of the Ministry of Agriculture. This survey encompassed the entire country and included about 8,000 farms whereby head-of-households were interviewed for recall and current information. For the 10 changwats selected for this study there were about 1,000 farms included in the survey. Unfortunately, permission to use all 1,000 farms was not possible. Instead a random sub-sample of 20 records per changwat for 10 changwats was drawn for a total of 200. The 13 number of rice, corn and cotton farms found in this sub-sample is summarized in Table 2.1. Table 2.1. Number of Rice, Corn and Cotton Farms Found in Random Sub-Sampling of 1972 Survey. Changwat Rice Corn Cotton Other Total Saraburi 10 10 0 0 20 Phetchabun 4 12 4 0 20 Phitchit 10 0 0 10 20 Phitsanulok 9 6 0 5 20 Uttaradit 9 9 0 2 20 Chainat 10 l 0 9 20 Sukhothai 10 8 0 2 20 Nakhonrajsima 6 0 0 14 20 Lopburi 2 8 0 10 20 Loei 0 0 0 20 20 Total 70 54 4 72 200 Since to be counted as a rice, corn or cotton farmer it was necessary that a crop be harvested, it is possible that crop failures caused understatement of actual farms growing the crops. This is especially probable for cotton where 200 farms drawn randomly from a predominantly cotton producing area show only 4 farms (in a single changwat) with a successful harvest. The survey data were used for computing input-output relationships for rice and corn but were not used for cotton because of the lack of cotton farms with harvested area. The survey was used for physical inputs on rice and corn but 14 to compute the cost of inputs on all crops required supple- mental information obtained from reports prepared by the Department of Economics and Business Administration, Kasetsart University, The Ministry of Commerce and from personal interviews in shops in Bangkok. The lack of cotton farms in the survey required con- sidering alternative ways of analyzing the economics of cotton production. 1. To expand the initial sub-sample of 200 farms to a number large enough to include an adequate number of cotton farms. Unfortunately, the initial 200 was all that could be made available. Therefore, it became necessary to seek other sources for information on cotton production. To use national average yield of cotton. This information was available but the cost of produc- tion data on farms used in this average were not available. To use another study involving cotton farms. Fortunately, the same division in the Ministry of Agriculture which conducted the above survey also conducted in 1972 a one-time special farm accounting survey on cotton farms in the region under study. The method was to interview periodically for an entire production season compared with the single interview used in the survey above. Whether there would be a crop failure or not was not known in 15 advance. However, when the summary was prepared only harvested area was included. No farms had complete failure, thus the results show total production costs per unit of crop harvested. All records in this 128 farm accounting study have not been summarized. Those available for analysis included 78 cotton farms in two changwats, Sukhothai (28) and Loei (50). Cotton yield on these 78 farms was computed to be about 40 percent higher than the national average. However, the yields and physical inputs were measured so carefully it appeared to be the best possible source of cotton production information for the immediate study. Modern methods of production as defined for this study were not found in either of the above surveys. For coefficients pertaining to rice and corn production, results from.experi- ments conducted by the Department of Agriculture, under farm conditions were used. In the case of cotton modern method coefficients were obtained from research under controlled experimental conditions also conducted by the Department of Agriculture in the Ministry of Agriculture. The foreign exchange costs were taken from the Depart- ment of Customs, Ministry of Finance. The disaggregation of foreign exchange inputs were based on various sources of information and necessary assumptions. The disaggregation of foreign exchange for farm machineries, machine fuel and 16 oil etc. were supplemented with other studies. The total production area for changwats was taken from the reports of Agricultural Extension Department. Further personal interviews were made of agriculturalists and agricultural economists in Thailand to get further insight and for arriving at realistic assumptions needed in the analysis. Selection of Crops The production of economic crops such as rice, corn, cotton, kenaf, cassava, sugar cane and soybean have long been concentrated in certain locations. Even though the southern portion of the Central region is particularly suit- able for rice cultivation and has become known as the "rice bowl" of Thailand, rice is grown generally throughout the Kingdom because Thai farmers desire to be self-sufficient -in their staple food, rice, thus farmers will utilize all suitable land for rice production, even though there may be a higher potential average monetary return to resources from other crops. Corn production was stimulated all along the way served by Friendship Highway which came into service in the 19603, The production of corn has increased since 1960 due to an increase in foreign demand. New land was brought into cultivation and the Upper Central Plain became as it is known today the ”corn belt" area of Thailand. Almost 60 percent of all cotton in Thailand is grown in changwats 17 Sukhothai and Loei. Changwats Lopburi, Saraburi and Phet- chabun account for about 25 percent of total cotton production3 Rice and corn are major exports of the country. Thai- land earned $221.7 million on rice exports and $98.85 million on corn exports in 1972. Cotton imports have increased in response to the expansion of the textile industry in Thailand. Cotton imports in 1972 amounted to $36.45 million.4 Given the goal of this study to determine the effect on farm earnings and net foreign exchange resulting from.changes in production systems, the selection of rice, corn and cotton was appropriate because these crops play a major role in foreign exchange earnings and savings within the agriculture sector of the country. Selection of Areas The total land area in Thailand is 321.25 million rai. Out of the total area 95.15 million rai is in farm holdings constituting about 29.62 percent of total land. The paddy land amounts to 68.18 percent of farm holdings. The field crops area amounts to 11.82 million rais which is about 12.42 percent of total agriculture land.5 3Grimb1e, Ibid., p. 1. 4 5Ministry of Agriculture, Agricultural Economics Divi- sion, Land Utilization of Thailand 1971, Agricultural StatistiElBulletin No. 24, BangROE, Thailand, 1972, p. 11. Bank of Thailand, MOnthly Report, May 1973, p. 50-1. 18 The majority of the corn and cotton producing area is to be found in the upper portion of Central Region. Within these areas rice is scattered all over the lowland areas which cannot be utilized by other field crops. These areas are of most importance in making comparisons on cost and returns in the production of rice, corn and cotton. Background of Selected Crops Rice Rice is still the basic subsistence crop of Thailand, and a very high proportion of the farmers grow some rice. The area under rice is still more than twice as great as the area under all other crops taken together. Rice is of great importance as a source of foreign exchange revenue to the country. Most of the farmers try to avoid having to buy rice. They will grow a surplus of rice partly as an insurance against poor weather and only partly for cash income: Not every province grows a surplus of rice, though most do. The main deficit areas are Bangkok and some provinces to its southeast and southwest, and also the extreme south of Thailand. The flow of rice is thus mainly southward. Bangkok's main rice supply is from the Central Plain.6 The area under rice cultivation expanded rapidly from 9.3 million rais in 1907 to 41.6 million rais in 1962 and 47 million rais in 1972 (see Appendix A.1). This rapid increase 6T. H. Silcock, Thailand Agriculture Development in Asia. Edited by R. T. Shand, Canberra: Australia National University Press, 1969, p. 116. 19 in acreage is due to the rapid growth of population, limited opportunity for employment in the city, and the fact that rice is the main staple food of the people. To the Thais, rice represents breakfast, lunch and dinner. Average rice yield exhibited a steadily declining trend until 1967 when it averaged 220 kg. per rai. Then the aver- age yield jumped to 270 kg. per rai in 1967 and to 300 kg. in 1970 (see Appendix A.1). There are two reasons to explain this rise in yield. One is varietal improvement and the diffusion of the varieties by the government agencies to farmers. Another is the expansion of area under irrigation. The utilization of modern inputs namely fertilizers and insecticides is still insignificant at the present time. Government has invested in rice research for a consid- erable period of time. A breeding program was started in the early 19503. The principle technique was to select and collect a large number of samples from farmers' fields, test them.under low fertility conditions (resembling farmers' condition), and then release the best material back into the local area from which they came. Many local varieties of traditional type are present in Thailand. Thai people are over discriminating in their taste for rice, and Thailand has long had a reputation in export markets for high quality rice. Hence the emphasis in the breeding program was logically on both grain quality and high yielding varieties. Irrigation has received heavy emphasis by the Thai government for a long time. Some of the structures in the 20 Chao Phya Delta date back to 1924. The biggest push started in 1950. The main policy has been to construct large multi- purpose dams and reservoirs and main canals with laterals. The farmer has been responsible for constructing farm ditches. In general, the farmer has not done so, and consequently very little of the area under the conmand of major dams has good water control. This is mainly due to incomplete and poorly designed systems, rather than lack of interest on the part of the farmers. Part of the difficulty also lies in the multiple purposes for which the dams were built. Electric power gener- ation, navigation, and prevention of salt water intrusion seem to have higher priorities than irrigation. In some cases where there is water in the canal during the dry season, but not enough to permit gravity irrigation, farmers have purchased small pumps and pumped the water from the canal onto the fields. There has recently been a major shift in government policy, away from.massive investment in large projects to investment in better utilization of water from the projects already constructed. The farmers pay considerably more than the world price for such fertilizers as ammonium sulfate and urea. The reason is that an investment has been made in an obsolete lignite conversion based fertilizer factory. Because the process is inefficient, cost of production is from 1.5 to 2.0 times the cost in the most efficient modern plant.7 7Author inquired with the people in the Ministry of Industry. 21 There is concurrently an embargo on importation of ammonium sulfate and urea. When free imports were permitted, the plant could not sell its production. Because it was financed by a foreign loan, the government has been hesitant to write the plant off as a bad investment. However, the recommenda- tion of Extension Department to use amophos (16-20 analysis) instead of pure nitrogen fertilizer because it is cheaper and there are no import restrictions. With the high world price of rice relative to the domestic price and with government wanting to keep the domestic price low, the private exporters have been required to pay a premium.for the privilege. The rate of that premium was roughly set at the difference between world market price and Thai domestic price. It is uncertain what the net effect of the abolition of the rice premium would be. The higher prices of rice would probably lead to more effective labor input in rice production, an increase in the use of other factors such as land and fertilizers input might also increase. The extended lands, however, are likely to be marginal and thus would be inferior in quality. But the higher price of 8 and the rice would make the use of fertilizers profitable, increased use of fertilizers would counteract the depressing effect of land scarcity. Thus, the productivity of rice would be improved. 8See Sura Sanittanont, Thailand's RiCe Export Tax. Table 40-41. 22 Corn (Maize) Corn is one of the important crops of the world since it can be used for human consumption as well as for animal feed and it can be used as a raw material in industries such as soap, margarine, alcohol, etc. Corn is relatively Cheaper in terms of feed value than barley or oats. It can be easily grown requiring only 90-120 days for maturity and can resist dry weather very well. So the crop can be expanded very rapidly and can provide a very good source of income to producing countries. Corn production in Thailand expanded rapidly during the last 10 years, partially because of the increase in world demand for animal feed. Corn improved farmers income, so many farmers made a shift from.ather field crops to corn in recent years. Corn production between 1937-1946 did not change very much with the total production area remaining about 67,000 rai with a total output per year of approximately 8,000 tons. In 1957 the area devoted to corn increased to 606,000 rai with a corresponding production of 135,800 tons. Ten years later the area had increased to 5,183,000 rai with total production of 1,950,000 tons (see Appendix A.2). Between 85 and 90 percent of total corn production areas are concentrated in 9 changwats which border the "rice bowl" on the north and east. There were only 5 changwats which have had extensive corn growing namely, Lopburi, Nakorn Sawan, Nakhonrajsima,Phetchabun and Saraburi. The other 23 four changwats have a minor proportion of the total corn area.9 The average yield of corn in Thailand has increased dramatically until very recently. The average yield in 1949 amounted to 127 kg. per rai and it jumped to 306 kg. in 1960 and increasing to 402 in 1970. However, by 1972 the yield had declined to 211 kg. per rai. There are three reasons to explain this phenomenon: (1) the breeding program which started in late 19503 developed several varieties which proved to be successful under field conditions and were released to farmers contributing to the early increase, (2) new land was brought under cultivation and initially corn yield was high. But with consecutive plantings on the virgin soil without replacement of lost nutrients, corn yields began to decline. Also, there was no irrigation in corn producing areas. During the drought year, a lot of damage to the crop will bring the average yield down, and (3) in addition, the price of fertilizer has been high relative to corn price, so the farmers did not use fertilizers. Further expansion of land for corn production will be rather difficult because, for one thing, there is not much virgin land left for development. If corn needs to be expanded further, and recognizing the need to replenish lost nutrients, special government action may be required. 9Pradit Rangsaritkul, and Natteethip Krasin, Produc- tion and Marketin of Corn, Bangkok: Ministry of Commerce, THaIIand 1972, p. 14-17. 24 Mbdern corn storage facilities in the provinces and in Bangkok are minimal. Construction of corn storage facilities is now progressing in several locations in Thailand. But during the 1966-70 period, storage facilities were small relative to the production and market flow of corn. Conse- quently, most corn flows rapidly out of the producing areas at harvest time, moves by truck and barge to Bangkok, and is rather quickly exported. Cotton The textile industry in Thailand has expanded rapidly. The production of cotton fabric increased from 109 million square yards in 1962 to 344 million square yards in 1969. The importation of cotton lint increased from 7.7 million kg. to 17.2 million kg. during the same period.10 The government realizing the large amount of foreign exchange required for cotton imports, launched a program of study to find out the problems and bottlenecks of increased cotton production. Cotton is an upland crop which has been grown exten- sively in two changwats, Sukhothai and Loei which accounted for about 54 percent of the total areas. The other area which accounts for about 25 percent of total cotton production includes Lopburi, Saraburi andPhetchabun.. The major cotton production is in these changwats.11 10 11R. J. Grimble, The EconOmic of Cotton Production. London: Overseas Development Administration, 1971, p. 1. Grimble, op. cit., p. 54-5. 25 Since the mid 19503 and more so in the last decade, considerable effort has been made towards breeding and selecting improved varieties of cotton which will produce both higher yields and better quality. Upland types were introduced from.Africa and the U.S.A. and were crossed with Cambodian strains. However, it is the imported upland types such as Reba B 50, Deltapine Smooth Leaf and Albar 200 that showed greater promise in the way of higher yield potential and better lint quality. At first Reba and recently Delta- pine have been released by the Department of Agriculture and widely grown by cotton farmers.12 The advent of improved types initially encouraged cotton growing so that production rose from an average of 23,000 tons of seed cotton between 1950 and 1955 to an estimated peak of 117,100 tons in 1968. unfortunately this high output has been followed by a dramatic drop in production since then (see Appendix A.3). Over the same period, the average area under cotton increased from 205,000 rais to 832,000 rais. It is clear that the expansion in cotton production up to 1968 was largely extensive rather than intensive. In other words, the increase was more the result of an expansion in area planted than an increase in yield. Average yield was 105 kgs. per rai in the period 1950- 1955 and about 141 kgs. per rai from 1964-67, an increase of 12Grimble, ibid. , p. 2. 26 34 percent. Cotton in all regions of Thailand is produced entirely under rainfed conditions.13 The essential problem facing the cotton industry in Thailand is how to reverse the setback in cotton production and, in the years ahead to produce enough of the crop to meet the needs of the country's growing textile industry. The recovery of cotton production and achievement of the produc- tion objective, set by the Third Development Plan of 201,000 tons by 1976, will be no easy task. The problem is that, to the majority of growers, the difficulties of insect control are such that they will lose money (or make very little) from.growing cotton. Mbre cotton is not grown in Thailand because to the majority of farmers, the economics of growing the crop are not satisfactory; and when cotton is grown the technical and managerial problems of its production are normally too great for good yields to be obtained. Grimble's study in Takfar has shown that, under present circumstances, farmers must expect to spend 350 baht on the purchase of insecticides for every rai of cotton they grow. This figure of 350 baht approximates the optimum i.e., the most profitable level of insecticide use under present farm conditions. Prospective growers should therefore be prepared to obtain, either by cash or credit, sufficient insecticide material for their total cotton.area (i.e., 350 baht X area). lBGrimble, ibid., p. 6. 27 Similarly, cotton farmers have experienced that over the course of the growing season, they will need to use a total of at least 200 man hours work for every rai of cotton they grow. Hence, available labor serves as an effective constraint. A further constraint to increasing cotton production is the capacity of spraying machinery available and the overall management capabilities of producers. The availability for spraying machinery also sets a limit to the maximum area of cotton that can be grown. A single power-operated knapsack sprayer, the type of machine most commonly found in the locality, can be used to look after a maximum of about 6-8 rai of cotton. These are the limiting factors which hinder the expansion of cotton production. CHAPTER III ESTIMATES OF PRODUCTION COSTS The objective of this chapter is to assemble and analyze production costs for rice, corn and cotton in the designated area. Data sources for this work were explained in the previous chapter. The plan of the chapter is to define and discuss the components of production costs for traditional rice, modern rice, traditional corn, modern corn, traditional cotton and modern cotton in that order. This is followed by a tabulation of total production costs (excluding land charges) per rai for each crop. Then gross and net revenue per rai for each crop is computed. Finally, marketing margins and marketing cost for each crap is computed in order to figure net foreign exchange in Chapter IV. In keeping with the objectives of the study it was necessary to distinguish between "traditional" and "modern" production practices. Even though the surveys of Thai agri- culture indicate negligible modern production in 1972, it seems most appropriate to project future developments including components of more scientific production rather than to assume traditional methods will remain in a static fashion. Traditional production methods are defined as the 28 29 the predominant current practices as reflected in farm surveys. Mbdern production methods are defined as those based on recommended practices by the Department of Agriculture. Labor Requirement and Production Costs of Traditional Rice Usually, for the area studied, rice production starts in June or July and is harvested in January or February. Farmers start plowing their lands after the first rain comes. Mbst of the first plowing is done by tractors, except some farmers still use animal power. Tractor services are avail- able for custom services in the locality when needed. Mbst of the second plowing and harrowing are done by animal power. The physical units of labor, power, seeds, and fertil- izers were taken from.the 70 sample farms identified earlier. Labor and power requirement at each stage of farm operations was calculated as a weighted average with weights based on planted area within changwat then a simple average over changwats. This also holds for quantities and values of seeds, fertilizers, insecticides, and herbicides. However for average yield, weights were based on harvested area. The survey reported number of rais plowed by tractors and harrowed by buffaloes. In other words, some farms completed first plowing by tractors and second plowing as well as harrowing by buffaloes. Other farms do all plowing and harrowing by buffaloes. The average time required for a 65 horsepower tractor to finish either first or second 30 plowing is .33 hours per rai or 20 minutes. The average time required for buffaloes to complete either first or second plowing as well as harrowing is 3.30 hours or 3 hours and 18 minutes (see Appendix C.1). These figures were used as a multiplier for the weighted average rais plowed by tractors and buffaloes. Then a simple average requirement for tractors and buffaloes was computed over the number of changwats. The physical inputs requirements for producing one rai of rice is tabulated in Tables 3.1 and 3.2. Harvesting averaging 34.7 hours per rai on the average is higher than either land preparation or planting which in each case averages about 19 hours per rai. Buffaloes remain important sources of power relative to tractors. The average animal power use is 6.77 hours while the tractor is only .18 hours which is equivalent to a half rai of work by a 65 horsepower tractor. The average seeds used is 11.15 kg. per rai. In general, farmers keep their own seeds for next year'splanting. However, the cost of seeds was figured using the 1972 market price of 8.97 baht. Usually, farmers apply fertilizers and insecticides in the nursery beds before transplanting to help insure uniform growth of the seedlings. The weighted average fertilizers for this purpose was only 1.3 kg. per rai. However, there were three farms in Saraburi reporting an application of about9 kg. per rai of fertilizers. They received the highest yield with an average of 500 kg. per rai. 31 .ouwn >o>usm a 803m aoxoa “Douaom .mhoo m.m maouuawuouanu .oouscaa mm «use: on no do.oh oi noon Honda sauce .3 .o 52533 33 .uuswcmno dado aw mauson uououuu owouo>w so now nowaaauasa a on nous ooa ousmww mush .ouaoc mm.o ow «an 030 wcasoam cw Houoouu .nn no How oouasoou «Baa O£HH nu.@ ma. on. wo.¢n #3. MN. ¢.H nn.mH n¢.oa omuuo>< Ho.m nu on. on.HN on. mm. u- ao.~m wn.Nm «Hanaog on.a nu uo.a am.m~ u: on. u- no.ma ma.o~ maaanouconxuz wo.~ mm. ma. on.m¢ q. :n mm.a om.nH NH.m «unuosxum mm.q Nm. o.~ no.mN mm.H ma. om 0.0 no.5 uucwonu mm.o ma. nu nH.oH on. .. Nn.~ mo.m om.o~ uavauuuua NH.m OH. u- so.¢¢ sm. «3. mm.m oc.o~ No.0N onncomuwsm oa.m no. u- mm.on HN. I- .. mn.n~ mm.¢m uanuuwnm ao.n ea. Hm. «H.0m u: u- u- mm.- oH.~N canonouonm mm.¢ mo. mm. oa.mm mm. mm. om.m n¢.- ~m.oa “unooumm cowuw>wuaao nouuouoaoum onwuom HuouoouH wconom wcwumo>uwm waahaumm cowumnwaauuom can wcaooos wcwuamam wand unswaono .NnoH .ooam amcoauwouuk mo Hum Ono oosooum cu oouwdoom moousom Mason was Honda mo manor .H.m canoe 32 .Ouua ho>hom aoum aoxoe "oouaom m. I ow. I ~m.~ m.H mm.w mH.HH No.~¢m owmuo>< II I no. I om.o oo.m HH.w «H.0H om.mom ausomog II I II I II II qm.m 0H.n 0N.Hu~ maamnouaonxoz «o.H I II I II II oa.m oo.HH ma.mm~ Hanuonxom wo.H I mo. I o~.~ 0H.H ee.m~ Ho.wN ww.¢~n uoaaonu we. I ma. I II II m~.~ mm.w H~.m~m newshouua mm. I mm. I mm.a mo.H Nw.m oa.HH He.oac xoaoaoouwnm II I am. I II II qo.m mm.o on.mmm uwnouwnm II I II I II II ow.~ ¢~.c on.eue unannouonm oa.a I NH. I mm.~H o¢.m oN.0H om.HH wo.mom wusoouom “Deane nope; Assume gouge Assamv “an“; Ausumv we uooo huwuaooo umoo muwuaoso uooo huwuamso uooo %u«u3ouo «ou\wu moowowouom moowowuooonu ououwafiuuom mooom macaw unswaonu .Nnma .ouoswaono oouooaom 3% Ham Ham coauosooum Guam Hoaowuavoua mo oumou oaooauo> owmuo>< .~.m Danna 33 The other five farms in the same province applied fertilizers at a lower rate of about 4 kg. per rai, receiving less than 400 kg. of rice per rai. There was insignificant use of insecticides and herbicides reported in all changwats. Critical Igputs and Additional Labor Required Under Modern MethOd of Rice Production The modern method of rice production requires critical inputs such as fertilizers and insecticides. Yield response is associated with these factors. The yield increase requires more time during harvesting and packing, also increased time during fertilization and spraying. The survey sample taken did not show any farm using modern methods. To suit our purpose, the yield response to modern inputs is based on the experiment conducted by Agronomic Management Section, Technical Division, Ministry of Agriculture. The Agronomic Management Section conducts experiments every year under farm conditions all over the country. The purpose of this is to give recommendation to other departments responsible for agriculture as well as to interested farmers. The recommended fertilizer is Amophos (analysis 16-20-0) at a rate of 15 kg. per rai. The yield responses were taken from experiments conducted on 27 farms in Central Region and 15 farms in Northern Region. 1Author inquired with agriculturalists in the section on the recommended rate of fertilizers. 34 The average yield for the two regions was 556 kg. per rai.2 Other input practices include the application of a 6 kg. per rai of B.H.C. to control rice stem borers and the spraying one time of either Sevin 85 or Folidol to control insects and diseases. The information obtained shows that rice yields under "modern" technology average 213.58 kg. higher per rai than for traditional input levels. The time required for har- vesting and packing also are higher. It is assumed that the labor and power required for farm operation under tradi- tional methods will be the same as for modern practices except for fertilization, spraying, harvesting, and packing time which would be higher in the case of modern. The Amophos fertilization is done before transplanting at a rate of 15 kg. per rai. The time required for fertili- zation is approximately 1 hour per rai. After 15 days after transplanting,B.H.C. is applied at 2 kg. per rai requiring 1 hour per rai. In the fifth week weeding and cultivation will be done with another 2 kg., application of B.H.C. per rai requiring approximately 8 hours per rai. In the eighth week the third 2 kg. application of B.H.C. will be made which requires 1 hour per rai. On the average for further insect 2Department of Agriculture, Agronomic Management Division,'Experimental Results of Fertilizer Trial on Field Condition?" January 1973. (Unpublished mimeograph in Thai.) 35 and disease protection, spraying will be done one time which requires approximately 1 hour and 30 minutes per rai. The total time required for weeding, cultivation, fertilization, and spraying more than by traditional method is 10 hours and 26‘minutes.3 Increased time required during harvesting and packing as a result of higher yield will be calculated on the same percentage basis as traditional operation information on Table 3.1. Increased time required for harvesting: §%§;g§ x 213.58 = 21.63 hours Increased time required for packing: 3:2;23 x 213.58 = .41 hours The total labor hours increased under modern methods over traditional methods is 32 hours and 30 minutes or approximately four (4) days. Labor Requirement and Production Costs of Traditional Corn The corn season usually begins with land preparation and planting in May or June and ends with harvesting in August or September (depending on weather conditions). Land preparation is mostly done by tractors and buffaloes and 3Twelve hours and 30 minutes - 2 hours and 4 minutes = 10 hours and 26 minutes. 36 requires less labor than is needed for rice. Planting corn is done completely by hand labor. At least once or twice weeding and cultivation is needed during the growing season. Corn producers in Thailand seldom apply fertilizers and insecticides. One reason is that new land brought under cultivation has sufficient soil nutrients for corn plants. But as pointed out earlier after 3 to 5 seasons soil fertility is exploited by the plant. This condition has caused the decline in average yield of corn. Corn yield fluctuations also are caused by flood or drought conditions in the region. The physical units of inputs required in corn production per rai were taken from the 54 sample farms in 7 changwats namely, Lopburi, Sukhothai, Saraburi, Uttaradit, Phitsanulok, Phetchabun, and Chainat. The weighted average of labor used in production were derived from the total areas in each changwat and total hours required during farm operation.4 The information on power used was based on reported numbers of rais plowed by tractors or buffaloes. The average time required for 65 horsepower tractors and buffaloes in plowing one rai is .39 hours and 3.13 hours, respectively. These figures used as multiplier on number of rais plowed by tractors and buffaloes for each changwat. The weighted average of variable costs including seeds, fertilizers, and 4See detail on deriving weighted average from rice production in previous sections. 37 insecticides was obtained under the same procedure as for rice. There is insignificant use of fertilizers and insec- ticides on corn except for one farm in changwat, Saraburi which reported an application of 20 kg. of fertilizers per rai having an average yield of 503 kg. per rai. The physical units of labor and other inputs used in the production are tabulated in Tables 3.3 and 3.4. gzigical Igputs and Additional Labor Reqfiired’UnderIModern Methods of Corn Production None of the corn farmers in the sample survey used fertilizers. Of the 54 farm questionnaires analyzed, only one farmer applied fertilizers and the yield response was not appreciably higher than that reported on the other farms without fertilizers. The two main reasons which may be offered to explain this phenomena have already been identi- fied. The corn areas have been expanded rapidly during the last 15 years on virgin soils. The new land brought under cultivation has sufficient soil nutrients to produce high yield without commercial fertilizer. After successive cultivation,yields per rai have declined since farmers did not use fertilizers to replace the lost nutrients. Farmers received good return during these early years of corn pro- duction without the risk associated with applying fertilizers. The second reason is that the price of fertilizers has been quite high relative to the corn price, so farmers did not want to take the necessary risk in making the investment. 38 so you Houamauaaa o no .ouwa Ao>uam a Beau coxua "mousom .mhmo nn.o haouqfiwxoummu no ouaon aN.mm ma cowumuoao Show a“ oouaooou uaau Houoe . S .o 53234 38 .uqswaono sumo 3H wcHSOHo uouoouu owouo>u own: was madman away .3330: mm.o uoonw ma How Ono weason aw Heuomuu .9: me o How oouaavou Dawn onHH mm. mm. mm. H¢.~N on. No. sn.mH -.w n.a owwuo>< II mm. II no.3H II II as.o mm.m II uncaono II we. on. n~.oN II II no.mH co.HH on.H aooosouocm -.H mm. an.a mn.wm II II Hw.mm o.¢H NN.N xoascumuanm mm. as. o~.o no.aH mo.m II oa.- mm.m om.~ uwoououu: mm. co. mm. n¢.m~ II 3H. mH.mN mm.“ no.H annoouom II No. no. Hm.m~ II II ww.o~ H¢.~ mm. Honuosxam o.H mo. II mo.m mo. II o<.oa Na.¢ Hm.m Munomoq III cowuo>wuaoo cowuouumoum oaomwam Huouooua mcwxoom wawuoo>hmm wcwhouam cowuonwawuuom mam wcwooos waaucon econ unzmcono .Nmma .cuoo Hmcowuflooue mo «mm «no Donooum cu powwooom uoomq mo muse: .m.m canoe 39 .ouma >o>u3m o scum coxos "wou30m II II mm. II mm. mm. No.o us.m ~.ooc owouo>< II II II II II II em.m mn.m o.wmc unaware II II II II II II mw.o mq.m wa.noc 3=AOSOuonm II II II II II II NH.¢ om.n m~.oam xoaacmouwnm II II w~.~ II II II mq.m o~.m mm.ma~ afloDHOuun II II «o. II mo.m mo.~ ma.m ~m.m um.mmc «Hosanna II II II II II II mm.o ma.“ um.cam wmsuonxam II II m~.H II II II no.3 Hw.n km.oms 3633363 Auemmv amuse Annamv amuse Assume we Assume we once muwuamao umoo huwunoso umoo huaucmoo umoo muauawno Hou\wM oomaoaouom movaowauode ouonwawuuom mooom mama» unswaoco .mmoa .mumswaono oouooaom 3% Hum pom coauooooum nuoo Huaowuaomuy mo oumoo DHooHuo> owouo>< .<.m Danna 40 The yield response to modern inputs was taken from the experiments of Field Crop Division, Ministry of Agriculture, conducted at two locations. One experiment was conducted at Farm Suwan using 50 kg. of fertilizers (14-14-14) per rai. The average yield taken from dry season and wet season is 751 kg. per rai. The other experiment conducted in farmers' fields in Saraburi province applied the same rate of fertil- 5 Since izer having the average yield of 672 kg. per rai. yield potential of corn under modern method of production can go up to 751 kg. per rai with 50 kg. of fertilizers, this yield will be used to represent modern methods of corn production. The yield difference between traditional and modern method was estimated to be approximately 345 kg. per rai. The increased yield requires more labor during harvesting and packing as well as fertilizing and spraying. The increased time required was calculated on the same percentage basis. The increased time for harvesting: Zgéegl x 344.8 = 19.02 hours The increased time for packing: 466‘52 x 344.8 = .45 The additional total time required for harvesting and packing is 19.47 hours. 5Ministry of Agriculture, Field Crop Division,"Experi- mental Report on Fertilizer Trial,"l972 (Mimeograph in Thai). 41 Corn varieties adopted by farmers are not susceptible to disease. The only enemy is grasshoppers which destroy tremendous areas in some years but such an occurance is not common. During such an outbreak, it is impossible for individual farmers to control the problem by themselves. The agriculture department may send a special team to do the job. The recommendation is to spray only once for protection. The insecticides used can be either Endrin, Sevin or Folidol at the rate of 300 gm. per rai. The approximate time required for spraying per rai is two hours. The fertilizer application was done before planting at 50 kg. per rai. The time required for fertilization is approximately 1 hour and 30 minutes. The additional labor hours required under modern methods is 22.41 hours (19.47 + 3.50 - .56), approximately 2.75 days. Labor Reguirgment and Production Costs of Traditional Cotton Cotton production is labor intensive relative to rice and corn. The crop's demand for labor seems to be at its highest from August to November when labor is needed for weeding, spraying and, at the end of the period, for picking the cotton. Usually, the cotton growing season starts in June and ends in December. The information on labor and power requirements for cotton production.was taken from 82 sample farms. Out of this sample, only 4 farms from Phetchabun province were used since other farms in the province had experienced complete crop failure. The other 78 sample farms 42 were located in Sukhothai and Loei provinces with the data obtained from the farm management accounting results assembled by the Production Section, Agricultural Economics Division. The average labor requirements at each stage of farm operation is derived as a weighted average for each changwat and then recomputed as a simple average over changwats. The average labor required in weeding and cultivation was 62.76 hours per rai and the labor required for the peak season of harvesting was 79.87 hours per rai. Information on tractors and animal power was calculated by the same procedure as described previously. There was no animal power used in Loei and Phetchabun. However, animal power was used in Sukhothai during plowing and cultivation. The information obtained from.the farm management accounting survey reported average hours of work per rai, so conversion was not needed. The tractor average time per hour was reported in Sukhothai and Loei provinces while Phetchabun province reported the number of rais plowed by tractor. Thus the tractor time required to complete plowing one rai was used as a multiplier for unit conversion. The land pre- paration for cotton did not require much power because cotton is planted in rows, with three to six seeds to each hill. In the manner of other crops, however, cotton was planted on a flat rather than on raised beds. Other physical inputs required in cotton production are insecticides, fuel and seeds. No fertilizer was used on cotton. Even without fertilizer the rich soils often lead 43 ' to the production of vegetative growth and consequent physical difficulties in applying insecticides. A weighted average for all inputs was computed for each changwat, then these results were averaged over changwats. Machine fuel require- ments for spraying machines will be discussed in a later section. Labor and other input requirements to produce one rai of cotton are summarized in Tables 3.5 and 3.6. The cost of insecticides used per rai varied widely among different changwats. For example, the variation was from 37 baht in Phetchabun to 306 baht in Sukhothai province. This variation would also likely increase yield variation in the different changwats. Critical Inputs and Additional Labor Required Under Modern MethOHTOI' Cotton Productibn The modern practice of cotton production is quite different from other field crops. The soil fertility level in the cotton producing area is such that fertilizer is not needed. A study at Takfar area shows most yield response 6 Insect resulting from fertilizer to be insignificant. damage is the most important cause of low cotton yields. Cotton's most serious enemies are the sucking insects, such as jassid, that feed on the leaves of young plants, and the 6R. J. Grimble, The Economics of Cotton Production, Foreign and CommonwealtH Office, London: Overseas Development Administration, November 1971, pp. 21-22, 48-50. 44 .mnma .fiooq oco “onuonJSm .ouoswcono aw cofiuoaooum 3H couuoo mo umoo do uuoaom "condom .mmmo mm maouqawxoumow .ouson on.oo~ me any one now vouaavou mason Honda annoy .Awunh cw namquOBHZv .Nnma vacuum ho>nam .aooq .uozwcono Sumo cw waazoaa nouoouu owmuo>m to now HDHHaHuHDE a mo ooma mDB ouswwu mach .mnaon mm.o ow “on one waasoam a“ acuoouu .m: no How oouwaoou oaau one a o~.H mm. an.o nm.¢m aH.om I on.~o mm.o m.HH owauo>< II mm. no.0H oo.~o wo.HH I mm.w~ mu.w II canonouonm II ma. No.m ~n.mmH mm.on I n~.Hm mm.mH nn.¢m Moog mm.m om. «0.3 om.m¢ ma.- I no.mo om.m ma.o “onuonxom cowuo>wuaso cowumuomoum oHowwnm Huouooua wowxoom wcaomo>uo= mcwhouam coHuowwawuuom vac mewoooz wauuaoam mama uoswcwno .Nmma .asnmaouonm mam «DOA .Hmcuonxdm .mum3wcmno aw couuoo HmcoHuHomuB mo «mm moo monooum Ou oouHSUDM moousom nosom one Momma no nude: .m.m Danna 45 .oumo mo>35m o Scum :oon ”mouoom II II mm.mo~ No.8 I- -I no.n km.~ mN.HnN owuuo>< II II oo.mm N.H II II no.m mo.H oa.mafl nanoseconm II II mw.NmH o.n II II NH.¢ mo.H o.HmN Hooq II II NN.oom om.HH II II NN.m «o.m om.on~ “msuonxsm Aonomv uouea Aoeomv Hosea Auoomv we Aoeomv we umoo zuwucmdo umoo zuwu3350 umoo mufiuamso umoo mufluamso Hmu\wM mooaowouom mmmwoauoomaH muouwafluuom ooom oHoww uoswcmno .Nksfl .ouosmcuoo oouooaom ow Hum Mom :owuoaooum couuou Honoauaowua mo oumoo oanmwuo> owouo>< .o.m Danna 46 bud and boll eating caterpillars such as the American Bollworm. Insect control, while not increasing a crop's potential yields, is intended to allow this potential to be realized. The modern method of production as defined in this study is characterized by the different methods and numbers of sprayings. In other words, improved management in spraying and scheduling spraying has an impact on cotton yield. Cotton is sprayed far more intensively than any other crap. If, in theIeventof rain, it is not possible for the farmer to spray the entire field at one time, it will be necessary to have more than one spraying schedule on a given farm. The study in Sukhothai and Loei indicate that the average farmer will spray 10 times per crop.7 Some farmers take good care of their plants by spraying up to 15 times while the other farmers sprayed only six times. Mbst of the farmers do not follow the recommendation given by Agriculture officers resulting in less use of insecticides and consequently a lower yield than would be the case had the recommendation been followed. Modern practice for the purpose of this study is based on experimental work conducted by Field Crop Division, Depart- ment of Agriculture. This division has one section working 7J. Ditapanya,"Resource Productivities of Cotton Pro- duction in Changwats Sukhothai and Loei, 1971-72 Crop Year." Thesis submitted to the Faculty of Economics and Business Administration, Kasetsart University, 1973. 47 on the effectiveness of chemical insecticides, spraying methods and spray schedules for cotton production. Experiments have been conducted on experiment stations in each of four changwats namely, Loei, Sukhothai, Saraburi and Suphanburi. Spraying at different times has been studied namely, spraying every seven days and spraying at 5, 10 and 20 percent insect incidence. It was found that spraying,with in3ects at an incidence level of 20 percent,resulted in higher yield and lower cost per unit of output than when spraying takes place at the 10 percent level. However, this conclusion is not practical under farm condition because the farmers will not have enough time to count insects every day before spraying. Spraying every 7 days has proved to be quite satisfactory fromIboth a practical and functional point of view. Toxa- phene-DDT was used in the experiment. Labor and other input requirements under modern method will be analyzed with regard given to the variables most likely to determine the success of insect control and hence the economics of the whole crop. The cost of insecticides and labor per rai from the experimental result is tabulated in Table 3.7. Almost all cotton farmers used their own equipment for spraying and several of the more prosperous farmers owned more than one spraying machine. Knapsack spraying machines are commonly used. MOtorized spraying machines are not popular. Mbtorized Sprayers have a higher initial cost and require fuel to operate but their work rate is much higher 48 .Houm3 mo HouHH o~\oooo¢ um HanIononmmxoa on: .uousa\n ow ooaowuooooH .«mu\n OH umoo Honda "ouoz . Cofiaflaw fimouwooawzv «EH ..munmcoqnm .Hnspmuom .Hofluosxalm .HDOA .maowuoum uaoawuummm Mach um aouuoo co coaumoaama< mam moowowuoomcH o>wuoommm Gnu no muuooom .aowma>an macho oHon .ucmauuomon Houauaaowuw< "Douaom n.5Hm Hon mm cum om.HH m.n muoomaH New u< n.mm¢ ohm ooH ohm w.mH OH muoomau Noa u< m.mm¢ wwq oma wmm oa.na ma muoomaH Nm u< m.mms moo owe mam ms.kH NH ozou A suo>m Aeou\nv Awuu\mv Aaou\nv Ago» Hou\wx umoo umoo ooHOAuoomcH \uouwav on: hmumm oHon amuoa wooed mo oowum oowoauoomcH mafia ucoauooua .Nnma .moaHH wcwuoumm ucouommwo Baum wawuaamom aouuoo mo moaoww oco mumoo .~.m DHooH 49 and requires less labor. It is assumed that on the average, 70 percent of the farmers use knapsack sprayers and 30 per- cent use motorized sprayers. The time required for spraying and fuel needed will be discussed later. The average yield response with spraying every 7 days was 485.5 kg. per rai. The difference between traditional and modern yield was 234.27 kg. per rai. The increased time during harvesting and packing is calculated on the straight line basis. The increased time for harvesting: §%%4§% x 234.27 = 74.48 hours The increased time for packing: 25%‘%% x 234 27 = 6.07 hours The total time required for 12 times spraying is 18 hours. The total time increased under modern practice is 68.36 hours or approximately 8.5 days. Labor and Fuel Requirement in Spraying Spraying time is a function of the age and size of the plant. As the plant size increases spraying time per rai will also increase. The experiment on the spraying time required at different ages of cotton had been conducted by the Agricultural Economics Division, Ministry of Agriculture. 50 The weighted average of knapsack sprayers and motorized sprayers was 5.52 rai per day, approximately 1 rai per hour.8 (See Table 3.8). The fuel required for motorized sprayers was 2 liters per hour.9 But it was previously assumed that only 30 per- cent of motorised sprayers, the average fuel consumption will only be 600 c.c. per hour. Spraying requires preparation of insecticide before spraying can be done. Usually, farmers spray 5 hours per day and spend 2-3 hours to prepare insecticides. It is assumed that the average time for insecticides preparation is 30 minutes per rai. So the total time required to complete spraying one rai is 1 hour and 30 minutes. This will apply to cotton production only. The rice and corn production did not require intensive spraying. The ordinary knapsack sprayers can do the job. It was assumed that rice and corn farmers did not use motorized sprayers. Input Cost The cost of inputs used in production were computed using 1972 prices and the following additional conditions. ngd The productivity of land is important to the individual 8Somchai Vanitkobjinda. The Use of Insecticides and Sprayers fOr DiseaSe Control. Agricultural Economics Divi- sion, Ministry of Agriculture, 1973 (Mimeograph in Thai). 91bid., p. 18. 51 Table 3.8. Labor Required in Spraying at Different Ages of Cotton. Spraying Times Age of Cotton Ordinary Air Engine Spray (Days) Pressure Spray Rai/day Rai/Day 1 8 - 15 7.82 14.88 2 l6 - 23 6.77 13.69 3 24 — 31 5.87 13.22 4 32 - 39 4.48 10.03 5 40 - 47 4.34 8.83 6 48 - 55 4.25 8.18 7 56 - 63 3.59 7.39 8 64 - 71 3.48 7.41 9 72 - 79 3.21 6.03 10 80 - 87 2.94 5.13 11 88 - 95 2.93 5.02 12 96 - 103 2.90 4.99 13 104 - 111 2.88 5.01 Total --- 55.46 109.81 Average --- 4.27 8.45 Adoption Rate --- 70% 302 Total weighted --- 298.90 253.50 --- 5.52 5.52 Weighted Average Source: S. Vanitkobjinda. The Use of Insecticides and Sprayers for Disease Control, Agricultural Economics Division, Ministry of Agriculture (Mimeography in Thai), June 1973, p. 19. 52 farmer from the standpoint of valuation and farm size, but, the task of maximizing output is to optimally allocate labor and capital resources among particular crOps. Thus, the choice is to select the crop and crop system that optimizes the return over additional costs to owned land and famdly labor. Thus, it is not necessary to calculate the accounting cost of land and family labor in making the choice among crops, even though such estimates are important for other purposes. £21225. The labor is homogeneous in the study area. The produc- tion of rice, corn and cotton utilizes the same skills and age grouping. The existing wage rate of labor in the locality was used to determine the price of hired labor. The average wage rate for hired labor is 10 baht per day.10 Family labor was considered on the same basis as hired labor. Tractors and Animal Power The cost is based on the average custom rate per rai in the designated area. The average rent of tractors was taken from the sample survey in 10 changwats. The average rate of plowing for rice, corn and cotton was 20, 24 and 32 baht per. rai, respectively (see Table 3.9). Given the rate per rai and the average time required to complete plowing one rai, the cost of tractor services can be calculated. 10Author inquired with several Agriculture Extension Officers in that area. 53 Table 3.9. Average Cost of Tractor Power for Land Preparation, 1972. Changwat Rice Corn Cotton Power Cost Power Cost Power Cost B/rai B/rai B/rai Saraburi 13.50 27 -— Petchabun 33 31 33 Phitchit 17.50 -- -- Phitsanulok 20 20 -- Uttaradit 20 20 -- Chainat 18.72 -- 25 Sukhothai 20 20 20 Nakhonrajsima -- _- -- Lopburi -- 28 -- Loei -- -- 50 Average 20 24 32 Source: Taken from a Survey Data. 11 This The rent of buffalo is 10 baht per 6 hours work. will serve as a cost of buffalo power. Seeds, Fertilizers, Insecticides and Fuel The cost of seeds, fertilizers, insecticides and herbi- cides per rai previously calculated will be used for traditional practice. The cost of fertilizers and insecticides used under modern practice was based on the other sources of information. 11Ministry of Agriculture, Agricultural Economics Division, Basic Data in Farm Management, 1971. Also, author inquired With agriculture officers in the field. 54 There is no information on the kinds of fertilizers used from.the raw data, nor on the kinds and quantities of insecticides and herbicides used. This is because the farmers do not understand about brand names. They buy what is available in the stores as "rice fertilizer" or "corn fertilizer." The information on fertilizer prices was taken from.the study done by the Agricultural Economics Division, Ministry of Agriculture. The data are tabulated in Table 3.10. The information on the brand names of the insecticides used by farmers is not available. Farmers will buy insecti- cides according to easily recognized symbols like the "skull and bones" which is used on the packages of Folidol. Other brands have different symbols which the farmers use to identify the insecticides. Brook Greene, studying innovation in 1968, reported that there were less than fifty percent of the farmers using insecticide, who knew the brand name of the insecticide they were using.12 According to Dr. Wongsiri, Head of the Entomology Divi- sion of Agriculture Department, the recommendations for the application of insecticides for rice were the use of B.H.C. and either Sevin or Folidol. Generally, if a farmer adopts the use of insecticides he will apply B.H.C., since it is a general insecticides and the granules are easily spread on the fields. Sevin and Folidol, used mainly to control flying 12Brook A. Greene. Rate of Adoption of New Farm Practices in The Central Plgins, Thailandl Occasional Paper No. 41, A Joint Project of Kasetsart University and Cornell University, Bangkok: Kasetsart University, October 1970, pp. 110-2. 55 .ouoo you oooaoaaooou «HIQHIQH .ooau you covaoaaouou oquH "ouoz .Asora osv uuooum uoroaaooooa .mkme aoxmoum .ououaoofluu< mo huoososz «NwH>Huonooum ousuaauamw< oooouoaH ou muouaflauuom mo maoanoum .aowow>ua mafiaoaoom Houauasuwuw< "ouuaom oo.m oo.m mm.N o~.~ mNIN Hm.a wn.~ ma.~ Nw.H NHIemINH n~.m an.m NM.N Hm.u mo.~ n~.H mm.~ oo.~ mo.H mHImHInH mo.m mm.~ o~.m mm.~ mm.H mo.a mN.N oa.a oo.H «HIeHIeH mH.m Ho.~ mN.N wH.N mm.H mm.H Ho.~ so.a oe.H o~ I ma no.~ aH.~ ow.H mm.H mo.a mm.H om.H mm.H m~.H ONM woo okuoanu aawmmouom ¢~.~ mm.H nm.a oo.a wm.a nH.H No.H mm.H NH.H momm NON ouonmmonm Hoaam mm.m No.m am.~ ow.~ wm.~ Ha.a om.~ oo.~ Hm.a 2 "co won: Hm.m mm.a ~o.a nw.a em.a NH.H mw.a om.H NH.H .z NHN ouonmaom anacoaa< uoxumz mammoaonz uoxuoz Odomoaona uoxumz oaoooaons Hoooq xoanwm .m.H.o Houoq xochom .m.H.u Hooog xoxwaom .mIH.o Mama «Baa Hnma uonwawuuom .maoHIHkoH .uoxuuz Huooo sou xosuoum as ooosum uousesouom .oH.m menus 56 insects carrying diseases and locusts, must be sprayed and, therefore, fewer farmers apply these chemicals. Folidol is used to a greater extent than is Sevin. The farmers that apply Folidol or Sevin also apply B.H.C. because Folidol and Sevin do not control the stem-borer. The Field Crop Division recommends Endrin or Sevin for corn. However, Folidol is popular with the farmers and some substitute Folidol for Endrin or Sevin even though it is not recommended for corn, the price is higher and is considered less effective than the other products. Thus, these three insecticides were considered for use in corn. The only insecticide recommended for cotton is Toxaphene-DDT, and the farmers do not substitute Folidol in their cotton production. The details are tabulated in Table 3.11. Table 3.11. Recommended Insecticides and Quantity Use Per Rai. Crops Insecticides Recommended Use Per Crop Rate/rai (c.c.) Kg. or c.c. 6% BHC 2 kg. 6 kg. Rice Sevin 85% 350 gm. 300 c.c. Folidol 250 c.c. Endrin 19.5% 300 c.c. Corn Sevin 85% 350 gm. 300 c.c. Folidol 250 c c Cotton Toxaphene-DDT 1.3 liter 15.8 liter Source: (1) Ministry of Agriculture, Department of Agricul- ture Extension. (2) Ministry of Agriculture, Department of Agricul- ture, Entomology Division. 57 The Bangkok retail prices of these insecticides were obtained from two surveys of both wholesale and retail shops. The first survey was taken in early 1972 and the second was in early 1973. The average retail price in Bangkok is about 12-15 percent above wholesale prices. Local market distri- butors received orders from Bangkok's wholesale shops on a discount basis. The percentage discount was assumed to be offset by the transportationcost. The local market price was assumed simply as a mark up of 10 percent over the retail price in Bangkok. The percentage of adoption was based on information from 13 For the Entomology Division, Ministry of Agriculture. simplicity, it was assumed that farmers practicing modern methods will adopt insecticides carrying these brand names. The weighted average price for B.H.C. is 11 baht per kg. The weighted average price of insecticides for rice is 78.32 baht per liter, for corn it is 30.80 baht per liter. The weighted average price is tabulated in Table 3.13. Production Costs of Rice, Corn and Cotton The variable costs of production can be derived from the physical units of inputs and labor required in producing one rai of rice, corn, and cotton. The variable costs of corn is lowest, while the variable costs of cotton is highest at both 13Author interviewed Dr. Thanongchit WOngsiri, Head, Entomology Division, Department of Agriculture. 58 Table 3.12. Bangkok's Retail Prices of Insecticides, 1971-1973. Insecticides Quantity Retail Prices (Baht) 1971 1972 1973 B.H.C. 6% 1 kg. 9 10 12 Sevin 85% 1 kg. 70 70 75 Folidol 1 liter 70 72 80 Endrin 19.5 1 liter 42 45 50 Toxaphene DDT 1 liter 25 28 35 Source: Survey of wholesale and retail shops in Bangkok. NOte: It is a per unit price, percentage discount will be given on large quantity purchased. technology levels. The variable costs of rice is in between the two crops. Production costs of corn, rice and cotton under traditional practice are 105.22, 120.46 and 450.04 baht, respectively, while under modern practice are 269.75, 279.88 and 909.52 baht, respectively. Detailed information is summarized in Tables 3.14, 3.15 and 3.16. Bangkok Wholesale and Local Market Prices Local price is the price received by farmers in different changwats. Local prices are effected by two important factors: (1) distance from the changwats to Bangkok market. The price received in the local market is inversely related to distance because of transportation costs. (2) The demand and supply condition in Bangkok which will signal price change to local market, usually it will move in the same direction. The average local price from the Table 3.13A. Rice, Corn, 59 and Cotton, 1972. Weighted Average Prices of Insecticides Commonly Used in Crops Insecticides Quantity Percentage Retail Weighted Used Adoption Price Price (3) (I) B.H.C. 6% 1 kg. 100 10 10 Rice Folidol 1 liter 60 72 4320 Sevin 85% 1 kg. 40 70 2800 Weighted Average -- -- -- -- 71.20 Price Sevin 85% 1 kg. 40 72 2880 Corn Endrin 19.5% 1 liter 35 45 1575 Folidol 1 liter 25 72 1800 Weighted Average -- -- -- -- 62.55 Price Cotton Toxaphene- DDT 1 liter 100 28 2800 Weighted Average -- -- -- -- 28 Price Source: Calculated from Table 3.12. Table 3.13B. Ma rk—up Price in Local Shops. Commodities Insecticides Weighted Average Price (B) Rice B.H.C. 6% ll Folidol, Sevin 78.32 Corn Sevin, Endrin, Folidol 68.80 Cotton Toxaphene-DDT 30.80 Source: Calculated from Table 3.13A. 60 .¢.m new m.m madame aoum .xuos.ou=on w you asap OH on: ouou owmsa "oouaom nn.mo~ II oo.o~ om.nHH no. mo.mm ma . Hm“ suave: NN.mOH II mm. mm. mm. mo.nm cnwuo N.oo¢ Hmdowuwvoua Anv any Ago any Auv any Anv uooo Odoumam Houooua uooo «ou\mu Ho>oa oaooauo> Houoa mongowouom moowoauoooaH nouwauuuom uwoo Hosea Huooog macaw awoaoanuos .mooauooum shove: was Haoowuavoua nova: auou no women aoauoaooum moaoua aouw :oxou Duos ooowum movwowuoomnH moo muoufiaauuom mo ouou oooaoaaooou woo woo: panama auoooz w you undo 0H ma scans Dunn uoxuma owmuo>m so woman no: Duos owns .mH.m pansy .ma.m one OH.m .moowouuuomaw can ououfiafiuuow .~.m Danna Baum woumuoaow was voguofi Hmdowufivoua N .xuos.mu:on .~.m can H.m madame scumH «moouaom ww.mn~ on. on.aw on.mm w~.HH om.oa mmH own :uoooz oc.o~a on. om. Nm.~ wN.HH om.oa mm ~¢.Nem Hoaoauaomua Anv any Anv Amv any Anv any umoo oaowmam nouooua uooo «ou\wM Ho>oq oaomwuo> Houoa Nooowowouom «moouowuoomdu muouwawuuom 3300 Hutch Huoomq macaw hwoaoanooa .moowuooum sauce: was Hoaowuuooua noon: mafia mo oumoo cowuoaooum .qH.m Danna 61 .Hoam mo ououwa o ooaoooou can Dowuooun Honouuaoouu Home: woaau oH mos mango mo amass: unnu oceanoo mos uH m .uouaa non undo N uooo Doouaom N .o.m was m.m moaooa aoum .xuos mason w you anon ad was some own?H "ouusom um.mom o<.¢H III oe.nmm mH.N Hm.c~ mmm m.mm¢ shove: eo.ome NH III mmm.moa mH.~ Hm.o~ emu n~.HnN Honowuavoua Ago any any Amv any any Anv umoo Odommam Houoouh umoo aou\mx Ho>oa oaooauo> Houoa «Hosp moowowouom moowowuoooaH mumoo nosom Huoooa macaw mwoaoasooa .ooowuooum suovoz odd HouOAuwooue Moon: acuuoo mo muooo :owuosvoum .oHIm DHAQH 62 areas studied will be used in the analysis. The average commodities price received by farmers in 1972 for rice, corn and cotton are .94, .86, and 4.35 baht per kilogram, respectively. The information on farm and Bangkok wholesale prices of rice, corn and cotton was taken from.week1y commodities price reports issued by Agricultural Economics Division, Ministry of Agriculture. The yearly average of prices were taken from 11 changwats during the period 1970 to 1972. The average price of rice was taken from all grades of paddy 1" while both namely 100 percent, 5 percent and 10 percent corn and cotton each have only one grade report. Total weekly prices were divided by number of weeks to get the yearly average price for each changwat. Finally, the average commodities prices were derived from the sum of the changwats' average prices divided by total number of changwats. The Bangkok wholesale price was taken from yearly average wholesale prices. The commodities price is tabulated in Tables 3.17, 3.18, and 3.19. Farmers' Revenue and Marketing Margin The marketing margins for rice, corn and cotton were estimated by computing the difference in the prices if one 1['Paddy rice grade is classified according to impurity percentage of undeveloped seed. 63 Table 3.17. Average Local Price by Changwats 1970-1972 (Baht/Ton for Rice. Baht/Kilogram for Corn and Cotton). Changwat Commodity 1970 1971 1972 Rice 886.14 700.28 1,070.95 Phetchabun Corn .85 .78 .98 Cotton 3.17 4.52 4.81 Rice 828.0 622.25 877.94 Uttaradit Corn .83 .76 .82 Cotton 3.50 3.82 4.00 Rice 819.45 523.15 905.39 Phitsanulok Corn .79 .74 .72 Cotton 3.55 --- 5.00 Rice 903.37 692.09 908.57 Nakhonrajsima Corn --- .74 .82 , Cotton 3.27 3.94 4.19 Rice 929.0 944.93 1,043.14 Lopburi Corn .97 .67 .74 Cotton --- 5.00 4.46 Rice 1,113.75 826.0 1,042.76 Saraburi Corn .85 .86 .98 Cotton --- 4.78 4.00 Rice 884.56 753.14 747.00 Chainat Corn .86 .84 0.72 Cotton --- --- --- Rice 793.50 551.20 922.84 Loei Corn .74 .74 .69 Cotton 4.10 3.95 4.65 Rice 821.96 622.65 894.91 Sukhothai Corn .84 .72 .92 Cotton 3.71 3.84 4.13 Rice 830.21 768.00 945.81 Kamphangphet Corn .84 .79 1.09 Cotton 3.39 4.70 14.02 Rice 853.20 603.00 979.21 Phitchit Corn 1.00 .67 .95 Cotton --- --- 4.28 Source: Generated from "Commodities Price by Changwats and Bangkok Wholesale Prices Weekly Report". 64 Table 3.18. Average Price Received by Farmers for Rice, Corn and Cotton, 1972 (Baht/Kg.) Changwat Rice Corn Cotton Phetchabun 1.07 .98 4.81 Uttaradit .88 .82 4.00 Phitsanulok .90 .72 5.00 Nakhonrajsima .91 .82 4.19 Lopburi 1.04 .74 4.46 Saraburi 1.04 .98 4.00 Chainat .75 .72 -- Loei .92 .69 4.65 Sukhothai .89 .92 4.13 Kamphangphet .95 1.09 4.02 Phitchit .98 .95 4.28 Average .94 .86 4.35 Source: Generated from Table 3.17. Table 3.19. Average Wholesale Prices in Bangkok, 1970-1972 (Baht/Ton for Rice, Baht/ Kilogram.for Corn and Cotton). Commodity 1970 1971 1972 Rice 1,222.61 900.00 1,127.00 Corn 1.23 1.19 1.14 Cotton 3.88 4.91 5.40 Source: Ministry of Agriculture, Agricultural Economics Division, Commodities Price by Changwats and BangkOk Wholesale Prices, Weekly report (various issues). 65 unit of production, first using Bangkok wholesale prices and then using local farm prices. Then marketing costs were computed by multiplying marketing margins by yield per rai. Marketing costs include transportation, storage, distribu- tion costs, and entreprenuer profit. The marketing cost of modern rice, corn and cotton are 190, 280, and 1,050 baht per ton, respectively and 65, 114 and 264 for these crops, respectively under traditional. This wide range is explained by supply/demand factors in the market and upon costs and profit margins in transportation and marketing industries. In turn, costs and profit margins in these industries are affected by scale of operation and competition among firms. The scale of operation for cotton is small with little competition in this business, unlike the marketing system for rice and corn which is well developed. (See Table 3.20). Comparing the performance in terms of net returns per rai, among these three crops we see that lowest returns are received by rice farmers and highest returns by cotton farmers at two levels of technology. The return to rice and corn farmers is only 201 and 244 baht per rai, while return to cotton farmers is 642 baht per rai under traditional methods. The return to rice under the modern method relative to corn is small, the difference is only 41 baht per rai for rice and 132 baht per rai for corn, respectively. The return to cotton farmers is almost double under modern methods. (See Table 3.21.) 66 .mH.m mam wH.m nuance aouw ouwum was mama» omnuo>w aoum wououoaow osuo>ox .oH.m was nH.m .qH.n nuance scum "wou50m wn.mom N¢.HHN n.qu an.mo~ mo.H mm.~mo.a mm.¢ MNIHmN couuoo w~.oa~ ow.m¢o o.Hmn «n.maa mu. mm.mqm ow. N.ooq choc qumoa «o.~um o.omm oo.mo aH. nm.a~m am. No.~qm DOHM .we\n .wx\m aou\m Ho>og fiau\n Ho>oq amu\n mumoo Bush um Hmu\wu mumoo afiwumx Show um Duanm Hmu\wx wafiuoxumz osco>om macaw mcfiuoxumz waauoxumz oaco>om Hmuoq oaofiw vonuoz shove: ooeuoz Hmooaufiomue moauaooaaoo .mwoaoanooa mo oao>oq 039 um mawwumz wnwuoxumz was oaao>um .muoaumm .om.n Danna 67l .uooo some moafia moao>ou amuou no voaawoo OH sauna: moouo .3wwuma mmouw aoum dowuofiooumov was uoomd mawaom mo dowuosoou noumw nuauou o no voafimoo mu nuauom uoz ”Duoz .oH.m was nH.m .ea.m vow ow.m modems scum "mousom oe.~o~a ~m.aom N¢.HHH~ mm.¢ m.mwo Hm.~qo n oowum Hou\wx chauom oaooauu> n ooaum «mu\wx uoz Hmuoa onao>om Hoooq macaw uoz Houoa oaao>om Hove; papa» oonuoz nuoooz vacuum Hosowuaooua moauuooaaou .hwoaoanooa mo mHD>OA 039 um muoahom Ou “pm you panama was mumoo .HN.m manna 68 Modern methods of production required import inputs having foreign exchange components. Since the crops showed higher net return per rai under modern methods, the foreign exchange cost and revenue per rai should be disaggregate in order to evaluate the net foreign exchange earnings under two levels of technology. This will be undertaken in the next chapter. CHAPTER IV FOREIGN EXCHANGE COSTS AND RETURNS The objective of this chapter is to develop a frame- work for analysis of the foreign exchange components of imported inputs used in the production of the selected crops. The ultimate objective is to be able to answer questions about the prospects of increasing foreign exchange earnings or savings by making adjustments in the regional production pattern for these crops. Before this can be done, however, unit calculations determined thus far must be aggregated to a regional basis. Then by making certain assumptions about the rate of which farmers in the areas will adopt modern practices and move up the ladder on yield potential, alternative government policies, pertaining to changing crop production patterns and their foreign exchange implications can be evaluated. Forei n Exchan e Components of Import Inputs Fertilizers and Insecticides Fertilizer and insecticide imports have increased substantially. Insecticide imports have increased from about 3 million kilograms in 1962 to 10 million kilograms 69 70 in 1967; however, they declined to 7 million kilograms in 1972. Fertilizer imports increased from .06 million tons in 1962 to .25 million tons in 1970 and reached .39 million tons in 1972.1 Close examination of nutrient imports shows that nitro- gen fertilizers were mostly imported in the early period. A change in the composition of fertilizer imports began to take place in 1967 which may be explained by the common recommendation of the formula 16-20-0 for rice fertiliza- tion by the Rice Department. Secondly, a government policy to control the importation of single nitrogen fertilizer has caused importers to change their orders for mixed fertilizers.2 In addition, the use of other fertilizer analyses has become widespread. For example, the analysis 14-14-14 is recommended for corn by the Field Crop Division, Ministry of Agriculture. The c.i.f. price per kilogram.of imported fertilizers was taken from reports prepared by Agricultural Economics Division,3 which reported a c.i.f. price for 16-20 fertilizer 1Generated from.the import statistics, Department of Customs , Bangkok , Thailand . 2Thailand has a fertilizer plant which is limited to the production only of ammonium sulfate and urea from lignite. The cost of manufacturing is higher than that produced abroad. To protect the industry, the government put controls on nitrogen fertilizer imports. 3Ministry of Agriculture, Agricultural Economics Division, Problems of Fertilizers to Increase %Ericulture Productivity. Bangkok, 1973. (Manuscript in a 71 of 1.52 baht per kilogram and of 1.65 baht per kilogram for 14-14-14 fertilizer in 1972. A lack of quoted c.i.f. prices for the recommended insecticides under study, and the fact that the Statistical Division, Department of Customs keeps records only by major groupings rather than brand name has made disaggregation of the foreign exchange component difficult and with low reliability. If the price range within a group is wide, average price would not be a good estimate. However, if the price range is narrow the average price would be quite reliable. It was decided to let the average price for a group containing the recommended insecticide serve as the c.i.f. price of the insecticide involved. B.H.C. insecticide is imported as containing 20 percent active ingredients whereas recommended dosage is with only 6 percent active ingredients. So a straight line interpola- tion was used to derive the appropriate price. Endrin is diolefin based, Folidol belongs to organic phosphate and Sevin belongs to the carbamate group. The c.i.f. price per unit imports for each insecticide was derived from total imported value and quantities imported in 1972. Details are tabulated in Table 4.1 and 4.2. Tractors and Attachments4 The majority of tractors are owned by the more prosperous farmers and local businessmen. Mast owners have 4The details of this section are largely taken from W. J. Chancellor, Mechanization of Small Farms in Thailand .Amoammw mnowum>v muuomom mEOumoo mo uaoauuwmon "oouoom 72 Hma.mwm.oma N¢H.Nmo.n o-.¢m~.an oom.Nnn.N «do.nww.ooa nHm.noo.¢ muonuo ooN.oNH omm.o NaH.om omm mum.HaN.H mom.~o Aafi>omv Dumaonuwo mnm.mm¢.n mam.mmm nmm.mm~.a omn.- owm.aN~.¢ Hmo.mma AHooHHomw Duos Imonm owamwuo mom.mm~.a moo.om nmo.ono.n Haw.¢¢o mm~.waq.n Hmm.on Aawuocmv oomom GHMDHOHQ mwm.aoo.a ooo.ooa oqo.om mom.H Hum.mo¢.m Hmw.NmH.H Now .o.m.m mmn.omm www.mo noo.wm mom.o mmo.omn.qm mmo.mmm.m Ham conumoouomm A3 Amos 2; Amos 3v Amos osHm> huwucmno ovam> zufiucmso DDHM> muwuaoso Whoa Han onoH mucowoouwcH .3.H.o o>aoo< mo moss .NNoHIoaoH .oouooaH ouaouoooooH ooouommuo mo sooHu> uou ooaosuouso .e.o odoue 73 Table 4.2. Average C.I.F. Price of Insecticides in 1972. Active Ingredients Quantity Value Unit Price Imports (Kg) C.I.F. (B) (B/Kg.) DDT 65,282 836,783 12.82 BHC 20% 104,000 1,001,525 9.631 Diolefin based 56,069 1,289,365 33.00 Organic Phosphate 292,919 7,439,379 25.40 Carbamate 4,950 129,266 26.11 Others 7,092,142 130,383,151 18.38 1 BHC 6% active ingredients cost 2.89 baht per kg. calculation based on a straight line extrapolation. Rice: weighted average price of Folidol and Sevin is 25.68 baht per liter. Corn: weighted average price of Folidol, Sevin and Endrin is 28.34 baht per liter. Source: Calculated from Table 4.1. only one tractor, though some own two or three. Plows with three or seven discs and disc harrows are the most common implements but other auxillary equipment including maize shellers and trailers for the carriage of crops are also used extensively. Over the last few years ownership of tractors has continued to increase steadily. At the same time, however, demand for tractor work has not grown at the same pace. The overall demand for tractor work is now likely to be relatively and Malaysia—by Tractor Hire Services, Rice Policy Conference, IfiternatiOnaIIRiceRResearch Institute, May 9-14, 1971, p. 3-15. 74 "inelastic"; the competitive nature of the market has meant that demand for the use of individual tractors is probably almost "perfectly elastic." Chancellor reports that most tractor owners indicated that farmers were very price- conscious, and that any slight increase in charge rates by an individual tractor owner would result in a sharp reduction in demand for his services. Tractor owners have been forced to look for other ways of more fully using their machines by sending their machines to work where tractor density is lower and competition is weak. During slack months tractors are temporarily sent to work in areas where the seasonal demand for tractors is complementary, rather than competitive, with the demand in the locality. During peak season, that is late April to early June, tractors may be running up to 20 hours a day by employing drivers to work in shifts. Tractors are busy about 5 months a year, working about 12 to 24 hours per day, with annual hours of operation averaging about 1,360 hours. Travel consumes 24 percent of the operating time of a 4-wheel tractor. Tractors breakdown causes a reduction in the potential working time by 26 percent. The average hours spent in the field is 1,205 per year. Annual depreciation due to wear is 16 percent and annual repair cost is 12 percent.5 SChancellor, ibid., p. 9-14. disc harrows were calculated by the Department of Customs for 1972. 75 The c.i.f. prices of imported tractors, disc plows and Usually, tractor size as measured by horsepower ranges from.42 to 77. purposes was in the 60 to 70 horsepower range. But the most commonly used size for hiring So the quantities imported of these two models is larger than for the other models. The average c.i.f. price was computed from the total value imported divided by number of tractors imported. plows and disc harrows (see Tables 4.3 and 4.4). The same procedure was also applied to disc Table 4.3. Quantities and Values of Tractors and Attachment Imports, 1970-1972. Kinds C.I.F. 1970 1971 1972 Quantity Value (B) Quantity Value (B) Quantity Value (I) Tractors 99 2,919,678 1,367 82,750,184 109 4,969,739 Plows 24 108,008 12,114 8,624,334 926 5,417,411 Barrows -- --- 202 421,894 46 320,891 Source: Department of Customs Reports (various issues). The life expectancy of tractors is 5 years. Repair costs and depreciation were computed on a straight line basis. 6 The repair cost reported by Chancellor was 12 percent per year. 6 The author interviewed the sales managers of Massey Ferguson Company and Ford Mbtor Company for these estimates. 76 But with a short life expectancy the amount required for imported parts is small. 'It was assumed that 15 percent of the foreign exchange component based on c.i.f. price of tractors will be spent on parts during a 5 year period. On this basis, the total foreign exchange for parts is 6,839 baht. The life expectancy of disc plows and disc harrows is 7 years without any requirement for imported parts. Table 4.4. Average Import Price of Tractors and Attachments, 1972. Kinds Quantity Value Unit Price C.I.F. (B) (B) Tractors 109 4,969,739 45,594 Disc Plows 926 5,417,411 5,850 Disc Harrows 46 320,891 6,976 Source: Calculated from Table 4.3. The c.i.f. price per hour of work by tractors was computed by adding up foreign exchange costs of parts to c.i.f. price of tractors and dividing by the total number of hours worked. The c.i.f. price per hour of work for disc plows and disc harrows was computed by dividing c.i.f. price by the number of hours worked. But the tractor cannot pull both disc plow and disc harrow at the same time, so it was assumed that both will be used equally. Thus, the average c.i.f. price of both will be used for further analysis. (See Table 4.6). 77 Spraying Machines In general, farmers own at least one knapsack sprayer except for those farmers who cultivate only 5 to 10 rais and would not purchase a sprayer. The farmers seldom own motorized sprayers unless they cultivate more than 100 rais of land or happen to be fruit farmers or cotton farmers. The rice and vegetable farms apply insecticides more extensively than other field crops on the average. A report of the Agricultural Economics Division in 1969 shows that 1,522 farms out of 2,774 sample farms reported using insecticides The total number of sample farms was 7,668, with an average of 36 percent using insecticides. The percentage of rice farms using insecticides is about 55 percent. The number of vegetable farms using insecticides was 921 or about 33 percent, whereas only 2 percent of the corn farmers used insecticides.7 The most common type of sprayer owned by rice and vegetable farmers is the knapsack sprayer. The capacity of work is about 2 rais per hour.8 These crops do not require as much spraying as cotton. Cotton was sprayed far more intensively than any other crop, and.with the importance of timing, the capacity of spraying machines has a correlation 9 'with cultivated area. Some of the cotton farmers own 7S. Vanitkobjinda. The Use of Insecticides and Sprayers for Disease Control. Agricultural Etonomics Divisién, Ministry Of Agriculture, June 1973, p. 13 (Mimeograph in Thai). 8Ibid., p. 4. 9Grimble, pp. cit., p. 33. 78 motorized sprayers (30 percent), whereas 70 percent used knapsack sprayers. The capacity of motorized sprayers is sufficient to cover up to 8 rais per day depending upon the height of the plants.10 It was assumed for this study that rice and corn farmers own only ordinary knapsack sprayers and that ownership of motorized sprayers is not significant. The average c.i.f. price of knapsack sprayers and motorized sprayers was compiled from statistical section reports, Department of Customs. The total value imported in 1972 was divided by the total number of machines to get the average c.i.f. price of sprayers (see Table 4.5). A life expectancy of 5 years was assumed for these machines without any imported parts required within the study period. Likewise the repair cost will be all domestic costs having no foreign exchange component in it. The sprayers have an effective use of 5 months a year 11 The average c.i.f. price per ‘with 5 hours of work per day. hour was derived from the average price per sprayer divided by total number of hours worked in 5 years (see Table 4.6). Oil (Fuel) As a country undergoes the process of economic develop- ment, the demand for energy increases. Oil is the major source of energy in the world. Agriculture requires oil as a source of energy for mechanization and transportation. 10 11 Vanitkobjinda, pp. gig., p. 4 Ibid., p. 7. 79 Table 4.5. Quantities and Values of Knapsack Sprayers and Motorized Sprayers (Knapsack Sprayer Duster Engine), 1972. Months Quantities Value C.I.F. C.I.F. Price (3) Per Unit (B) January --- --- --- February 5 6,240 1,248 March 5 6,240 1,248 April 5 6,240 1,248 May 156 314,038 ‘ 2,013 June 736 820,936 1,115.50 July 4 746 186.50 August 315 297,467 944.40 September 132 181,860 1,377.72 October 562 120,156 213.80 November 120 86,417 720.14 December 49 9,941 202.88 Total 2,089 1,850,281 885.73 Source: Statistical Section, Department of Customs. The purpose of this analysis is to find out the foreign exchange component of the benzene, diesel and lubrication oil required for tractors and sprayers. The average conversion ratio from crude oil to benzene and diesel fuel is 24.6 and 27.8, respectively (see Tabl3 4.7). During the refinery process both benzene and diesel fuel will be extracted from crude oil. 80 .oaoo mms.~m Aommo + smm.nsv om uouuooas ouuoo mo ouooo mosuoaooa suooouuu mo oosuo .3.H.o Ame .unmn on. ma xnos.mo Mao: umm mwamnoxm cmamuow mwmum>m msa .nowumnmmmum mama ca omma hHHmavm me on omabmmm ma souumn omao mam 36am omwo om .maau m um unmanomuum moo soup 3mm Houomuu m madam Aqv .Aanma nomHmS mamamav «mu umm Hao mo .o.o QOH pom Hmam Hmmmao mo mumuwa n.~ masmaoo ououomua Amv .xuoa mo Hoop umm mcHHOomw mo .o.o coo haao mmauoaoo uH om .omoa mumhmumo mo amoeba Hmuou mnu mo unmouma on haco mmz ufi Dam .unon Hmm maAHOAmw mo mumuaa N mmabmaoo momma mawwcm ANV .mudon n ma mom son xuos mason mo Hones: may .Hmmm m menace n mm: m>wuommmm m>mn mummmumm umau omabmmm ma uH adv om. mn.mmw ons.m emu m mummmumm mm. mnm.o nm¢.m mo~.H n msouumn Oman so. onw.n mm¢.m mo~.H a osoeo ooso on.w mm¢.~n muo.o mo~.H m ououomuh Amv xuos mo snow pom pom» Hmm Amummwv mwamnoxm Amv mac: Hmm xuos mason mo xuoz muse: mocmuommxm I awamuom mOHHm .m.H.u umoauz HmuOH mo HmoESZ mafia magnum: mo onwx .omxuo3 mason mo mumoabz Hmuoa mam omcfinomz show no moamuommxm mmaq .o.¢ manma 81 Table 4.7. Conversion Rate of Crude Oil from Three Different Sources. Kinds Conversion Rate (Percentage) Average Syria/Miri Quavata Kuwait Percentage Benzene 33.1 23.4 17.4 24.6 Diesel 29.2 28.3 26 27.8 Source: C. Chanchaiyasuk and P. Anantapakorn, Oil. Ministry of Finance, 1973, (Mimeograph in Thai). (1) Government imposes excise tax of .80 baht on benzene and .12 baht on diesel. (2) Conversion rate from.crude oil to benzene and diesel is 52.4 percent. (3) In 1972, total consumption of diesel oil in Thailand was 2,815 million liters. The total imports are only 6.3 million liter. So it is not significant in terms of c.i.f. price difference. (4) Foreign exchange component of diesel and benzene fuel is .17 baht per liter. The total conversion ratio is 52.4 percent. So the foreign exchange component of benzene and diesel fuel is the same except that the domestic price is different because the government imposes unequal rates of excise tax on them. The excise tax imposed on benzene is .80 baht per liter while it is only .12 baht per liter on diesel fuel. The major consumption of fuel in Thailand is diesel fuel. Domestic refineries cannot produce enough supply to meet domestic demand. Diesel fuel is imported every year. However, relative to total consumption, the quantity imported 82 was insiginificant in 1972.12 The total diesel fuel con- sumption in Thailand was 2,815 million liters while imports were only 6.3 million liters. The foreign exchange component of other oil products was derived from the average c.i.f. price (see Tables 4.8 and 4.9). C.I.F. prices per liter will be used as the foreign exchange components of these inputs. Foreign Exchan e Costs of’Imported’ nputs The total foreign exchange costs component of import inputs is computed in terms of costs per rai. The previously discussed total time of tractor plowing is multiplied by the average c.i.f. price of tractors and attachments which is 9.46 baht per hour of work. Thus, the foreign exchange costs of tractor services is obtained. The foreign exchange component of sprayers is computed by the same procedure. The foreign exchange component of insecticides, fertilizers is based on the average units used and the c.i.f. price per unit, also the quantities of gasoline and oil used (see Table 4.10). From these the cost of foreign exchange component per rai was computed. The foreign exchange component costs of producing rice under both technology levels is lowest when compared with 120. Chanchaiyasuk and P. Anantapakorn. Oil. Ministry of Finance, unpublished article, 1973, p. 11-15_ Calculation on percentage consumption of diesel fuel based on total consumption and import. 83 .Anonmma msoaum>v muuomum uEOumsu mo unuauumnmn "wounom coa.HnH.aom an.mom.o mnw.omo.oon wHN.H¢w.n ooo.mma.moe Nao.mqm.o AuouHH OOHV HHo Howowa m~¢.oma.~ao.~ Hmn.nwm.uo omo.~mc.~¢m.a woa.oqa.om quu.~mm.Omo.a ocm.qw~.wm Auouwa OOHV Hao ovsuo mmv.na Hmo.~ ouo.qmm NHw.wm wHN.aN qoo.m Auoufiav pfisam ofiasmuvhm Hmm.Hoc.o~ Num.nna.q mwc.qm¢.ou mma.mco.n mmm.o~a.mn mmw.~am.o Amwv wmmouo wcwumoaunaa me.Nmm.Nm~ oHo.nma.mm oom.~ms.nma th.omm.n~ Hoo.mm~.sm~ mON.NsH.MHH Aumufifiv Hfio waquUfiHnsq Anv 05Hm> %u«u:m=c Anv msam> huwuamac Anv usam> hufiuawso Huma oan unavoum Hfio .m.H.o mo mummy .NanIONmH .munomaH muuavoum Hfio no moon> van wmfiuauumac .m.< candy 84 Table 4.9. Average C.I.F. Prices of 011 Products Imports, 1972. Types of Oil Product Quantity Imports Value Price per Kg. C.I.F. (3) or Liter (I) Lubricating Oil (Liter) 93,135,616 232,592,381 2.50 Lubricating Grease (Kg) 4,177,322 20,401,981 4.88 Hydraulic Fluid (liter) 2,091 17,453 8.35 Crude Oil (100 liter) 62,987,771 2,012,980,479 .32 Diesel 011 (100 liter) 6,305,427 31 309,171,104 .49 Source: Calculated from Table 4.8. corn and cotton. There are only 4.20 baht of foreign exchange costs under traditional methods and 50.34 baht per rai under modern methods of rice production. The foreign exchange costs on corn production under traditional and modern methods are 6.04 and 97.91 baht, respectively. The foreign exchange spending on cotton production is highest. It is 93.66 baht under traditional and 230.62 baht per rai under modern methods. Import and Export Prices of’Commodities The information on import of rice and corn, also import of cotton, was obtained from the Department of Customs report. The average c.i.f. (import) and f.o.b. (export) is simply the average price obtained by dividing the total value by total quantities. The f.o.b. price for rice13 is 2.10 baht per kg., 13Rice export in terms of milled rice, the transformation rate is 66 percent. The paddy has to be converted into milled rice. 85 cows: newuouunoun ovwoduuomca now vouwsvou «Ida nouadouw leak .ouaoa on sane a“ coaunuua meaning. no on: onu on .nuaoa ow on on volume. aw .ouaoa on.on an an.n «decay oouuooun Huaowuwvauu nova: «Ida anew-um. on1u0h4 any .uuoaoelou ounlnouo flaw-non #130. no unsuooa .uuoxcunu can cacao-nu noon «undead I Hush Honda: adv "noun: mn.- No.0mu ca. moo. cm.~ mm.m uh.n- no.5H III III wo.u .oun NH mm.~ ma nouuoo om.q Hm.nm on. and. no. on.n an.» n. on.~w on on. n.H ~n.n mm nuoo oc.n~ I A05.“ «TN 3.8 2. 8o. 2. on; + 3;: n. + 93 2.2 3 a. a.“ 24 3 32 manual zunna: wo.c oo.mo ea. nee. an.u no.“ n¢.na ~u.o III III oe.~ .au: OH un.~ ma nouuoo cm. co.o mm. «ma. no. oc.n III III III III nu. an. ~n.n mm :uoo aw. o~.q nu. coo. nN. mn.a III III oa.a n.a OH. on. nn.H Ha mafia noun”: Aog one nova: acuuoo van choc .ouwm we «um one wnwonvoum ca unoo owunnuum nuwouom .o«.¢ manna 86 corn is 1.13 baht per kg. and cotton is 14.98 baht per kg.14 With the information on yields under both levels of technology the foreign exchange earnings or savings can be computed. The foreign exchange revenue is tabulated in Table 4.11. Foreign Exchange Earnings or Savings Per Rai Among _The Commodities under traditional practice, rice receives better foreign exchange earning per rai than corn. Rice earns 470 baht while corn earns only 452 baht per rai. However, the return to farmers is better in the case of corn. Corn earns more foreign exchange as well as revenue to farmers relative to rice under modern practice. Cotton shows very good foreign exchange savings under both levels of technology (see Table 4.12). At this point, the question of which crops should be emphasized can be analyzed. However, the information on earnings and savings per rai is not sufficient to show the potential and performance of crOps in aggregate form. The regional aggregation will give a clearer picture of potential limiting factors and bottlenecks than would be the case of analyzing only on the basis of one rai for each crop. Rice is the staple food of Thai people and farmers always allocate a certain portion of their land for the growing of rice in order to assure a year-round supply of 14Cotton import in terms of lint cotton. Lint figure is obtained by taking cotton seed figure and multiplying by 33.3 percent. 87 .aouuoo comm How monawam mo unmoumm m.mm wcaxmu kn vmawmuno coon no: shaman ucfia aouuoo ANV .muwu coauMEHOMmcwuu ucoouom om saws..moau uoHHHE ou ahommcmuu kappa AHV "muoz «m.HN¢N m¢.¢H no.Hoa NN.mmNH mm.¢H oo.mw Gouuoo mo.w¢w MH.H Hnn omq MH.H N.oo¢ choc wed: 3d madam 00.3% cad oNN ooflm A3 A3 owamnoxm may .wM owawnoxm mnv .wx amsmuom so .m.o.e Hum gum cmsuuoe um .m.o.m Ham Ham HauOH Ho .h.H.U .wMIUHme HauOH Ho .h.H.U .wMIvaww sumac: Hmaosusumue mmsusuoaaoo .%woaoc£oma mo mHo>mA osa nova: Hum Mom monao>om owamsoxm cwwmuom .HH.¢ oHan 88 Table 4.12. Foreign Exchange Earnings or Savings Under Two Levels of Technology. Commodities Rai Traditional Modern Foreign Foreign Earn or Foreign Foreign Earn or Exchange Exchange Save Exchange Exchange Save Revenue Cost Revenue Cost (3) (B) (B) (B) (B) (3) Rice 474.60 4.20 470.40 770.62 50.34 720.28 Corn 459.0 6.04 452.96 848.63 97.91 750.72 Cotton 1253.22 93.66 1159.56 2421.84 230.62 2191.22 Source: Generated from Tables 4.10 and 4.11. rice for their families. The previous analysis showed that return to investment on rice is lower than corn and cotton in the designated areas. Also, foreign exchange earnings from rice are lower under modern methods of production and insigni- ficantly higher than corn under traditional methods. However, rice does not compete with corn and cotton for the same cul- tivated areas. Rice will continue to be cultivated in these areas but will not have much influence on foreign exchange earnings. Aggregation of Corn-Cotton Production Areas The major location of corn production in Thailand is on the upper portion of the Central Region. There are eight Changwats which have more than 70 percent of the total corn Production areas and production in Thailand,. namely, Lopburi, 89 Phetchabun, Nakorn Sawan, Saraburi, Sukhothai, Loei, Kamphangphet and Phitsanulok. The other remaining area of corn cultivation is scattered around Central, Northern and Northeastern Regions.15 The major location of cotton pro- duction is also the same as for corn. Cotton areas in Sukhothai, Loei and Lopburi constitute 65 percent of the total production area in the country.16 The production areas under rice, corn and cotton in these changwats were gathered from Agricultural Extension Department reports- The total rice areas have declined since 1969, from 6.6 million rais to 5.3 million rais in 1971, but increased to 5.5 million rais in 1972. The production areas under corn have increased since 1969, from 2.6 million rais to 5.1 million rais in 1972. The cotton areas have declined from .53 million rais in 1969, to .27 million rais in 1971, increasing to .31 million rais in 1972. (See Tables 4.13 and 4.14.) There seems to be limited virgin land for further expansion of corn areas. Hence, we can expect the total area in corn to remain near the 1972 level. However, certain government programs to encourage modern methods of produc- tion of corn and cotton may intensify the competition for land between these two crops as well as competition for the 15Thailand, National Corn and Sorgham Program, Annual Report, Dggartment ongriculture, Kaseteart University, Bangkok, ailand, 1971, p. 3. 16Grimble, 92. 335., p. l. 90 .Amnamuwomafizv couuoo can Chou .uauauumama soamcouxm Hmuauaaowuw< AnmmuwooEsz mafia .musuanoauw< mo huuoasaz .coamw>aa mafiaoaoom Huuduaaowuwd "mousom mmm.¢H 000.0 mmm.~ 0n0.ma 00¢.HH 000.00 0n0.00a NnH.m~H Numa nnm.Ha 0n~.¢ 0¢m.~ 050.0H mqonaa NOH.Nm 0~0.~0 mm0.ooa Hmma Nun.HH NNN.H 050 000.HN 000 0 m~0.o amo.mw 00H.00H 0NOH 0mm.0 mm0.¢ m00.¢ 0mH.nm 00~.HH mmw.mm n00.0ma Nom.~0~ 000M Assay zoayou 0mm.q0m mmm.0m0.a mmm.m- 0NOHmma.a owqunuw 000H00~.H 0m0HOHH mnaumme Numa 0H~.mom 000.00H.H ~0H.0m~ 0mm 50¢ 00¢ NHN #00 0mm mom mm ¢0~ 00¢ Hmma HOH.0Hm 300HNHH.H ¢n~.~0H. oomummm 000H~0~ oonuamq nannow mqmuoae 050M 0q~.0Hm 00m Hum 0H0.00H 00H 000 000 mma «mm ~00 050 mm w~0 mmm 000a Aammv zmoo 000.000 000.mam.a 000.30“ 000HOHm 000.00m 000.000 000.m0 000.m¢¢ Numa 000.H0m 000.0N0.H 000.500 000 nmm 000.500 000.500 000.05H 000.0H0 Head 000.mm0 000HN05HH 000H~0HHH 000.0Mm 000Hmmo 000.0«0 000.0ma 000.H0¢ 0~0H 000.0HN 000 sum A 000 00H A 000.0«0 000 000 000.H00 000.00g 000.m<¢ 000a Asmmv muHm Hunnwumm _ cmsmm cuoxmz 1* monDCMmuwm adnmnouom _ uwmwcwmnaamx # «Hanaoq — Hwoq Hmnuozxsm _ paw» .NmmaImomH .mum3mamso vmuomamm Cw couuoo Ucm Shoo .mofim mo mmmu< umum>flufido ash .mH.¢ magma 91 Table 4.14. The Total Areas of Rice, Corn and Cotton in Selected Changwats, 1969-1972. Year Rice Corn Cotton ................. Rai--------------- 1969 6,686,000 2,643,046 553,164 1970 5,998,000 3,311,869 244,715 1971 5,376,000 4,103,966 277,161 1972 5,529,000 5,179,346 313,411 Source: Generated from Table 4.13. use of labor. The analysis in the next section will focus on the potential of foreign exchange earnings and savings between corn and cotton under assumptions of fixed land areas and availability of labor resources on corn and cotton production. Assumptions about projections on modern prac- tices will also be needed in the analysis. Total Net Farm Return and Net Foreign ExchangEFEarnings and Savings Under Cbrn andFCotton Production with *Proiections to 1977 The analysis on total net farm return and net foreign exchange earnings and foreign exchange savings on selected alternative assumptions will serve as a guideline for policy recommendations. Land and labor are the two major constraints in the production of corn and cotton. To increase land for cotton production will reduce corn areas and vice versa. lLabor becomes a constraint because the two crops are produced 92 at the same time period. Corn production is labor extensive in nature while cotton production is labor intensive. Thus, other things constant, corn farmers will have more time for leisure or alternative employment than those in cotton production. A five year projection.with 1972 as a base will be made for net foreign exchange under five sets of policy assumptions. Assumptions will pertain to crop area as well as proportion of crop under modern practice. Results of the analysis will be discussed in detail with appropriate implication in the concluding chapter. The alternative assumptions are as follows. Alternative A It is assumed that: (1) Total cotton land will increase at a slow arbitrary rate of 2 percent each year. (2) Cotton production under modern practice will increase at a rate of 2 percent of total cotton area each year. In other words, the first year will be 2 percent, the second year 4 percent, the third year 6 percent, and so on. This is based on the fact that modern cotton production has high risk associated with it and requires a high level of technical knowledge on the part of farmers. Even though with encouragement and the provision of incentive by the government, it is expected Table 4.15. 93 Labor Requirements, Cost, Revenue, Net Return and Net Foreign Exchange Earnings per Rai Under Two Levels of Technology. Traditional Mbdern Traditional Modern Corn Corn Cotton Cotton Yield (Kg/rai) 406.2 751.0 251.23 485.5 Labor Requirement (Days) 6.75 9.5 25.0 33.5 Revenue (3) 349.33 645.86 1092.85 2111.92 variable Cost (3) 105.22 269.75 450.04 909.52 Net Returnl per rai (3) 244.11 376.11 642.81 1202.40 Cotton (Lint Figure) kg. --- -- 83.66 161.67 Foreign Exchange Revenue (1) 459.0 848.63 1253.22 2421.84 Foreign Exchange Cost (3) 6.04 97.91 93.66 230.62 Net Foreign Exchange (3) 452.96 750.72 1159.56 2191.22 lCross value - (Variable Cost + Total Labor Charge). Source: Based on Tables 3.20, 3.21 and 4.12. that modern cotton production will not exceed an accumulated rate of 2 percent per year. (3) Total corn area will be equal to the residual after computing total cotton area. (4) Total available labor is equal to the total estimated corn and cotton labor used in 1972 plus 15 percent of the corn labor assuming that it was not fully utilized. This estimate was computed by multiplying per rai labor requirements for corn and cotton by the 1972 crop area for these crops, respectively. No allowance has been made for other farming 94 activities in the region. However, it was assumed that if 1972 peak season labor requirements were met and if there was some slack in the use of corn labor then the estimate of total available labor for use on the two crops would be reasonable for the present analysis. The analysis shows that the net foreign exchange increase would amount to 446.24 million baht in 1977, without fully utilizing all labor available. Further results are summarized in Tables 4.16a and 4.16b. Alternative B Supply of labor is the limiting factor in considering expansion of cotton production using modern methods. For this alternative the total cotton area will be increased 10 percent each year and modern cotton will be allowed to increase by an accumulated 10 percent of total cotton area each year (this is an increase of 10 percent on the first year, 20 percent on the second, 30 percent on the third, and so on). This is considered to be a maximum rate of annual increase even with concerted effort on the part of the govern- ment to encourage cotton production which would be appropriate if the goal is to reduce cotton imports. The total corn area will be equal to the residual after determining total cotton area. The area of corn under modern practice is assumed to start from zero and to increase each year by an additional arbitrary 5 percent of total corn 95 .uxuu wsu aw vunwmamxu hamsow>oua muowunaumnu van muov hu>uam no 00000 “coupon 0.000.0 n.000.0 n.000.0 s.~00.0 h.~00.0 n.000.0 noun Hmuoa 6H.0H0 Hm.noa.a Nm.nmm.~ ao.am0.m 00.non.0 m0~.n gonna 066:6: 000.00 000.00 000.00 000.00 000.00 000.00 uopaa mo zanaam annoy 00.000.00 00.000.00 00.000.00 00.000.00 00.000.00 0.000.00 choc now vouwsuwu «Honda Hauoa 00.000.0H 00.H0n.0 0a.000.~ mm.000.0 0H.000.~ 0 shoe auuvoa you vouwaamu henna 0H.000.0~ 00.000.00 NH.000.0~ 00.000.00 00.000.00 0.000.00 auou stowuuvmuu Mom voufiavou Honda 00.000.0 00.0Hn.0 N0.000.0 00.NON.0 H0.000.0 0.000.n souuou you vouwavou «Honda Hmuoa H.000.H 0H.000 00.000 00.000 00.0HN 0 souuou saunas How vuuwauou Hanna 0~.m0~.n ma.~00.n 0.0a0.~ m.0~0.~ 00.H00.~ 0.000.n, aouuoo Hmnowuwvouu mom vauasauu Honda 00.00H.m n0.00a.0 ~H.00H.0 00.00H.0 00.00H.0 0.0nH.0 mwuum :uoo Hmuoa 00.00~.H 00.000.H 00.000 00.0H0 00.000 0 noun choc suave: ~0.000.0 nu.-a.0 0H.000.0 u0.000.0 00.0H0.0 0.0na.m mono shoe amdowuaumua H0.000 00.000 00.000 00.000 00.0H0 0.0H0 mwauw nouuoo 00909 00.00 0H.n~ 00.00 00.0H 00.0 0 «and :ouuoo sauce: H0.HHO 00.~H0 00.000 00.0H0 00.0H0 0.000 wand souuoo Hmsowuavmua 0000 000a 000a 000a 000a 0000 Honda can wand .uaauIaaa4aluaquaqu0004AIIwuaau .0 o>auuauaua< 066:: uauaouaauom songs van 0600 .msa.0 «Hana 96 .unou any 60 vmawwanxm 0H¢300>000 maowugaumma can «and mo>uam no woman "mouaom 60.606.0 00.066.0 60.660.0 00.666.0 60.606.0 06.660.0 6066 6600 60666666 6006060 066 06066 06.066 66.066 66.000 60.600 60.660 6 6066 606666 6600 60666666 6006060 062 06.066.0 06.660.0 06.606.0 00.660.0 ~6.60~.0 06.660.0 6066 06660006600 6600 60666666 6006060 062 60.606.0 66.660.0 00.060.0 06.600.0 06.660.0 00.66~.0 6066 6600 606060 066 06060 06.006 06.600 00.060 00.660 00.66 6 6066 606666 6600 606060 062 60.066 06.666.0 66.666.0 60.000.0 06.660.0 00.660.0 6066 06660006600 6600 606060 062 60.066 60.006 00.666 00.060 60.660 06.060 660066 6600 60666666 6006060 066 06066 0.60 66.60 06.06 60.00 6.60 6 660066 606666 6600 60666606 6006060 062 60.060 60.060 60.060 66.060 00.060 06.060 660066 06660006600 6600 60666666 6006060 062 06.060 60.000 66.600 60.600 66.660 66.060 660066 6600 606060 066 06060 66.06 06.00 66.00 06.00 06.6 6 660066 606666 6600 606060 062 00.660 06.660 06.660 00.060 60.060 66.060 660066 06660006600 6600 606060 062 6660 6660 0660 6660 0660 0660 60666600 6006060 062 666 606060 062 0660 660000: "...—fig .< «>0umauoufl< 000:: 00665000 amwouom uoz van 605000 002 .AOH.0 manna 97 area. Under this policy alternative, the government would put higher priority on modern cotton production, even though corn export can provide foreign exchange earnings. Some farmers in the area will adopt modern production but it is expected that the adoption rate will not be more than what has been assumed. Given these assumptions, the analyses show that the net foreign exchange increase amount to 766.84 million baht in 1977. However, there will be a labor shortage after 1975, amounting to 1,739,190 labor days. Thus, other things held constant, there would be no labor available for corn and there would be idle land. This would bring some decline in net foreign exchange in 1977. Further results are summarized in Tables 4.17a and 4.17b. Alternative C Shortage of labor resulted from rapid cotton expansion as determined by Alternative B. With these results, it seemed advisable to study the effect of increasing modern corn production at a faster rate than in Alternative B. This alternative assumes that initially the total corn area is unchanged and the cotton area and technology remain unchanged. The corn area under modern practice will be allowed to increase each year by an additional arbitrary 10 percent of total corn area with the residual left as corn under traditional practice. 98 .0000 0:0 :0 vmafioanxo hdnno0>aua 06000935006 vow muov ho>uam no woman "ouuaom 0.060.0 0.060.0 0.066.0 0.060.0 0.060.0 0.060.0 66606 06060 00.000.0u 60.600.0n 00.060 00.066.0 60.606.0 000.0 06660 666666 6.606.06 6.606.00 6.606.00 6.606.00 6.606.00 6.606.00 06660 06 606666 06060 00.066.00 60.000.60 00.000.60 00.006.00 00.600.00 6.066.00 6066 060 66006660 06660 06060 0.600.00 00.060.6 06.000.0 00.000.0 0.000.0 6 6066 606666 060 66006660 06660 06.000.00 60.000.00 00.000.60 06.666.00 00.006.00 6.066.00 6066 06660006600 060 66006660 06660 66.060.00 66.006.00 00.000.00 60.000.60 60.006.0 6.000.0 660066 060 66006660 06660 06060 66.000.0 60.000.6 66.000.0 06.600.0 00.000.0 6 660066 606666 060 66006660 06660 6.660.6 0.000.6 00.600.0 00.000.0 00.600.0 6.000.0 660066 06660006600 060 66006660 06660 06.006.0 60.006.0 00.006.0 60.000.0 66.000.0 0.600.0 66606 6066 06060 6.000.0 00.666.0 00.060 00.000 66.000 6 6606 6066 60666: 06.600.0 06.006.6 00.000.0 00.066.0 60.660.0 0.660.0 6606 6066 06660006600 00.060 00.000 00.000 00.600 06.000 6.000 6606 660066 06060 60.000 00.000 66.000 00.00 00.60 6 6606 660066 606662 60.000 60.000 60.060 00.060 00.600 0.000 6606 660066 06660006600 0060 6060 0060 0060 0060 0060 06660 666 6660 0 av ooo H paw mam“ oooqa 000:; .m m>auwauoud< nova: unmaouasvom Honda won @660 .mna.c 60660 99 .0000 000 00 000000000 600000>000 00000000000 000 0000 60>000 00 00000 0000000 66.omo.~ 66.066.~ 0~.m~m.~ 06.666.~ 66.606.~ 0o.66m.u 0000 0000 06000000 0000000 000 00000 60.606 00.660 66.006 60.666 6~.n60 o 0000 000000 8000 00000000 0000000 002 06.666.0 66.606.0 ~0.nm6.0 06.6wo.~ m~.n0~.~ 00.66m.~ 0000 00000000000 0000 00000000 0000000 002 NN.~mm.0 60.0om.0 60.6mm.0 mn.m0n.0 66.06~.0 NM.60N.0 0000 0000 000000 000 00009 00.606 no.006 66.060 mm.~60 00.66 0 0000 000000 0000 0.00.00.0 002 00.606 60.066 06.~no.0 66.600.0 66.66060 ~6.60~.0 0000 00000000000 0000 000000 002 06.660 66.0N0 66.006 06.006 06.666 06.606 000000 0000 06000000 0000000 000 00000 66.~mm 60.~o6 60.060 60.000 66.66 0 000000 000000 0000 06000000 0000000 002 mo.~6~ m~.60m 66.6mm 00.0mm 00.666 06.666 000000 00000000000 000m 00000000 0000000 002 60.no6 06.066 66.066 o~.60~ 66.¢6~ 66.0om 000000 0000 000000 000 00009 66.606 66.0NN «0.660 60.06 66.06 0 000000 000000 0000 000000 002 N~.~o0 66.600 66.600 00.660 66.660 06.0ou 000000 00000000000 0000 000000 002 0060 6060 0060 6060 0060 0060 66666660 6606060 062 666 606066 066 0000 0000002 00002 .m 0>00000000< 00002 0w00nuxm 0w00nom 002 000 000002 002 .060.6 00008 100 The results of analysis show that the net foreign exchange is almost the same as alternative B; it increases the amount to 771.10 million baht in 1977. Again, there is a shortage of labor under this alternative. However, the difference between utilization and the supply of labor is small in 1976 (only 452,410 labor days). If modern corn were allowed to expand at the rate indicated until 1977, cotton production would need to be reduced because of labor shortage. Further results are summarized in Tables 4.18a and 4.18b. Alternative D Given the labor shortage resulting from Alternative C, it was decided to evaluate the condition of having no modern corn production and having total corn area be equal to the residual after computing cotton area where the cotton area was assumed to increase by a compounded 10 percent rate computed on total cotton area each year. The results show that the net foreign exchange increases only 395.54 million baht in 1977, which is the lowest among the previous ones, with the shortage of labor supply in 1977 amounting to 392,920 labor days. Further results are summarized in Tables 4.19a and 4.19b. Alternative E This alternative assumes cotton area will decline by 20 percent of total cotton area each year in keeping with recent trends. The level of technology under cotton will lOl .u o>wuoaumua< nova: unuaouwsuom uonmg can mama .me.¢ .uxou ms» aw uoawoaauu mamaow>oun maoaumasmma can dump hm>u=m no woman "wouaom um.mnm.al H¢.Nm¢ I ow.o~a Ha.mmm.~ He.oaw.m m<~.n Honda woman: amo.mq smo.ws mmo.ms mmo.ws amo.ms mmo.mq gonad mo sauna» Hauos Nw.Hmo.~q He.ome.oc o~.mnu.mm mm.mow.nm am.ewm.on Hoa.cm ahou you cougavou Honda Hmuoa we.aoo.c~ cm.-w.ma Ho.Hom.¢H no.o¢m.¢ cm.o~m.e 0 shoe aumvoa you vouusvmu Honda ca.owq.na nw.mmm.o~ aa.~ne.e~ «N.mom.n~ nu.eo<.am Hom.em choc Huaoauwvmuu now vouunvmu Honda mmw.m nmm.n mmw.n mmw.n nmw.m mmw.~ nouuou Hmaowuavmuu How vmuwavuu Hogan ~.~m<.m ~.~m¢.n n.~ae.n n.~me.n ~.~mc.m n.~a¢.m muons Hooch qwnam «.mam «.mam «.mam «.man «.mam. noun aouuoo Hmuos m.msa.m m.mna.m m.ana.n m.mma.m m.anu.m m.m~a.m mound auou dwuoa mo.mwn.~ mm.Hmo.~ au.mmn.a om.mmo.H mm.nan o mono anon sumac: mo.own.~ mm.moa.m Hm.nNo.n c¢.m<fl.¢ sm.Hoo.< m.ana.m mono choc Hudoauakua nmoa chad mnaa chad mama Nnan Honda can and; mmwv oooqa was mawu ooo.a "awn: manna 102 .uxau «nu a“ umaamaaum hamaofi>mun maowumasmmo was «now hobusm no woman "muusom HH.~HH.m -.~eo.m mo.wom.~ ne.¢mo.~ m~.oom.~ Ho.osm.~ auoo scum «masses» awuouom um: Hayes oa.sso.a mm.¢mm.a os.ooa.a so.-u ~m.mmm o upon apogee scum omaaaoxu undone“ uuz Ho.m~H.H ah.nos.a H~.~se.H Hm.ohm.fl HQ.HHH.~ Ho.oem.~ auou assesufieauu scum manages» amfiaHOW umz ma.ooe.~ m~.nmn.a Hq.aos.fl no.Hos.H mo.~mm.~ ~m.¢o~.a auou sou“ guano“ use Hauoa mm.n~m so.mhh am.¢mn oo.mmm om.saa o auou nuance any“ unsung uoz oa.~me mo.mnh No.mmw ms.HHo.H am.hmH.H um.«o~.fl cuoo Hm=0fiufieauu scum chasm» umz Hq.mom Hq.mom as.mom as.msm H¢.mom as.mom couuoo sown «mamauxu awauuom no: Hmuoa o¢.ao~ oe.Ho~ ss.ao~ os.ao~ sq.Ho~ o¢.Ho~ aouuoo scum aunumu so: sauce hhma sass mama «Baa mama mama owuasuxm cmaouom uoz can cusses uoz seam gonads: ”sacs .0 o>HuwauouH< nova: awamnoxm cmwouom uoz can auauum umz .an.e oHnMH 103 .uxmu may ma confidanxm mamaow>oua maofiugasmuo and aunt mo>unm do woman "muuaom Na.~mm I om.m~o.a ma.ua~.~ no.wmm.n wn.mnm.q m¢~.mn wanna woman: mmo.mq mmo.we mmo.wc mmo.we amo.w¢ amo.m¢ Honda mo madman Hmuoa ow.moo.mm mm.mmo.mm oa.oo~.¢m 00.9Hm.¢m mn.mes.em Hom.¢m choc you confisvou Honda Hmuoa oo.mom.ca mo.Hmo.mH «B.Hw¢.HH mm.<-.oa ac.HHm.m mmm.n douuou now vouasvou Honda kuoa oo.¢mq.w mm.wqa.o om.HmH.¢ cc.o¢m.~ en.wuaaumua< nova: uauaouwavum woman can mama .mmH.e 3e; 104- .uxmu on» GH vwcwmamxm mamaoa>mum maOfiuqasmmm was mumv >m>u9m no woman "mousom mm.mm~.~ «H.om~.~ mo.am~.~ H~.oflm.~ mm.Hmm.~ Ho.ssm.~ :uoo scum omamgoxa awsmuou um: Hmuoa H¢.~H~.H Hm.m-.H amN.H nm.mq~.a no.0mN.H mm.ssN.H anon scum ausumu um: Hayes as.msw ~s.a- mm.HHo om.~Hm Hm.mms as.msm couuou scum «masses» amassed “an Hmuoa wa.~mm wa.~os mm.H- m~.osa mm.m~ o aouuou cusses scum amamnoxo amnmuow uaz ms.~a~ m~.mHm am.mmm w~.Hnm w~.mmm as.mom couuou Hmcowufiumuu scum «waweoxm amfiouom umz 00.nos 00.nsm sq.smm o~.sm~ am.oq~ os.~o~ couuoo acne chasm“ “ma saucy ss.mom as.oN~ No.msH ma.Hm ms.as o souuoo nuance eons chabun “oz -.~oH hm.ssfi as.mmfi Ho.mmH ss.mma os.ao~ aouuou Hmaoflufismuu scum spasms “oz mums sums mama «Rafi mmsfl Numfi swamnuxm amamuom umz can enzyme umz ”sum conHHfiz Hugs: .n m>aumaumua< amps: owcmsoxm anmHOh umz paw chaumm umz .naH.¢ mHan 105 remain unchanged. The total corn area equals the residual after computing the reduction of the cotton area. Mbdern corn production is allowed to increase each year by an additional arbitrary 10 percent of total corn area. The results show a favorable net foreign exchange position; the increase amounting to 653.58 million baht with a labor surplus in 1977 amounting to 1,677,930 labor days. Further results are summarized in Tables 4.20a and 4.20b. 106 .uxou «nu aa wmaamaaxm mamaoa>mua maoauaaammw wam muaw mm>uam ao woman "mouaom ma.nno.a ~m.ma~.~ qo.omo.m m~.~mm.q mo.oqw.c m¢~.m nonaa womaaa amo.m¢ mmo.wq mmo.we mmo.mq mmo.me mmo.m¢ momma mo haaaam amuos Nw.mmm.m¢ wo.oaa.~¢ an.amm.o¢ mm.~mo.mm am.c~w.wm awm.qm auou How wouaaumu Honda aauoH m.~ow.m~ mm.qwm.om ow.oma.ma wo.mmo.oa m.mnm.q o auoo a...Swoa now wauaaaa.H nonaa mm.ama.ma mm.m~n.am mw.¢aa.m~ nc.n~m.w~ ao.mqm.am awm.¢m auou aaaoauawanu now wmuaavmu Momma mm.nom.~ mo~.m n~.aao.¢ m~.¢ao.m wo~.o mam.“ acuuou amaoauawauu you wmiaa—ua.H uonaa ao.oam.m cm.qwm.m mm.~mm.m ma.~m~.m mm.ac~.m m.mna.m madam auou amuoH o.mmw.~ c~.mea.~ no.mmm.a mq.mmo.a o~.qmm o «mum auou auowoz ao.mmo.~ oo.wa~.m nm.~mm.m ow.mmm.¢ wn.man.q m.m~a.m mmum auou amaoauawaua mo.~oa wm.w~a m¢.owa mm.oo~ -.omN «.mam «mum aouuou annoy mnaa whoa mama enma mama mnaa gonna waa waaa £384 nus .m m>aumaumuaa Howa: uamamuaaumm nonaa wan waaa .mo~.¢ manna 107 .uxmu may aa woaaaaaxm hamaoa>oua maoauaaamma waa auaw >m>uam ao woman “mouaom Na.ms~.m m~.moo.m os.amw.~ mm.~a~.~ as.omn.~ ao.esm.~ auou scum «wamaoxm awamuou so: Hmuoa ma.m~o.~ mm.oao.a om.oo~.a mm.qaa mn.mmm o anon spaces scum mwamauxu awamuou umz ma.o-.a om.hmq.a o~.oao.a oa.~aa.a om.oma.~ ao.oem.~ anon aacoauaumuu scum «mamnuxm awamuom umz om.aas.a Na.~an.a am.~am.a mm.amq.a mw.wsm.a ~m.qs~.a auou scum guano“ use amuoa No.mao.a no.5om mo.aoe mo.mmm aa.~aa 0 shoe nausea aoum ensue“ umz mm.~mo mo.mma sa.aaa mq.mmo.a oo.ama.a mm.qo~.a auou amaoauawmuu scum nusumu uaz mo.maa sw.mqa no.0ma am.~m~ Na.om~ as.mom couuou scum mwcmnuxm cmamuou um: Hmuoa ao.os am.~m sa.moa mo.w~a aa.aoa os.ao~ nausea sous spasm“ um: amuoe “Rafi mama mama «Baa mama mama owamauxw awamuom can panama uoz “can aoaaaaz uuaaa .m m>auaaumua< umwa: mwaaaoxm awamuom umz waa auauom umz .no~.¢ manna CHAPTER V SUMMARY, CONCLUSIONS, AND IMPLICATIONS Summary This dissertation has focused on the international trade and farm income implications of changing agricultural production patterns of major crops in a primary agricultural production area in Thailand. For many years heavy reliance has been placed on agriculture exports as a source of foreign exchange. The productivity of the agricultural sector in increasing the productivity of the major agricultural crops is far less than.itspotential. This is due in part because Thailand has not experienced food deficits and has not been under pressure to adopt more modernized forms of farming. Aside from rice, which has long been a major export of the country, corn is becoming a more favorable source of exports. Corn has little domestic demand because it is not a staple food in Thailand and because the livestock industry is still small. Total production of cotton has declined from about 117,000 tons of seed cotton production in 1968 to only 49,400 tons in 1972. This decline comes at a time when domestic demand has leaped due to a 100 percent expansion of the textile industry. 108 109 Problems arise for policy makers facedvfililthe question as to what crop production pattern should be emphasized and what policies should be used to improve resource allocation for the purpose of increasing farm income as well as increasing net foreign exchange earnings. The objective of this study was to analyze the domestic and foreign exchange costs and returns per rai for the selected crops under two levels of technology and to aggre- gate them for a corn-cotton production region in order to analyze the performance of alternative crop production patterns on farmers' net return and net foreign exchange earnings to the nation. The approach to this problem was to assemble production costs and revenues per rai from sample data based on 1972 market and production conditions. The foreign exchange component of inputs used was generated from Department of Customs reports and previous studies available. The foreign exchange costs and revenues per rai were calculated and aggregated for a major corn and cotton production areas. Five alternative strategies involving shifts in production patterns and technology levels for corn and cotton were evaluated. Alternative A. Increase modern corn and modern cotton at a slow rate with certain allowances made for shifting the corn area to traditional cotton production. 110 Alternative B. Increase modern cotton production at a more rapid rate than modern corn production, while modern corn production increases at a slow rate with allowances made for shifting the corn area to traditional cotton production. Alternative C. Increase modern corn at a rapid rate leaving total area and traditional cotton area and produc- tion techniques unchanged. Alternative D. Increase modern cotton production at a rapid rate with rapid shifting of corn area to traditional cotton production, leaving the residual corn area and production techniques unchanged. Alternative E. Increase modern corn production at a rapid rate with shifting of cotton area to traditional corn production, leaving the residual cotton area and production techniques the same. The results of analysis and their implications will be discussed in the next section. Conclusions and Implications The conclusion of this study are based on the analysis of five alternative strategies involving patterns of corn and cotton production on increasing net foreign exchange and return to farmers. Assumptions and results are summarized in Table 5.1. Alternative B, with_further decline in cotton production and a corresponding increase in corn production with an increased modern proportion would bring about the 111 A, .xuo: «a» ow ou uaiaoauunu uoa ca aowol 0:» aa nonaa .waIa-w cocoa. mania «and. uv wan 3N3 wad 8N3 .833 .Ioa..~ .835 .03.: .335 .153 .Aoaé .3a.¢ ...—nan. do would .aowQI.QAu aa anon-a wouaaauaa: no: noun: manna. cocoa! hag-a Anna. +v .uuiu gnu aa wouou- ha-aoapoun oceans-50.. "noun-sud» nonqa ”cannon an.nno on.nan ca.a~\ ea.oos ¢~.o¢e Anna aoaaaaly shoa aa unannuuo chow oooouoaa ha.mon na.~o~ w~.oao N¢.nso na.nnn Run. abaaaauv ohaa aa onaaaoui chow o-oouoaa n~.non oa.ao~ oo.~oo c.w~¢ om.oo~ aunan aoaaaalv nuoa aa ouaunuuo aha-now ooaouuaa na.nsoa No.~an- Na.hnoan ha.-un- ca.oam A-haw coo.av usaa aa aoauaauao wanna ~a.oa- on.m~oa aa.un¢u oa.onsa- am.~o~a Aux-w oco.av whoa aa aoauaauao nonaa an.snha n~.nooa ao.nona on.hona no.5ooa snaa aa nulaunu ou auauou no: no.oaa ao.n¢¢ ac.non oo.oem n.a<¢ n ma aa owaasnm ova-noun aouoh ~o.nc~n mn.on- aa.~aan oo.ono~ on.oan~ n ma aa unaaauau oua-aoum a ouch ~s.ao- ~«.ac- ~¢.ao- ~e.ooh~ ~«.oon~ “nan: unawaauc «sad aa 0 anon. a aouou uoz uuasuou .aa auoo mo non-a soaa- Rna + non-a auoo 4 a. «sum < n. clam < on oaum < .- alum was uoaoa aouuoo magnum wanna aouou abuuou «o aouou acuuou no aauou acuuou wad» soda Nba nuns and. flea mo no.» non. flu «mango oz an wou~a33500< «macaw oz an wannasaaoo< up woucaalsuuc acauuoaoum aouuoo auowox noon no.» son. acuuoo good aouuoo you» soon ado» auoo a-uou no naa aauou uo sea aouuou a-uOu uo acuuoo a-uOu uo wowasoaloo wowaaoaaou fl~ wowasoaaou so“ won-ouooa an woooouuaa cud-so on an wo-aouuaa an woo-ouoaa aou< acuuou aauou auou aouou auoo .aauou anon uo anuou au0u NO you» cod. no uaox node an.» soon we woo» noon Noa a-aoauaww< ago-nu 02 sea anneauaww< Hm aoaoauaww< 8n aaaoauaww< aoauuoaoum auoo ancwo: .2335. A122 .338 :32 .538 A32 838 waa usma - nou< acuOHv a~noav - cou< anachv - oou< aouohv aa oou< aouoh aoawaoox - ouaaau oz aoawanoa aqawaaou noua auoo u 2,3153: 9 «RB-anon: u o>auoauoua< a 023-33.: a o>au¢auoua< oaoaualau: .a mm>anazunaa< .u announu < oo>auaau0ua< uo nuances wan oceans-aun< .a.n canny 112 highest foreign exchange earnings to the country amount to 3,243.92 million baht in 1977. The foreign exchange savings would amount to 119.08 million baht and the net foreign exchange would amount to 653.58 million baht in 1977. Alternatives B and D considered rapid adoption of modern cotton production, but with a slow rate of modern corn produc- tion in Alternative B and with technology on corn remaining unchanged in Alternative D. The results showed that foreign exchange savings were highest in Alternative B, amounting to 845.60 mdllion baht. The net foreign exchange was highest in Alternative B amounting to 766.84 million baht and lowest in Alternative D , amounting to 395.54 million baht. However, there were labor shortages in Alternative B starting in 1976 amounting to 1,739,190 labor days and Alternative D starting in 1977 amounting to 392,920 labor days. Alternative C considered expansion of modern corn pro- duction with areas under corn and cotton remaining unchanged and cotton technology remaining unchanged, bringing about the highest net foreign exchange amounting to 771.10 million baht. The foreign exchange earnings would amount to 3,117.11 million baht and foreign exchange savings would amount to 363.41 million baht in 1977. The net return to farmers would amount to 1,807.61 million baht. There was a labor shortage in 1974 amounting to 452,410 labor days. Alternative A considered increasing modern corn with modern cotton production increasing at a slow rate. The foreign exchange earnings and savings in 1977 would amount 113 to 2,714.36 and 441.3 million baht respectively, with net foreign exchange amounting to 446.24 million baht. The net return to farmers would amount to 1,667.98 million baht. Implications for Policies and Future’ResearCh Limitation of the Study Assumptions concerning the total available supply of labor and the total production area have been made for the purpose of the analysis based on the 1972 situation. The labor shortage issues occur in Alternatives B, C and D. Alternatives B and D considered rapid expansion of modern cotton production with.modern corn production expan- sion either at a slow rate or unchanged. The results showed a labor shortage in 1976 while Alternative C with rapid expansion of modern corn production with unchanged technology for cotton production revealed a labor shortage starting in 1977. Labor Supply Implications Labor supply conditions in the study are not related to the total population. Labor supply was defined as the total labor utilized for corn and cotton in the 1972 crop season. The total labor supply is equal to the estimated corn and cotton labor used in 1972 plus 15 percent of the corn labor assuming that it was not fully utilized. This estimate was computed by multiplying the labor requirement for corn at 6.75 days per rai with the total areas amounting 114 to 5,197,300 rai and labor requirements for cotton at 25 days per rai with total area amounting to 313,400 rai in 1972 respectively. The labor force in the analysis was considered as merely the labor required in production activities for corn and cotton. If the contribution to the farm labor force from population growth is more than outmigration, resulting in an increased total labor force in the region, the labor shortage situation would be decreased. If the contribution to the farm labor force from population growth is less than outmigration, resulting in a decrease total labor force in the region, the labor shortage situation would be more serious. If a more precise measurement of available farm labor force is desired it will be necessary to know the regional population growth rates by age and sex composition, as well as the projected outmigration and immigration figures. In developing countries, there is a growing tendency toward unemployment in urban areas. The rural population has migrated to urban areas searching for better employment opportunities than can be found in rural areas. This increase in unemployment in urban areas has created social welfare problems such as housing problems, health problems, public utility problems, etc. It is appropriate for the government to develop programs aimed at increasing agricul- tural production while encouraging the labor force to stay 115 in the rural areas. Cotton production is labor intensive. If labor utilization is an objective of the policy makers, keeping other factors constant, the government should increase cotton production. The labor requirement for modern cotton production was based on the increased labor required for harvesting and packing as a result of yield increase. To the extent that yield per rai used in the analysis for cotton is overstated, so the total labor requirement is overstated. If we were to use a lower average yield of cotton per rai, the additional labor requirements for harvesting and packing would be less than estimated. Finally, the assumption about homogeneity of labor may be subject to question. This assumption refers to the same level of skill in producing corn and cotton. However, it may not be ture that corn farmers can become good cotton farmers. It is more likely that cotton farmers can become good corn farmers. Hence, with higher labor skill required in cotton production and with the hazards associated with working with toxic chemicals in cotton production, the labor shortage may in fact be higher than the present analysis indicates. In summary, if farm labor force grows the labor shortage would be less than indicated. Conversely, if the farm labor declines, then the labor shortage would be more acute. Cotton yields are overstated to the extent that the 116 additional labor required for harvesting and packing is also overtated. If insufficient consideration has been given to the higher skills required in cotton production and to the hazards from handling toxic chemicals, then the labor shortage would be more serious than the results indicated. Cost Accounting Implications The following cost accounting implications will be discussed: (1) fixed costs; (2) tractor services; (3) risk factors for corn and cotton accounting; (4) average yield and (5) hired labor and family labor accounting. Fixed costs were not considered in the analysis because it was assumed that the farmers would allocate their labor and capital to maximize return by producing certain-crops. This analysis focused primarily on the possibility of increasing foreign exchange to the country with less emphasis on the problem of intra-regional resource allocation. If the fixed assets were considered in the analysis, the transformation of production patterns between corn and cotton would have to consider fixed asset problems. For example, if land value had been taken into account and if the land value for corn production is higher than land value for cotton, then total costs of production would be increased more on corn, relative to cotton. As an additional example, if the cotton farmers want to switch to corn production, they may want to sell some of their equipment which is necessary in cotton production but not required for corn 117 production. The salvage price of the equipment would be lower than acquisition price and the total cost of trans- formation from cotton to corn production would be increased. The average cost of tractor services was derived from the sample data which considered all the tractor services on a hiring basis. If the farmers owned and operated their tractors without service rendered to other farmers, the cost per unit for their operation may be higher than for custom services because of the scale of operation for their own tractor is limited. However, a farmer might also sell custom services and have a lower cost than was assumed. Recalling that tractor services were charged at custom rates rather than costs of ownership, certain problems of aggregation arise: 1. In a micro sense, the operation costs of tractor ownership may be different from the assumed custom services charge. Because of the small farm units, tractor ownership is quite possibly more expensive than hiring tractor services, unless the tractor owner engaged in selling custom services. Without knowing the extent of tractor ownership and the extent of tractor owners selling custom services, little can be said about the effect of changing the machine charge on the final analysis. 2. In a macro sense, universal budgeting of custom services implies such services are available to all farmers. Such may not be the case. 118 Most farmers do not have enough capital for their farm operation and they must acquire capital by means of borrowing. In addition to normal farming risk, there is further risk associated with borrowing capital. The degree of risk.may not be the same for corn and cotton production. Yield uncertainty of cotton is relatively higher than corn. A failure on cotton production would extend the loan repay- ment for at least another year. Risk associated with loan repayments would be higher for cotton farmers than for corn farmers. To the extent that this is the case, the cost of cotton production would be higher than was indicated. The avenage yield used in the analysis was based on harvested areas and the production costs were based on planted areas. The corn sample did not show any failure but 16 cotton farms out of 20 in the original sample experienced crop failure. They were omitted from the average yield calculation. Instead, the average yield of 78 cotton farmers in another study was used. Their yields were above the national average. Obviously, if the planted areas had been included in the yield calculation, it would not have resulted in as much profit as was indicated from the analysis (nearly 3 times higher for cotton than for corn production). When this analysis is updated for future policy recommendations it is possible that new data will be available and that yields per planted acre as well as yield variability can be considered. 119 Even though for the region under study, the cotton yields appear higher than the regional average the selected data for these yield calculations was clearly the best available. (See Chapter III for comparison of alternative data dealing with the costs of cotton production.) Summary_and Policy Implications A primary objective of Thailand is to increase net foreign exchange positions from the agriculture sector. Emphasis has been directed toward development of new technologies which would provide profits to farmers through increased productivity so that surpluses could be exported. Increased net foreign exchange could be derived from increased exports or from reduced imports through increased import substitution. The specific goal of the country could give priority to either one of them or both of them. Corn is an export crop while cotton is an import crop. The preferred alternative involving the mix of these two crops and/or the preferred rate of technical advance will depend on national goals. The study was based on the production situation in 1972, with projection made for the five years up to 1977. It is not a demand and supply analysis but rather a look at the change in the foreign exchange position of the country over time if arbitrary rates of corn and cotton expansion are considered alternatively. 120 Prices are assumed static over time because the analysis focused on the net foreign exchange with different patterns of crop production holding everything constant except pro- portions of crOps and technology levels. It is realized that price relationships do change over time, but the intent here was to evaluate the effect of alternative systems on the net foreign exchange without examining all forces which might bring these alternative systems into being. Corn exports face a perfectly elastic demand so there would be no effect on price as exports increased because the price is determined by international demand and supply factors. Likewise, the price for cotton received by Thai farmers is tied to world market price and is not influenced by changes in cotton production area. Before specifying policy recommendations it will be well to review the results from the analysis of alternative strategies. Alternative A is a compromise position with a slow and probably programmatically feasible rate of increase in modern corn and cotton production. There is a reasonable increase in total farmers' return and net foreign exchange and this is feasible from the standpoint of labor supply. Alternative B put more emphasis on modern cotton production with less emphasis on modern corn production. The foreign exchange savings would increase by 845.60 121 million baht while foreign exchange earnings would increase only 2,630.66 million baht. However, ceteris pafibus, there would be quite a serious labor shortage as a result. Also, there would need to be a concerted government program to obtain an annual increase in cotton production equal to the assumed ten percent rate. These additional costs would need to be taken into account should this alternative strategy be followed. Alternative C puts all emphasis on modern corn produc- tion with the areas and technology of cotton remaining unchanged. The net foreign exchange is the highest among other alternatives and the return to farmers is not as high as Alternative B but the difference is small. The foreign exchange savings are highest amounting to 845.61 million baht while the foreign exchange earnings remain the same. Also, there is a labor shortage but it is not as much as Alternative B. Alternative D puts all emphasis on modern cotton production with technology on corn production remaining unchanged. The net foreign exchange increase is the lowest among the alternatives. The return to farmers is almost the same as Alternative A. The foreign exchange earnings are lower than the base period amounting to 87.66 million baht. Alternative E puts high priority on modern corn pro- duction with reduction in cotton areas for corn production. This alternative is a favorable situation. The net foreign 122 exchange and the total return to farmers is quite high, only slightly different from Alternatives B and 0. But there is a labor surplus for this alternative. With a different weight given to the modern corn and _cotton production in each alternative, decision makers are allowed to put the degree of priority on each of them as they deem appropriate. For example, if the primary goal is to increase net foreign exchange then they may put high priority on Alternative C. If the goal is to increase total net return they they may put high priority on Alternative B. Short-Run Policy Consideration for Cotton Cotton producers are faced with both a high risk associated with a yield uncertainty and a relatively high managerial skill requirement. The managerial skill require- ment could met through an intensified educational programs. But the problems associated with risk such as drought and flood are beyond the farmers' control. Also, cotton producers face more hazards through use of toxic materials. Cotton production has declined since 1969. On the presump- tion that high risks in cotton production are largely responsible for this decline, steps could be taken to transfer some of these risks either to the government or to the textile industry. If the risk to farmers is to be transferred to the government, the following programs would be recommended: 123 l. Grouping cotton farmers in one large area by way of land consolidation in order to make possible the coordination of cotton spraying activities. The government could set up a spraying unit in this production and, with use of large spraying machines, spray all cotton farms in that area. This would solve the different spraying schedules among farmers which allows insects to move from one farm to another. In addition, educational programs involving cotton specialists could be organized to instruct farmers on recommended cultural practices such as time of planting and proper spacing. 2. Government cr0p insurance programs could assure the cotton producers a certain level of income if uncon- trolled disaster such as flood and drought occurred to them. This kind of proposal may be needed to provide proper incentives for increased cotton production. It could be a very expensive program if low premium are charged and it could be very politically volatile because of questions of income inequities among farmers and the probable pressure to insure all crops. If the risk is transferred to the textile industry it could be initiated as backward integration into cotton production. The textile industry with its demand for a dependable supply of raw materials may find it profitable to invest in its own program of cotton production in preference to buying an increasing proportion of its needs 124 in the form of cotton imports. To do so would require high costs of initial investments and programs similar to those proposed above where farmer risks are transferred, in this case to the industry. It is assumed that this vertical integration would be profitable in the long run, but some government assistance to the textile industry may be required in the initial phase of this program. Another alternative is not complete backward integration but the textile industry could contract with cotton producers to supply necessary inputs, namely; seeds, insecticides and spraying equipment with the producers selling the entire harvest to them in return. It might be more efficient if the textile industry would provide the contract cotton producers with wide area spraying instead of providing them with insecticides and spraying equipment. These programs would increase costs to the government and/or the textile industry, depending upon who bears the transfer risk from the producers. If the government bears the risk its costs are borne by taxpayers in Thailand. However, if the textile industry bears the risk through backward integration into their own cotton production the cost would be passed along in the price to the consumer of the finished product. However, the textile industry in Thailand must compete with those in Japan and Korea and the price of finished material will be determined in this competitive market. Since the industries of Japan and 125 Korea must depend entirely on imported cotton, it is possible that an integrated cotton industry in Thailand would have a comparative advantage. Short-Run Policy Consideration for Corn Corn production requires less complicated managerial skills than cotton, but traditional production practices have.caused exploitation of soil fertility resulting in declining yield. Continued corn production without fertilization will further decrease the corn yield. TherefOre, increased productivity will rely heavily on the use of fertilizers. If the government puts a high priority in corn expansion the following policies would be recommended: 1. Pricing Policy: The world demand and supply will determine the international corn price which, in turn, determines the f.o.b. price of corn exported from Thailand. Corn export faces a perfectly elastic demand so that domestic price fluctuation follows the fluctuation of the world market. Price uncertainty and fluctuation can retard the expansion of corn production. A price support program could relieve some uncertainty and thus serve as an incentive to produce more corn. The level at which corn price should be supported is a difficult question. It would be an important political issue because we have to consider the need to expand corn in relation to other export crops. 126 2. Input Price Policy: The present policy of pro- tecting domestic fertilizer plants which manufacture nigrogen, urea and mixed fertilizers at a high cost of operation needs careful evaluation. This policy has prohibited the importa- tion of single nutrients and eliminated the economies resulting from importing high analyses for mixing into complete fertilizer within the country. This situation in combination with the protection of high cost production within Thailand has resulted in high fertilizer prices for farmers. The government should evaluate the alternatives of sub- sidizing fertilizer prices to corn farmers and of removing the protection policy so as to encourage private sectors to import high analysis single nutrient fertilizer to be mixed in Thailand. Long-Run Policies for Corn and Cotton In the long run, both corn and cotton production should be considered as potential for improving the foreign exchange situation by increased earnings and savings to the country. Long-run policies should be directed toward increasing modern corn and cotton production. The following policies would be recommended for the long-run perspective: Production Policy b. The continuation of corn and cotton breeding programs to develop disease resistant and high yielding varieties, 127 with improved seeds being produced and distributed to farmers in sufficient quantities. 2. An increase in both the numbers and in quality of extension officers. The number of farmers per extension worker could be reduced from the currently high level to one which is low enough to enable an extension agent to do his job of teaching farmers profitable technologies. This proposal would require the development of training schools and curricula to develop the trained personnel. 3. The expansion of an irrigation system to the production area to reduce crop damage or loss by drought or flood. At present, the dam can divert sufficient water to many areas but there are inadequate numbers of lateral canals to supply water to the production areas. Alternatively, or as supplemental irrigation, small projects such as tube well irrigation projects might be expanded to the production areas. 4. If irrigation is made available, farmers should be encouraged to plant beans after harvesting corn or cotton. This would increase theircash.income and would improve soil fertility as beans increase nitrogen in the soil. The crop residual plowed down would increase organic matter in the soil and fertility would be improved for eithercorn or cotton production the following year. Credit Policy The majority of farmers are poor and capital is usually scarce during the planting season. The Bank for 128 Agriculture and Cooperatives and some commercial banks have extended their credit to farmers but they require collateral and most farmers cannot meet the requirements. This allows the rich farmers to get cheap credit while the poor farmers must turn to the more expensive sources of credit such as middlemen or merchants. Government programs could alleviate the shortage of institutional credit by guaranteeing the loans made by commercial banks against drought, floods and other risks that can destroy the farmers' harvest. It is also possible for the government authority to guarantee the loans made by farmers' cooperatives in order to increase the flow of credit from commercial banks to the cooperative. In that case, the cooperatives can make allowances for farmers who have no collateral. 0n the other hand, such a program improperly conceived and administered could provide a major drain on the national treasury without appreciably increasing farmers' capacity to produce. MarketinggPolicy Since farmers do not have their own storage facilities they sell their corn immediately after the harvest. Usually, the prices are low during the harvesting season due to the excess of supply relative to demand. There is a high cost of transportation duetx) the size of the farms, the distance between farms, and the distance to the export silo. 129 The transportation cost from the production area can be reduced if a system of low cost and efficient transpor- tation could be designed. Cost reductions from these development programs should bring about higher local prices, increasing the farmers' incentive to expand production. It is expected that certain measures to reduce the transportation costs of cotton would also increase the competitiveness of the trading system. Cotton is bulky and requires expensive transportation. The encouragement of the textile industry to decentralize its ginning opera- tion closer to the cotton production areas would increase employment during off-season cotton production and would permit the semi-finished cotton product to move more effectively and economically from the production area to their final use. 0n the other hand, if the economies to scale in the ginning operation are such as to favor centralization rather than decentralization, then the textile industry would not be encouraged to follow this proposal. All of these policies need to be evaluated. A cost-benefit analysis of each program or package of programs is needed to determine the feasibility of each program and of a priority ranking of programs. APPENDICES APPENDIX A Planted Areas, Harvested Areas, Yield Per Rai And Market Value of Rice, Corn and Cotton, 1949-1972 130 .tha sumaunun .aa .oz onumnuaum ouauaaoauw< .ouauaaoanm< mo huuoaaaz .moaaoaoou aauauaaoauwa mo aoama>an .woumubhan mono Bonn nooaouaomuhuaaaow_aonm .ouaua mammoaonzu "mouaom a ~.mms.aa na.amm ¢¢~.ma mow amn.o¢ meo.~¢ N~\a~aa w.¢na.ma mw.~am oa~.ma mam meo.~¢ ooa.oe aa\oaaa o.~mn.ma ao.¢~o.a oa¢.ma mom mon.ne oo¢.~¢ on\moma a.mqw.aa oo.ooa.a a-.oa nNN aaa.am use.<¢ mo\moma «.maa.aa m~.wna.a mam.m «nu coo.mm «so.o¢ mo\noma m.aon.¢a N~.~m~.a nnm.aa SNN ame.me mmo.a¢ .ao\ooaa o.mma.aa ¢¢.oam.a mma.a new a¢~.nn Hom.o¢ oo\moma a.o~o.m oa.mmm mnm.m saw oam.~m Nam.o« mo\soma s.-~.~ Ho.oan mmo.oa mmN man.mm om~.H¢ eo\moma ~.Nom.m mo.mmm a-.a oou omo.mm nao.a¢ mo\~oma n.anm.m “H.5mo.a aha.» Ham aqm.nm mao.mm No\aeaa m.mmn.~ Hm.oam emm.~ NNN oa~.mm moo.am Hoaooma o.aoa.m om.onm on~.o oo~ mmw.~m mom.nm oo\mnaa ¢.¢mm. -.omm mac.“ mau oom.~m ama.nm mn\mmma m.~as.m om.a~o.a onm.n mom eon.o~ ou~.am .mn\~mma m.maa.n ~m.mnm na~.m omu mao.om m¢o.~m “~n\onma n.amm.o mm.mcm «mm.a wHN mom.mm ooo.om con\mmma m.mon.e oo.m~m moa.n New ¢-.w~ «ma.¢m mn\emma ~.H~m.m mm.m¢o mn~.m NNN moo.~m qnm.wm en\mmaa ~.wam.¢ Hw.m~a ~oo.o mom soo.~m Hmm.mm .mm\~mma m.ooo.o so.o~m nmm.a sow Hmm.mm mq~.nm .~m\amma o.oaaum mm.mca ~ma.o mom aao.mn owo.qm an\onma m.mmn.s mm.aaa «wo.o mHN oao.am omm.~m om\mema n.5sm s mm.m~n nmm.s NNN Nam.om mam.~m me\m¢¢a unmm conaanz coy nma seam mace ooo.a «ma non .wx awe ooo.a Hum ooo.a .a.< Nooaum wamaw amu< mou< whom» maam> madmoaosz aoauoawoum m mum>< woumo>Ham wouaaam mono .Nnaa-m¢ma .moam mo anam> noxnmz was conuoswonm mmmu< .a.< manna 131 soaaoh .wmaamSm ouamfi .xoxwaam .Amwan maaaw maawaaoaav .Nama mumsumom .ma .oz oaumauaum ouauaaoauw< .ouauaaoauwa mo mnumaaaz .manoaoom aoaauaaoauwa mo aoama>aa .owaa wasp ao woumo>han mono mo muonaaa waaon Bonn "monaom N a o.mmm.a ma.a o.mam.a aam ma~.m am~.m mama o.ama.~ ma.a o.oom.~ mmm mmm.m mmm.m aama m.mmm.~ m~.a o.Omm.a mam Nma.m mma.m mama o.oam.a oa.a o.o~a.a mom m-.m mm~.m mmma m.~mm.a mm.o m.mom.a mmm mmm.m mma.m mmma m.mmm.a aa.a m.mam.a «mm mmm.m mma.m amma a.am~.a -.a m.mma.a mom mmm.m mmo.m mmma o.mm~.a -.a m.a~o.a amN oam.m mom.m mmma m.~mm mo.a a.mmm mam mmm.m mom.m mmma «.mom mo.a a.mmm mmm mam.~ Nam.~ mmma a.~mm ao.a m.mmm amm moo.~ omo.~ Nmma a.omm ma.a m.mmm aam mmm.a mam.a amma m.mmm No.a m.mmm mom mam.a mma.a omma m.o~m ao.a «.mam mma amN.a m¢~.a mmma m.mma mo.a m.mma mmm mmm Nmm mmma m.ama mm.o m.mma mmm mmm mom mmma ~.mma ma.a m.maa mam oam mam mmma o.am oa.a m.mm mma mam mam mmma o.am om.a m.~m ama mam amm mmma m.ma om.a a.am mma mmm mmm mmma a.mm mo.a m.mm mma aam amu amma m.~m om.a m.am mma mmm mmN amma a.m~ mo.a m.ma mma aam mam omma @ o a.m~ ama mom mam mama mama coaaaaz .wa awn mama com ooo.a amm Ham .wa awe ooo.a amm ooo.a .a.¢ mowhm UHQHW fimummxrhwm flmugam oaam> maMmoaonz coauoawoum wwmuo>< aon< mon< Ham» .mmma-mmma .cnoo no 0name. umaumz wag .coauoswonm .mmmu< .~.< mange 132 .mwma wasp ao aoauoawoua wan woumo>uaa mono mo muoaaaa waaou Bonn .aama mumsuaum .ma .oz oaumaumum manuaaoauw< .ouauaaoanm< mo anomaaaz .moaaoaoom aauauaaoaum< mo aoama>ao .wooa acuuoo .xoxmaam ”mouaom m .aoauuawoua man mo uaoouoa n.nm um wounm>aou uaaa aouuoo .aoama>an moaaoaoum amuauaauauwa mo mo>ham summoned a scum .mwmom auazw a mm.mma om.m m.mo mma «mm «mm aama m.mma am.m m.om mma aaa mma aama m.mma ~o.m a.am mma maa mma mama a.maa mo.m a.mm. mm mom mmm mmma a.aam am.m a.aaa oma mam amm mmma m.mom ma.m a.om ama mom ama amma m.mma ma.m m.mm maa mmm mam mmma m.mma ao.m m.mm ama mmo aam mmma m.mma mm.m a.mm maa mam mam mmma m.ama mm.m m.mm aaa mmo mmm mmma a.ama mm.m m.am maa amm aam mmma m.ama mm.m m.mm maa omm mmm amma a.aaa ma.m m.mm mma mam amm omma m.ama mm.m a.am maa mma aom mmma m.oma aa.m a.mm ama mma mma mmma m.oma mm.m m.mm ama mma ama amma a.aaa mm.m m.am ama ama mma mmma o.moa oa.m o.ma maa ooa moa mmma m.ooa am.m a.aa aoa maa maa mmma a.am aa.m m.ma aoa ama ama mmma m.ma oa.m m.ma moa maa mma mmma o.am ma.m a.ma moa mma maa amma m.mm aa.m m.oa am oaa mma mmma o @ m.ma am maa ama mmma aama coaaaaz .wa Hum aama mace ooo.a ama ama .mx ama ooo.a ama ooo.a .o.¢ wDHm> mwuwhm HUHwHW Uwummarumm Umufide umthz mHmmmHOSB GOHuodmuOHm mwmhmafiw NOH< mmh< .Hawmw .Numanmmuma .COquU m0 05Hm> umxumz USN fiOHUUDUOHm .mmmH4 .m.< mHDmH APPENDIX B Summary of Net Returns and Net Foreign Exchange Per Rai of the Selected Commodities 133 Table B.1. the Selected Commodities. Summary of Net Returns and Net Foreign Exchange Per Rai of Commodities Rice Corn Cotton Net Returns and Foreign Exchange Average Yield Traditional (Kg/Rai) 342.42 406.2 251.23 Total Revenue Traditional (B/Rai) 321.87 349.33 1092.85 Total Variable Costs Traditional 120.46 105.22 450.04 Net Return on Traditional 201.41 244.11 642.81 Average Yield Mbdern 556 751 485.5 Total Revenue Modern 522.64 645.86 2111.92 Total Variable Cost Mbdern 279.38 269.75 909.52 Net Return on Mbdern 243.26 376.11 1202.40 Increase Variable Cost on modern 158.92 164.53 459.48 Increase Revenue on Modern 200.77 296.53 1019.07 Increase Net Return on Modern 41.85 132 559.59 Foreign Exchange Earnings or Savings (B/Rai) -- -- -- Foreign Exchange Cost Traditional 4.20 6.04 93.66 Foreign Exchange Revenue Traditional 474.60 459 1253.22 Foreign Exchange Cost Modern 50.34 97.91 230.62 Foreign Exchange Revenue Modern 770.62 848.63 2421.84 Foreign Exchange Cost Increase on Modern 46.14 91.87 136.96 Foreign Exchange Earnings on Traditional 470.40 452.96 -- Foreign Exchange Earnings on Modern 720.28 750.72 -- Foreign Exchange Savings on Traditional -- -- 1159.56 Foreign Exchange Savings on Modern -- - 2191.22 Source: Taken From Tables 3.21 and 4.12 APPENDIX C Power Utilization in Producing Rice and Corn l.‘ I'll I'll ill-ll I." ll illllJlIl 1.! III! III . ...1 w .aoawou oBmm wan Ba ma mmma aoauoawona mo aoaummohwwa man .Omam .wama mo mama mBmm map ao 30pm aouuoo wan ahoo mmamoon auoo mm mBam map on on woBammm ma mwaoam aouuoo waasoaa How wouaavma oBau osH Amv .amn ama mason mm. mo owmno>m man no waasoaa amaaam ama mnouomau nosoammnon no umnu woBammm ma ua .muouomuu HmBoaomaon mm amnu Hmummm 30am ama noa£3 wnouoanu Hm3oaomnon mm an oaow ma3.waa30aa moam Aav .4 u .m-am .ma .oama .aa .02 canmaasm .uamammmamz mam How moan oammm .onauaaoauw< mo anomaaaz .aoama>an moaBoaoom amnauanoanw< “meadow ma.m om.m wo.a mm.¢ mm. am.o , m¢.o _ auoo om.m mm.a ma.m o.m ma. aa.o A ma.o moam waawom3 owmnm>< Ho waa30am waasoam mwmuo>< waa3oam maa30am waa3oaumm waN uma waN uma mooamm am muouomne . moauawoBBou manom .auanaoa wam aaanmumm .umaamno .mumbamnu Boum CHOU wam moam waaoawoum Ba coauMNaaauD Ho3om .a.o maan APPENDIX D Comparison by Weight and Volume Among Different Insecticides i l 1111' III.- lll'lll all! . 135 Table D.1. Comparison by Weight and Volume Among Different Insecticides. Insecticides Weight (Kg) Volume (Liter) Thimet 83% 1 Kg. . 1153.16 B.H.C. 6% 1 Kg. 858.42 Dimicron 50% 1 Kg. 952.75 Metasystox 50% 1 Kg. 1004.67 Thiodan 35% 1 Kg. 1053.52 Sumithion 50% 1 Kg. 1111.26 Dimethoate 20% 1 Kg. 994.20 Average 1 Kg. 1018.28 Source: Agriculture Department, Entomology Division, Experimental Report. Bangkok. Thailand. Note: From the experimental result, it is quite reasonable to assume that one liter of insecticide is equivalent to 1 Kg. APPENDIX E Foreign Trade, Import and Export Price of Rice, Corn and Cotton and Balance of Trade, 1962—1972 136 .mwoow unauaaaB waawaaoxm "ouoz .mnma an: .uuoamm aaaaaa wcmaamrb mo xamm wan uuoaom mBoumao mo uaoBuuuaoo "condom mam.oa mum ama.a ooa.~ mao.a ¢m¢.¢ mam cnm omm.m u maw.om oan.- «ama oqa.¢a owe o-.a cam.a oma.~ mom.~ who non nam.m u amn.ou amN.ha aama wow.aa mam oom.a mom.~ amw.a oam.~ mmm «mm mmN.~au moo.n~ Nan.¢a oaaa --- nun mmo.a moa.~ o~o.a mom.~ one one <¢N.aan oom.n~ NNN.¢a moaa nun nu- ano.a amm.m omn.a ama.n mmn ace ¢~¢.oau moa.¢~ who.ma wooa nu: --- ~o~.a «ea.m mmm.a mnw.¢ mmo «mm -o.w u ama.~N ooa.¢a mmma nu: In: aa~.a omo.~ oun.a aoo.o wno aom no¢.¢ . «on.wa mmo.¢a coma --- nu- NaN.a am~.~ mom amm.¢ anm mmm Noo.N u mmq.ma ama.~a mmma In: un- cna.a nan.~ cam.a mmm.o mum omm aam.a u www.ma mmm.~a coma In: nun ama.a oa¢.~ mum ¢N¢.m mew Nma aNa.n n now.~a who.o mooa unn --- moo.a enm.~ own oom.n mma mma msa.a . con.aa mun.o Noma wuaaz moam mowaoaumom aoean aoeam waa wmwmn uuoaBH! acuuo A.o.o.wv. mmma: ooam mucuoauhx muonHauuom, ooaaaam A.m.a.ov A.o.o.wv .\a.m.a.ov muuoama ouaum unoaxm muuoaxm monomsa owauH muaoaBa muuoaxm Mao» .Auemm mo mCOaaaazv Amwmue mo oaam> amuoav muaoaxmm wan mwmuh awaouom .a.m manna APPENDIX F Employment in the Agricultural Sector of Thailand 137 Table F.l. Employment in the Agricultural Sector of Thailand (Million People). Year Total Labor Force Number in Agriculture Percent 1929 7.5 6.3 84 1937 6.8 6.0 89 1947 9.0 7.6 85 1954 10.2 9.0 87 1960 12.7 10.3 82 1966 14.6 11.6 79 1971 16.8 12.7 76 Sources: 1) 1929-1947 are from James C. Ingram. Economic Chan e in Thailand, 1850-1970, Stanford: Stan ord University Press, 1971, p. 57. 2) 1954-1971 are from Bangkok Bank Monthly_Review, 1972, p. 434. BIBLIOGRAPHY BIBLIOGRAPHY Bangkok Bank. MOnthly Review. Bangkok: Bangkok Bank, October, 1972. Bank of Thailand. Monthly Report. Bangkok: Bank of Thailand, May,l973. Barton, Thomas Frank. "Rainfall and Rice in Thailand," Journal of Geography. Vol. 62, No. 9, Cecember, 1963. Brown, Lester. The Social Impgct of the Green Revolution. International ConciliatiOn, 1971} Burling, Robins. Hill Farms and Padi Fields: Life in Mainland Southeast Asia. Englewood Cliffs, N.J. Pfentice-Hall, Inc. , 1965. Chancellor, W. J. Mechanization of Small Farms in Thailand and Malaysia by Tractor Hire Services. Rice Policy Conference, Manila. IRRI, May9-I4, 1971. Chanchaiyasuk, C. ; Anantapakorn, P. Oil. Bangkok: Ministry of Finance, unpublished— article in Thai, 1973. Chuchart, Chaiyong; Tongpan Sopin. The Determination and Analysis of Policies to Support gndStabilize A ricul- ppraIPrices and Incomes of the Thai'Farmers. angkok: Kasetsart University,l966. Corden, W. M. Richter, H. V. "Trade and the Balance of Payments," Thailand: Social and Economic Studies in Development. Edited’byTjH. ISilcock. Durham, N.C.: Duke University Press, 1967. Ditapanya, J. "Resource Productivities of Cotton Production in Changwats Sukhothai and Loei, 1971- 72 CrOp Year. " Unpublished dissertation, Kasetsart University, 1973. Falcon, Walter. "The Green Revolution: Generations of Problems," American Journal of Agricultural Economics. (December, 1970). Foster, George M. Traditional Culture and the Impact of Technological Change. New York: Harper and’Row, 1962. 138 139 Gehrels, Franz. "Trade Policy and Allocative Efficiency in Underdeveloped Countries," Essgys in Economic Analysis. Edited by Franz Gehrels, Henry M. Oliver, Jr. and George W. Wilson. Bloomington, Ind.: Indiana University Press, 1970. Greene, Brook A. Rate of Adoption of New Farm Practices in the Central Plains,fiThailand. Occasional Paper No. 41. Bangkok: Kasetsart University, Department of Agricul- tural Economics, October, 1970. Grimble, R. J. The Economics of Cotton Production. London: Overseas Development Administration, 1971. Haberler, Gottfried. "Some Problems in the Pure Theory of International Trade," Economic Journal, LX,June1 1950. Hayami, Yujiro, and Ruttan, V. W. "Sources of Agricultural Productivity Differences Amon Countries," A ricultural Develgpment: An InternationaI Pergpective. Eltimore: John HopkinsIPress,gl97l. Heady, Earl 0. Economics of Agricultural Production and Resource Use. Englewood Cliffs, N.J.: Prentice- Hall, Inc., 1952. Honick, J. P. An Economic Analysis of Maize Price in Thailand: The Effect of Recgnt Export Agreements. Staff Paper No. 7, Bangkok: Kasetsart University, Department of Agricultural Economics, August, 1972. I.B.R.D. The Problem of Stapilization of Prices of Primary Products. washington, D.C.: IBRD,1969. Ingram,'James C. "Thailand's Rice Trade and the Allocation of Resources," The Economic Development of Southeast Asia. Edited by C. D. COwan. *London: George Allen and Urwin, Ltd., 1964. . Economic Change in Thailand, 1850-1970. Stanford: Stanford University Press, 1971. Ishikawa, Shigeru. A ricultural Develppment Strate ies in Asia. Japan: e Asian'DeveIopment Bank7219 0. Johnston, B. F. and Mellor, J. W. "The Role of Agriculture in Economic Development," American Economic Review. Vol. 51, No. 4 (September 1961). Kohl, R. L., Marketingof A ricultural Products. Third Edition, New Yofk: éIMacmillan Co., 1967. 140 Kwok, Min-hsioh. "Farmers' Associations and Their Contributions Toward Agricultural and Rural Development in Taiwan." Bangkok: FAO,ECAFE, 1966. Mellor, John. The Economics of Agricultural Development. Ithaca, N.Y.: Cornell University Press,—1970. Mishan, Ezra J. The Costs of Economic Growth. New York: Praeger, 1966. Nakajud, Arb. Agriculture Production, Producpivity and Measures for Promoting Productivity in Thailand. Bangkbk: KasetsartUniversity, 1967. . Farm Credit for Promotion of Fertilizer Use. Staff Bulletin No. 6. Bangkok:'Kasetsart_University, 1972. , et g1. Research for Planning Corn and Sogghum DevelE ment in Thailand. Bangkok: AKasetsart University, septemaer 1970. N.E.D.B. The Third National Economic and Social Development Plan (1972-1976). Bangkok: Government House Printing, 1973. Nuttonson, M.Y. The PhysicalJEnvironment and Agriculture of Thailand. Washington, DfC.: American Institute of Geography, 1963. Onchan, Tongroj, Ong, Shao-er. Institutionalizing Agricul- tural Credit in Thailand. Staff Paper No. 5. Bangkok: Kasetsart University, December 1971. Oshima, Harry T. "The International Comparison of Size Distribution of Family Incomes with Special Reference to Asia," Review of Economics and Statistics. (November, 1962)- Rangsaritkul, P. and K. Natteethip. Production and Marketin of Corn. Bangkok: Ministry of Commerce, I972. (In Thai) Rozental, Alek A. "A Note on the Sources and Uses of Funds in Thai Agriculture," Economic Development and Cultural Change. XVIII, (April 1970). Sabatini, Omero. The Agricultural Economy of Thailand. Washington, D.C;: UiS.D.A.,lEconom1cs‘ResearCE—Service, 1972. 141 Sanittanont, Sura. "Thailand's Rice Export Tax: Its Effects on the Rice Economy." Unpublished Ph.D. dissertation. University of Wisconsin, 1967. Shand, R. T. Agricultural Development in Asia. Canberra: Australian NationalUniversity Press, 1969. Silcock, T. H. "The Rice Premium and Agricultural Diversi- fication," Thailand: Social and Economic Studies in Development. EditedlbyST. H. Silcock. Durham, N.C.: Duke University Press, 1967. . The Economic Development of Thai Agriculture. Ithaca, N.Y.: Cornell University Press,ll970. Sriplung, Somnuk. Use of Fertilizers in the Thai Agriculture. Bulletin No. 50. Bangkok: Ministry oflAgriculture, Division of Agricultural Economics, 1972. Thailand, Ministry of Agriculture, Division of Agricultural Economics. Basic Data in Farm.Management. No. 12, Bangkok: Ministry ofngricultur , 1971. , Ministry of Agriculture, Division of Agricultural Economics. Land Utilization of ThailandL 1971. No. 24. Bangkok: Ministry of Agriculture,l972. , Ministry of Agriculture, Rice Department. Annual Research Report. Bangkok: Ministry of Agriculture, 1969. , Ministry of Agriculture, Agricultural Extension Department. Annual Report. Bangkok: Ministry of Agriculture, 1971. , National Economic Development Board. National ncome Statistics of Thailand, 1964 and 1965 editions. Bangkdk: Government House Printing Office. , National Economics Development Board. National Income Statistics of Thailand, Preliminary Diaft, I972 (Mimeo). , National Statistical Office. HouSehold Expenditure urveyf—Whole Kingdom, 1963. Bangkok: ”KfiaofPanit Press,’1966. Tomosugi, Takashi. "The Land System in Central Thailand," The Developipg Economies. VII (September 1969). 142 Tosunthorn Suphan,gp. g1. Demand for Ferpilizer in Thailand. Economic Report No. 32I Bangkok: Kasetsart University, Faculty of Economics and Business Administration, October 1970. Uhgpakorn, Puey and Yossundara, Suparb. The Economy of Thailand. Third Edition. Bangkok: Pramuanmit, 1961. (In Thai). United States Department of State. Thailand Transportation Coordination Study. Bangkok: Wilbur Smith and Associates, June 1970. Usher, Dan. ”The Thai Rice Trade," Thailand: Social and Economic Studies in Development. EditedbyT. H. SilcoEk. Dfifham, N.C.: Duke University Press, 1967. Vanitkobjinda, S. "The Use of Insecticides and Sprayers for Disease Control." Bangkok: Ministry of Agriculture, Agricultural Economics Division, 1973 (Mimeograph in Thai). Welsch, Delane and Tongpan, Sopin. "Rice in Thailand," Viewpoints on Rice Poligy in Asia. Edited by Randolph Barker. Los Banos, Philippines: IRRI, August, 1971. , Wattanutchariya, Sarun. Case Studies of Seven Tractor Owners Who Did Contract Plowing in Amphoe Pdkchong in I970. Department ofiAgricultural Eddnomics, Bangkok: iKasetsart University, July 1971. RARI 3146 2181 ll L|l H Ill T“ 3". RH Ill-l EIHIHN