New Mandala

8 responses so far ↓

• 1 polo // Feb 5, 2008 at 3:25 pm

  I don’t think you can assume a consolidation of landholdings from small farmers to tycoons after 1997. For one, the devaluation increased the baht prices of farm commodities, putting more money into the hands of rice farmers for a few years. Secondly, banks had too many bigger problems to bother so much with smalltime farmers.

  But also, there were businessmen and even some big tycoons who likely had to give up land holdings pledged to the banks. One was the top rice trader — can’t remember his name — who bought up huge amounts of land in the 80s and 90s to build eucalyptus plantations, and then tried to industrialise a lot of other farm business. When his empire collapsed he possibly lost all that land.

  Presumably the banks would have had to sell off a bunch of the land seized as loan collateral, but that would have been mostly passing it from one businessman to another.

  Charoen anyway already had lots of land before 1997 for sugar cane, rice and hops to support his beer a liquor businesses. Handley wrote that Prem was on his payroll someplace, but that didn’t turn Charoen into a sufficiency economy farmer.

  But I would guess that Charoen and the evil Sophonpanichs stoked their own land banks from defaulting banking customers (Charoen did control Siam City Bank ?and First Bangkok City Bank?.)

• 2 David Fullbrook // Feb 5, 2008 at 6:54 pm

  Is 100,000 rai a large holding for a man of such wealth? Setting aside acquisition of land from bankrupt farmers - small and large - the price of farming land on the open market is a fraction of the prices being paid for prime parcels of land in Bangkok.

  How do we define huge in terms of land holdings? Thailand is a large country, with a fair amount of agricultural land across the plains, plateaux and mountain valleys. Does it matter whether his holdings are scattered in small parcels or concentrated in a few huge estates?

  Will the distribution affect how he monetizes that land? Small parcels might suggest contract farming of high-value crops requiring close attention by relatively skilled farmers, the latter may be more suitable for plantations by lower-value crops only requiring occasional attention by less skilled labourers or tappers.

  Who will do what? Contract farming, probably offering higher returns and a closer relationship between the investor (Charoen) and the farmer, seems more likely to employ Thais. Plantation work may lend itself to migrant (illegal?) labour from Burma, Cambodia, Laos and perhaps even China, given developments in Laos.

  He would not seem to be alone. Advanced Agro (Double A) is being delisted by the family that listed it (notices were placed in the Bangkok Post in early January). Last November or December the Bangkok Post reported that a factory was being built to produce energy (either ethanol or to generate electricity on site for sale to the grid - my recollection is foggy) in Mae Sot using sugar cane grown on fields polluted with cadmium. I remember Arsa Sarasin, the king’s private secretary, being mentioned in the article. What happens to the cadmium in the cane when it is burnt? Is it released in the smoke going into the air, or does it remain sequestered, concentrated even, in the ash? What happens to the ash? Sold as fertilizer to farmers?

  The report of Chaoren’s expanding agricultural interests coincidentally appeared at the same time Samak’s announcement of a scheme to irrigate Isarn with water diverted from the Mekong at Loei.

  What impact will that have on land prices? Will prices of land once written off as barren or marginal rise if it lies within the boundaries of the water transfer and irrigation scheme? If there is real political will behind this project perhaps some well-connected cliques had advance notice of this project and the areas it will irrigate. Would they not be buying up land?

  As an aside, perhaps agri-business is becoming more attractive, more manageable because of improving infrastructure, especially roads and mobile phones, which should contribute to cutting costs and improving supervision. Do these trends favour more intenstive, time-sensitive, more capital-intensive crops?

  How will these investors add value? Where will they add value? What markets are they targetting? How will this affect Thailand’s economy and competitiveness? What about exports? Regional trade patterns and political relations? As investment ramps up into biofuels will the government lend its investor friends a hand by mandating a shift to biofuels in transport, industry and the home?

• 3 Land of Snarls // Feb 5, 2008 at 11:44 pm

  BTW, 1 acre = approx 2.5 rai; 1 hectare = 6.25 rai, so 100,000 rai is about 40,000 acres, or 16,000 hectares. (The esoteric may disregard this post. It’s for people like me, who still think in feet, inches, yards, etc., centuries after Oz got rid of imperial measurements. ‘Multiple intelligences’ is my excuse…)

• 4 chris baker // Feb 6, 2008 at 11:43 am

  Polo: The depreciation gain for rice farmers lasted only one season because all the input prices (fertiliser, pesticide, etc) then went up. I agree totally that Charoen is likely to have accumulated his land by buying from other entrepreneurs who had been accumulating land banks. Charoen’s two banks were not the mechanism. He lost control of both of them right at the onset of the crisis. I don’t think he had much (if any) agricultural land before 1997. He started buying into sugar mills as part of his defence of the liquor monopoly in 1999, and may have acquired some sugarcane plantations at the same time.

  DF: I agree, the amount is not excessive for Charoen. He could buy a lot more, and the BP article hints that he will. The interesting point is that Thailand has really has been a smallholder society, and this could now be changing. The only large plantations were rubber holdings in the south. Even many of the big estates grabbed by old aristocrats a century ago subsequently got broken up. The (few) studies of landholding have shown a fairly stable pattern, dominated by small holdings.

  But several people have been wondering what will happen as labour gets transferred away from agriculture. Many migrants are now selling their family land because there is not enough labour (family or hired) left in the village to keep it going. I’m just wondering how far this has gone, and how much quicker it might soon become. The recent price shift, which increases the attractiveness of crops which lend themselves to plantation-style farming, could have a big impact.

• 5 Alfred Nauman // Feb 6, 2008 at 10:16 pm

  There have been reports of other big holdings. I seem to recall that Sudarat and her spouse declared large landholdings in their last asset declaration. Was it mainly urban? How did it compare to Charoen’s holdings? There was data much earlier (70s?) regarding large royal landholdings in the countryside. When the big floods hit Ayudyha a couple of years ago, there were some notes in the press about the king’s landholdings in the area being flooded: “His Majesty has 2,000 rai of land in Thung Makham Yong, Thung Phu Khao Thong and Muang district’s Tambon Ban Mai” (Nation, 11 Oct 2006). 2000 rai is not huge, but maybe there is more reporting of this elsewhere?

• 6 Fab-bob // Feb 7, 2008 at 2:15 am

  Since the late 1980s and particularly since 2004, there has been in northern Phetchabun and eastern Phitsanulok an increasing number of land transactions (mostly for rubber and teak plantations, but also for resorts, secondary residences, etc.). Large-scale transactions have become actually quite common and the largest I’ve seen represent about 10 square kilometers. These large-scale land transactions have occurred only in the rainfed uplands, which used to be dominated by maize cultivation. Some of the previous owners are then hired to plant the rubber or for other tasks.

  I don’t want to go into the details of such land transactions. So I’ll stick to the following two points:

  1) Based on my rather imperfect data, I’d say the 1997 crisis didn’t have a clear impact on the number of land transactions, or the capacity of capitalist owners to use their lands. If it had an impact, I believe it was mostly temporary and the interests of local and non-local elite to buy lands from villagers quickly resumed. However, I do have indications that in a few cases, the new absenteist owner was unable to use the land for a long period of time due to economic crisis (this might have led to secondary forest re-growth on their lands).

  2) In the case of these large-scale land transactions, the farmers’ motivation to sell their land is ultimately the result of their incapacity to secure a relatively “safe” income from these upland rainfed lands. Basically, they begun to loose money increasingly frequenly out of maize cultivation, these debts became increasingly larger as maize cultivation became capital intensive (and the state didn’t provide help), and the farmers were in general unable to find alternative crops that local middlemen were willing to buy.

  In any case, large tracks of land have been laying fallow since the early 1990s and most of it has reverted to secondary mixed deciduous forest. What the local and non-local elite have been buying en masse since 2004 is usually these secondary forests, which they clear to make way rubber plantations, teak plantations, resorts, etc.

• 7 Keith Barney // Feb 7, 2008 at 7:35 am

  Chris:

  You wrote:

  “The only large plantations were rubber holdings in the south. Even many of the big estates grabbed by old aristocrats a century ago subsequently got broken up. ”

  - do you have any recommended sources or further information on this history of rubber estates in the south of Thailand?

  Thank you,
  Keith Barney

• 8 chris baker // Feb 18, 2008 at 12:36 pm

  Fab-bob: Thanks. Your analysis makes a lot of sense. I suspect this has been the pattern all along the fringes of the uplands frontier.

  Keith: Sorry, I don’t know anything substantial on the rubber estates. My remark was based on research done by Atsushi Kitahara on land legislation between the wars. There was a half-hearted policy to impose a ceiling on holdings, and the people who opposed it (or asked for exceptional treatment) were rubber planters in the south. I don’t think Kitahara ever published the paper in English, but I have a manuscript somewhere. If you want it, please contact me and I’ll try to find it.

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