Introduction
Notwithstanding the rapid growth of commercial agriculture in Thailand over the past half century, farmer organizations and community enterprises have been a common and distinctive feature of the rural economy and have been strongly supported by government policies, especially with the promotion of the concept of a “sufficiency economy” introduced by the late King Bhumibol and incorporated in national development plans (Thai Chaipattana Foundation 2013). While informal cooperation such as through labor exchange and rotating savings groups has been a traditional part of village life, the government has consistently promoted more formal organizational arrangements for farmers, alongside mainstream policies for intensification and commercialization of rice and other crops. Farmers are encouraged to form themselves into groups as legal entities to obtain support from outside agencies, especially through government programs. These groups are formed to meet members’ common needs with regard to the production and marketing of agricultural and non-agricultural products goods and services. This juxtaposition of independent smallholder farming and collective, community-based economic activity is explored in this chapter through case studies of organizations in three villages in Northeast Thailand.
Farmer Organizations and Community Enterprises in Thailand
Organizations, groups, and networks are forms of social structure that can provide social, economic, and political benefits to participants and others (Ishihara and Pascual 2013). In Thailand, farmer organizations and community enterprises have been advocated as tools to improve rural livelihoods. They are said to provide the following benefits: (a) Forming groups provide an opportunity for the members to link up with other groups, government, and traders to conduct business or obtain support. (b) Marketing members’ products jointly enable them to realize economies of scale and receive better prices. (c) Developing a culture of saving is seen as a means to overcome farmers’ chronic lack of finance and inputs and build the autonomy of farmer organizations. (d) Beyond the economic enterprises they undertake, farmer organizations strengthen social bonds and help address social issues such as alcohol abuse, crime, and domestic violence. (e) Organizations make rural development more effective by building close collaboration with local administration, making it easier to voice development concerns. (f) Working in groups requires leadership, financial accounting, and record keeping, ultimately promoting transparency and accountability. (g) Providing equitable access to support services has encouraged women to take up leadership roles and improve their management skills and an open membership policy has encouraged poor and disadvantaged villagers to participate.
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Stockbridge et al. (2003) found ten factors associated with the success of farmer organizations in general:
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Participants should be relatively homogeneous in terms of their socio-economic status and cultural values.
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The size of a farmer organization should match the organizational abilities of its members and be appropriate for the type and scale of activities being collectively undertaken.
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The services provided by the organization should reflect the demands of its members and should be matched by the ability of the organization to deliver them.
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The organization should be able to identify and undertake activities that make good business and commercial sense.
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The organization should not be dominated by outsiders (e.g., government, donors, and non-governmental organizations) in pursuit of their own respective agendas and in the long run should not be overly dependent upon outsiders for support and guidance.
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The organization should have financial capacity to support its own activities and not be heavily dependent upon subsidies.
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There should be a minimum level of skills and education among the organization’s membership.
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Strong incentives exist for active participation by members in decision making and in the use and/or provision of services.
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The structure of the organization facilitates good governance and effective day-to-day management of the organization and ensures that the leadership is accountable to members.
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The legislative framework within which the organization operates promotes good governance while at the same time avoiding excessive regulations and the harm this can do to autonomous development of the organization.
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Resources should be focused on effectively undertaking a limited number of activities rather than less effectively engaging in a larger number of activities.
These factors have been confirmed in many studies, including by Kassam et al. (2011), who studied the success of the Samroiyod Shrimp Farmers’ Cooperative in Thailand, and by Chumsri (2010), who analyzed lessons learned from successful cases of three farmer organizations in Thailand. Asia DHRRA and Agriterra (2002) found that farmer organizations in Thailand had the following strengths: self-management, government-influenced rules and regulations, well-directed strategies, closely government-supervised programs, services responsive to the needs of the people, and adequate resources.
In the Thai context, a “farmer organization” is considered to be a body providing credit, savings, farm supplies, joint marketing, and agricultural extension services to members. Farmer organizations include both “farmer groups” and “farmer cooperatives”, the latter having commercial marketing function. Both have the same organizational principles, including voluntary and open membership, democracy, autonomy, independence, cooperation, human resource development, information dissemination, and community spirit. Farmer groups and cooperatives are generally formed within villages and sub-districts (tambon) and are linked at district and provincial levels through farmer networks and higher-level organizations.
Rice farmer groups were first established unofficially in 1955. Since 1967, the Government has encouraged the formal establishment and registration of these and other agricultural groups. To form an operational unit, a group needs at least thirty members and has to register with the Registrar of Farmer Groups.1 In 2012, there were 4277 active farmer groups in Thailand with a total of 642,096 members (Cooperative Promotion Department 2013a).2 These included groups for rice farmers, field crop farmers, horticultural farmers, fishers, and livestock farmers, with rice farmer groups accounting for 50% of the total. The Northeast Region had the highest number of farmer groups in 2012. In the same year there were 5124 rural cooperatives, of which 74% were agricultural cooperatives. In 2010, the total turnover of all farmer groups was THB 7.1 billion and of agricultural cooperatives, THB 215.3 billion (Cooperative Promotion Department 2013b).
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A second strand of cooperation among agricultural households in Thailand is in the form of “community enterprises”. These are cooperative activities or micro-enterprises involved in selling products or services and are found in most tambon. Community enterprises originated in women’s groups which initially produced food and handicraft products for local consumption. After the 1997 financial crisis, small and medium enterprises were promoted to strengthen the grassroots economy and help overcome hardship (Wiboonpongse et al. 2006). Further support came from the launch of the One Tambon One Product (OTOP) program in 2001. Women’s groups in a number of villages were targeted to be scaled up into micro-enterprises (Teerakul 2011). The Government has supported these enterprises through the provision of information, technologies, and marketing. Under the OTOP program, about 37,000 villages established community enterprises during 1997–2006 (Kittisataporn 2006).
Community enterprises are based on four core principles: (a) belonging to the community, (b) aiming to meet the needs of the community, (c) being fully operated by the community, and (d) contributing benefits to the community. They aim to embody a learning process and contribute to self-reliance (Teerakul 2011). According to the Community Enterprise Promotion Board (2010), community enterprises can deliver four types of product and six types of service. The products are agricultural goods, handicrafts, processed food, and other products. Agricultural products include crops, livestock, and fish and account for a higher percentage than the other types (Teerakul 2011). Handicrafts include fabrics, artificial flowers, weaving, gifts, souvenirs, jewelry, furniture, leather goods, and pottery. Food products include cottage foods, herb products, and beverages. Other products include machinery and agricultural inputs (Community Enterprise Promotion Board 2010). The services include community grocery stores, community savings groups, tourism, health services, mechanics, and other services (Teerakul 2011).
Case Studies in Ubon Ratchathani
Case studies were conducted in 2014 in the three villages in Ubon Ratchathani Province described in Chap. 3, namely, Ban Donmoo, Ban Bua Teang, and Ban Nong Bua Hi. There were several successful small farmer groups in Ban Donmoo, a few in Ban Bua Teang, and one loosely organized group in Ban Nong Bua Hi (not described further here). The groups had been formed for a variety of purposes, including to obtain access to inputs or credit, obtain support with production technologies, increase market accessibility, increase agricultural incomes, reduce production costs, and increase off-farm incomes. Other purposes of group formation were environmental protection and extension of traditional healing therapies. Key informant interviews and group discussions were used to obtain qualitative data about five different types of group, which were assessed according to the participants’ own experience and evaluations.
Ban Donmoo Farmer School Group
The farmer school group in Ban Donmoo consisted of forty-five farmers. The group was established in 2003 to help members solve rice production problems and reduce costs. The group was formed by farmers who attended training provided by the Debt Suspension and Debt Burden Reduction Project of the Bank of Agriculture and Agricultural Cooperatives (BAAC) in 2001. The training course was called “The Truth of Life” and was conducted by the Ratchathani Asoke Group.3 Farmers learned how to have a sustainable livelihood, in particular by reducing both living costs and farming costs. An alternative farming system, namely, organic farming, was introduced to them. Farmers learned to produce alternative fertilizers and pesticides.
After the BAAC-sponsored training, the group started operations by setting up an organic farming demonstration site of 1.3 rai on a lead farmer’s land so that members could learn the appropriate practices for organic rice production. The forty-two farmers who had attended the course started to practice what they had learned. They used the demonstration farm to grow organic rice and this farm became the site of a farmer field school. When the farmers needed particular knowledge, specialists came to share their experience. In recent years, the farmers have been growing organic rice on their own farms but they still came together to produce organic fertilizer and provided credit to members to make organic fertilizer in their own farms.
Initially, the farmers found organic farming quite complicated. They needed to spend more time in their fields, the alternative pesticides were not as effective as purchased agrochemical inputs, and they had to apply large quantities of organic fertilizer. Moreover, the rice yield was lower than with conventional farming in the first year. Belonging to the group encouraged members to continue with organic rice. After several years, soil quality was improved and rice yields increased. The farmers had also reduced their input costs by ceasing to buy synthetic fertilizers. They learned together and could more easily obtain access to new higher-yielding technologies using less seed.
Participation in the group also created a sense of unity and enabled members to share their opinions frankly. They felt they could all share their ideas when decisions were needed and their views were regarded as equally important. Working as a group created reciprocal trust among the farmers, generating a sense of social obligation. Hence they could organize to produce and sell organic rice for a higher price than conventionally produced rice.
The farmers adopted the sufficiency philosophy in other aspects of their lives. They produced essential goods together and shared them among the members, including alternative fertilizers, plant extracts, and home goods such as washing liquid, shampoo, shower cream, and soap. As a group, it was easier for providers of external assistance to support them and knowledge was more easily transferred to members.
Ban Donmoo Community Rice Mill Group
There was also a Community Rice Mill Group in Ban Donmoo. It was formed after farmers were unsatisfied with the farm-gate price of paddy they were receiving through normal market channels, which they felt was unfair both to them and to consumers. Originally, the organic rice they produced was sold through conventional channels and farmers received the same price as rice produced with the use of chemical inputs. The farmers hoped to receive a higher price for their organic rice because at that time the rice yield was lower and they spent more time to produce it. Additionally, the farmers thought that organic rice had added value for consumers’ health and so should attract a premium price. The way the existing rice mill mixed organic rice with conventional rice did not benefit the farmers or the consumers.
Consequently, seventy-four farmers formed the Community Rice Mill Group in 2005. The group started to get involved along the supply chain from farm to market so that they are now producers, buyers, processors, and sellers. The key objective was to assemble organic paddy from member farmers so they could bargain for a higher price. They also aimed to mill the organic paddy to get a premium price for the rice. The group raised about 58,500 baht (USD 1950) from the members. To construct the mill and buy paddy from farmers, the group obtained a loan of 500,000 baht (USD 17,000) from the BAAC. The group had executive members as well as purchasing, marketing, and standards teams. At the time of the study, it had increased its size to eighty-eight members, including some from nearby villages. The group bought about 50 tons of organic paddy from its members at 1 or 2 baht per kg higher than the price offered by other traders and rice mills. About 80% was sold directly to contracted buyers such as Santi Asoke and restaurants in town. Santi Asoke bought paddy while the restaurants bought milled rice. Another 20% was sold as rice directly to consumers from government offices and through the group’s retail outlet in the village.
The Group’s operations started from the time of planting. The standard control team frequently visited farmers to monitor and ensure that rice produce was organic. The area of members’ farms was recorded and the expected yield estimated. The process of monitoring helped to prevent the problem of farmers buying non-organic paddy to sell to the Group. Separate committees worked on different aspects of the group’s operations and members took part in the milling and packaging process. The Community Rice Mill Group had a vertical relationship with the Farmer School Group. Members of the Farmer School Group could sell their organic rice at favorable prices. Thus farmers tended to continue growing organic rice. The Group also created employment in the village by hiring members to work in the milling and packing processes. They were paid the standard wage rate in the village for their duties. The Group was also seen to build human capital and farmer networks.
As a group, the farmers learned to work together and respond to their duties. The knowledge received from managing rice production and marketing was very important. The farmers normally could not undertake marketing by themselves. They were price takers and mostly sold their produce to traders. In addition, the farmers found they could manage finances and personnel. The Community Rice Mill Group confirmed that farmers were able to run a small business successfully. In addition, the linkages formed with the organic rice production group and with farmers in other villages showed them the possibilities for building a stronger and wider agricultural community.
Ban Bua Teang Agro-Tourism Group
The Ban Bua Teang Agro-Tourism Group was formed because the village had distinctive agricultural activities such as floriculture and received a push from the District and Provincial Agricultural Extension Offices (DAE and PAE). Farmers attended agro-tourism training in 2006, supported by the DAE and PAE. After the training, forty-five farmers formed the Group and selected a committee. Significant progress began when Mr. Kittipotch Seansing undertook a research project on community-based agro-tourism practice in Ban Bua Teang for his master’s thesis (Seansing 2009). The project was supported by the Thailand Research Fund. The villagers involved in the project learned how to conduct effective agro-tourism. Initially, the attractions were only individual flower farms but villagers subsequently found that Ban Bua Teang had various suitable sites, including integrated farms, orchards, the community forest, and the landscape along the Mun River, where visitors could experience how villagers fished and processed local fish. Traditional farming technologies, local foods, and traditional beliefs and practices were also highlighted.
Information about the village was communicated by mass media, by government officers, and by word of mouth. As the number of visitors increased, the Group set up three more committees to handle facilities, food and beverages, and speakers. At the time of research, there were about 150 members from almost every household in the village and the group was catering for about 1000 visitors a year. The Group had also been asked to provide training organized by the BAAC for indebted farmers under the Debt Suspension and Debt Burden Reduction Project; hence, in total there were about 3000 people coming to the village each year.
The main objective of the Agro-Tourism Group was to increase villagers’ income. The progress of the Group in this respect was more than the members had expected. When a large number of visitors came, all participating members received fair pay for their work which included organizing the groundwork, preparing food and beverages, entertaining visitors, and acting as resource persons. They also obtained income from selling their agricultural products and providing homestay services. The 3000 visitors and trainees coming to the village in 2013 brought in about 1.8 million baht, mostly from the BAAC for training activities. The Group received 350 baht per person for one-day training and 1250 baht per person for training over four days and three nights. Expenses for food, homestays, on-ground preparations, use of training room and facilities, and a contribution to the village temple were met from this income. The remaining income was saved in the Group’s account and later distributed to members based on their time contribution.
Participants reported that the Group generated trust among the members as they worked together for the success of the Group. Members learned to take on different roles and responsibilities. Moreover, the Group gave the villagers a greater sense of confidence when visitors showed their interests in the village and its activities.
Ban Donmoo Micro Finance Institute
The Donmoo Micro Finance Institute (DMFI) had been established in Ban Donmoo to provide an accessible fund for poor households. It catered for the needs of the many different occupation groups within the village. DMFI had its origins in a village saving group—the Community Saving Fund for Pig Farming (CSFP)—formed in 1991 with the support of an NGO which contributed an initial fund of 3000 baht. Each member had to save 50 baht per month and could borrow money from the fund. With increased savings in the CSFP and by other occupational groups in the village, a local official suggested starting the DMFI in 2005. The committee members undertook training programs, especially in accounting and financial management, and visited other microfinance funds to learn how they operated. The DMFI was formally established in 2007 with support from the BAAC and working capital of 1 million baht. After ten years it continued to operate successfully, with working capital of 10 million baht, even though most of the committee members had only primary education.
At the time of the research, DMFI had fourteen committee members, elected in 2010 for a four-year term. All were residents of Ban Donmoo who understood the villagers and the issues they faced. DMFI’s Members paid an enrolment fee of 50 baht. Membership was also open to residents of other villages. DMFI provided loans, paid dividends to members, and received saving deposits. The saving account was limited to 500,000 baht to control the total interest paid out; otherwise, saving would exceed borrowing and the Institute would struggle to cover its interest costs. The Institute paid a 1% annual interest rate for regular savings, 5% for fixed deposits of twelve months, and 7% for fixed deposit of twenty-four months. The rates were higher than offered by commercial banks in order to increase membership and generate more capital to circulate and use. The DMFI had regulations for membership and borrowing to minimize bad debts and maintain profitability. However, community members who struggled to meet their basic needs could borrow from the fund. In cases of overdue payments, the committee would extend the repayment period or provide an additional loan where repayment was feasible.
The DMFI was open for members on Mondays, Wednesdays, and Fridays. It operated like a bank. All members had books for their saving accounts. For withdrawals of 50,000 baht or more, members needed to give three days’ notice as only 100,000 baht cash was kept in the office. However, in an emergency, a member could withdraw the money with the approval of three committee members. DMFI had also set up a welfare fund for members but this was an optional program. Each member wanting to join this fund had to pay 500 baht per year. The benefits were: (a) the ability to borrow money for family needs, (b) a hospital benefit of 60 baht per night for up to five nights per year, and (c) a death benefit of 100 baht from each fund member.
DMFI appeared to be a sustainable institution for the following reasons. (a) DMFI was formed on the basis of kinship and neighborhood ties. Thus there was a strong sense of belonging, joint liability, and participatory decision making, which strengthened the management of the organization and enhanced loan performance. (b) The committee played a crucial role in the operation of DMFI. To operate the Institute required a commitment of time and energy apart from the committee member’s main occupation. The committee members had displayed sacrifice, honesty, responsibility, and accountability. (c) Committee members participated in training to improve their management skills. (d) DMFI received good support from local government agencies and the BAAC in terms of training activities and advisory services. This improved the capacities of staff and committee members and increased the sources of funds for the Institute.
Ban Bua Teang Village Fund
Village funds were part of a Thai Government program introduced in 2001. They were to provide relatively cheap microfinance to poorer borrowers in ways that mirrored informal institutions. The initiative was intended to improve the supply of rural credit through two channels: (a) stimulating local economic growth and employment; (b) targeting otherwise disadvantaged groups. The program addressed the village as the smallest administrative unit, typically comprising a few hundred households.
Each Village Fund had to be formally established with its own regulations, which nevertheless had to be approved by the National Village and Urban Community Fund Office. Part of the requirements were that the villagers form a committee of about ten persons to decide on lending policies (interest rates, maximum loan amounts, and the term of loans) and to approve borrowers. Households borrowed and repaid with interest, freeing the money to be re-lent. In this sense, village funds operated more like a formal institution. However, they had no staff or permanent office, so can be regarded as somewhere between a formal and an informal institution.
The capital provided to each Village Fund totaled one million baht. The Village Fund Committee did not handle this money directly; this was done by the BAAC. The Fund and each member had a bank book with the BAAC. Government funds were transferred to the Village Fund bank account and the committee transferred loan funds to approved borrowers.
The Ban Bua Teang Village Fund was established in 2001 with initial working capital of one million baht provided by the Government and 192 members. At the time of fieldwork, there were 220 members. The Village Fund Committee had nine members. The committee members received compensation for their work equal to 10% of total interest payments. Each member had to buy one share at 100 baht and pay a membership fee of 10 baht. There was a members’ meeting once a year when the committee had to report on the Fund’s performance.
Discussion
The apparent success of the farmer groups studied was influenced by various factors relating to leadership, membership, networks, assistance providers, and government policies.
Good leaders were vital as they could encourage members to participate in group activities and express their opinions to the group. The leaders needed to be fair, diligent, honest, and willing to volunteer their time and energy. The leaders in the groups in Ban Donmoo and Ban Bua Teang had these qualities and contributed greatly to the success of the groups.
The active participation of members was also essential. Group success needed the opinions, participation, voluntary contributions, and unity of the members. This contributed to the necessary trust between members and leaders. The extent to which members in the groups in Ban Donmoo and Ban Bua Teang volunteered their time to support the groups was a key factor in group development.
The groups benefited from being part of wider networks. Horizontal and vertical linkages to other groups and organizations within and outside the village helped to strengthen the group’s capacities. For example, the internal linkage between the Community Rice Mill Group and the Farmer School Group in Ban Donmo enhanced the profitability of organic rice and helped increase incomes. In Ban Bua Teang, the external linkage of the Village Fund with the BAAC was crucial.
The groups all had outside assistance from government, non-government, and private sector organizations. Suitable support was needed, particularly in the first stage of the group’s activities, including training, seed monies, and guidance.
Government policies and institutions were instrumental in creating the opportunity for the groups to form and grow. The “sufficiency economy” principle was influential in group formation in Ban Donmoo and Ban Bua Teang, including the emphasis on organic farming, agro-tourism, and finance for the poor. This was translated into financial and training support through various government and non-government providers. The government-supported BAAC provided the backbone of village groups and microfinance institutes in the case-study villages and throughout Thailand.
Conclusion
The development of farmer organizations and community enterprises can help to enhance the socio-economic welfare of rural communities, beyond that achievable through independent commercial smallholder agriculture. Farmer organizations can facilitate the sharing of knowledge and skills, improve access to production technologies, encourage saving and investment, and increase farmers’ market competitiveness. Community enterprises can create new employment opportunities in rural areas, especially for women and disadvantaged groups, contributing to livelihood diversification while reducing the need for out-migration. This chapter explored the development of several successful organizations and enterprises in Northeast Thailand. The key factors contributing to the success of these groups were identified as strong committed leadership, involved membership, connecting with wider networks, the role of government and non-government assistance providers, and, underlying all these, supportive government policies.
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