RECOGNIZING STRUCTURAL CONSTRAINTS ON IMPLEMENTATION
OF A FARMINGSYSTkMS APPROACH WITHIN A NATIONAL AGRICULTURAL PROGRAM: SOME VIEWS FROM THAILAND
Fanning Systems Support Projeot
International Programs Office of Agriculture and
Institute of Food and Office of Multisectoral Development
Agricultural Sciences Bureau for Science and Technology
University of Florida Agency for International Development
Gainesville, Florida 32611 Washington, D.C. 20523
NETWORKING PAPER NO. 9
RECOGNIZING STRUCTURAL CONSTRAINTS ON IMPLEMENTATION OF A FARMING
SYSTEMS APPROACH WITHIN A
NATIONAL AGRICULTURAL PROGRAM:
SCME VIEWS FROM THAILAND
Craig L. Infanger
Department of Agricultural Economics 500 Agricultural Science Bldg. South University of Kentucky
College of Agriculture
Lexington, Kentucky 40546-0215
Networking Papers are intended to inform colleagues about farming systems research and extension work in progress, and to facilitate the timely distribution of information of interest to farming systems practitioners throughout the world. The series is also intended to invite response from the farming systems network to help advance FSR/E knowledge. Cements, suggestions and differing points of view are invited by the author or authors. Names and addresses of the author oi authors are given on the title page of each Networking Paper.
Networking Papers do not necessarily-present the viewpoints or opinions of the FSSP or its affiliates. Readers wishing to submit materials to be considered for inclusion in the Networking Paper series are encouraged to
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The author is Extension Professor and Specialist in Agricultural Economics, University of Kentucky, and formerly Agricultural Econcist on the University of Kentucky Technical Assistance Team, Northeast Rainfed Agricultural Development Project, Tha Phra, Khon Kaen, Thailand. Views and opinions expressed here are solely those of the author and do not necessarily reflect any official or implied position of the University of Kentucky, the U.S. Agency for International Development, or the Royal Thai Government.
RECOGNIZING STRUCTURAL CONSTRAINTS ON IMPLEMENTATION OF A FARMING
SYSTEMS APPROACH WITHIN A NATIONAL AGRICULTURAL PROGRAM: SOME VIEWS FROM THAILAND
Craig L. Infanger
Farming systems research (FSR) projects are now underway on several continents and under the sponsorship of the U.S. government, the international research centers, and other donor agencies. Most of these efforts are pilot projects financed and managed by the donor entity. The Northeast Rainfed Agricultural Development Project
(NERAD) is a joint U.S.-Thai farming systems project attempting to implement farming sytems approach within the context of a national agricultural program. Management of NERAD field implementation is the responsibility of host nationals within line agencies of the Ministry of Agriculture.
NERAD is jointly sponsored by the Royal Thai Government (RTG) and the U.S. Agency for International Development (USAID). The purpose of the project is to develop a replicable agricultural development program for increasing farm production and income, particularly among lower income farmers in rainfed areas of the Northeast region of Thailand. The geographical target areas are nine tambons (administrative grouping of villages) in four widely separated but representative changwats (provinces) of the Northeast (see following figure). The intended direct beneficiaries are 65,000 Thais in 10,000 families living in over 100 villages.
Much of the available farming systems research and extension (FSR/E) literature focuses on the rapid rural appraisal approach, the important first step in FSR initiation. NERAD adopted the rapid rural appraisal technique terming it "RAT" or "rapid appraisal technique". This proved to be an important and beneficial tool for initiating the project. However, the purpose of this paper is to look beyond the rapid rural appraisal to some lessons being learned from the
subsequent implementation of an FSR/E approach within a stable
physical and economic environment. Sobering structural constraints are being encountered which are impeding project success and undoubtedly exist for other FSR projects in the world.
OVERVIEW OF THE ENVIRONMENTAL AND ECONOMIC SETTING FOR THE NERAD PROJECT
Thailand is one of the world's most important food producers. Agriculture accounts for 221 of gross domestic product and is the largest single sector in the economy. Not only do Thai farmers feed a national population of nearly 50 million but also provide food and commodities exports worth $4 billion annually over the last five
years. These agricultural exports generate 60-65% of all foreign exchange earnings for the Kingdom. In recent years Thailand has become the leading rice exporter and the fourth or fifth largest food exporter in the world, achievements that are the envy of all
The Northeast region represents about one-third of the Kingdom's population and land area and 40% of all cultivated land. Unfortunately the Northeast is also the least productive and poorest sector of the Thai economy. Crop yields, incomes, and levels-ofliving are all below Thai national averages and a great source of concern to the RTG. In the Northeast, agriculture is still basically a subsistence activity, despite the production of large export cash crops like cassava, kenaf, sugar cane and tobacco. For the majority of the village population a-subsistence lifestyle means:
*the major agricultural activity is production of
a subsistence food supply built around rainfed rice as the stable food crop and upland crops (cassava, kenaf, sugar
cane) for cash income;
*the major agricultural resources are land, family
labor, and animal power;
*output per unit land or per unit labor is low by
national and world agricultural standards;
*the farm production system exhibits low land use
intensity, limited diversification, and a near total
dependence on rainfed production systems;
*farm family incomes are the lowest of any region
in the Kingdom, roughly 15,000 baht ($555) annually--about
65% of the Kingdom average;
*adoption of technological improvements in agriculture, despite decades of foreign-donor and RTG
intervention,has been slow.
The Environmental Setting for NERAD
The two most salient features of the physical environment facing Northeastern farmers are the poor soils and the marginally adequate and erratic rainfall. Farmers in this region till sandy, infertile soils that are the least fertile soils in Southeast Asia (see following table).
FERTILITY CLASSIFICATION FOR ASIAN SOILS
Region Three Factor Score
Sri Lanka, wet and intermediate zone -.33
Sri Lanka, dry zone -1.58
Bangladesh, Ganges 1.27
Bangladesh, Bramaputra .43
W. Malaysia, Kedah-Perlis 1.48
India, Godavari-Krishna 1.76
Thailand, south -.11
Thailand, Bangkok plain .26
Thailand, upper central -.30
Thailand, intermontane -.93
Thailand, Northeastern-plateau -3.26
NOTE: Three Factor Score represents a summation of the values for statistically significant variables of three categories: Inherent Potentiality of Soils (IP), Organic Matter and Nitrogen Status (OM), and Available
Phosphorus Status (AP).
SOURCE: UKy TA Team Quarterly Report #8, Dr. John Ragland summarizing the work of Kazutake Kyuma,
"Fertility of Paddy Soils in Tropical Asia", Proceedings of Symposium on Paddy Soil, Science Press,
New York, 1980.
In addition to infertile soils, the other equally important environmental feature of the regioais the seasonal monsoon weather systems of Southeast Asia. Thailand lies in a monsoon climatic zone considered "dry". Rainfall alone is not sufficient every year for reliable wet season rice production except in river floodplains or deltas. For the Northeast, the seasonal monsoon rains are erratic in timing and distribution resulting in the potential for- drought and flooding in the same month for virtually all soils and terrain. For the NERAD changwats, mean annual rainfall varies from 2270 mm. in Nakon Phanom to a low of 1218 mm. for Chaiyaphum, a changwat considered to be in the "rainshadow" of a mountain range.
In the absence of irrigation, these levels of annual rainfall are too low for feasible annual rice production over large areas of the region. Rice farmers here have historically bunded land for rice paddies at low, middle, and high positions on the terrain. For the middle and upper paddies, wet season rice production is a reality in only 3-6 years of each decade. Periodic water shortages constitute the main reason for the instability in yield for the wet season rice crop.
What these soils and rainfall data mean to the Northeastern rainfed farmer is that the physical setting is inherently risk prone and uncertain. Because rainfall is the single most important factor determining rice yields, Northeastern rice farmers consistently
identify water as their primary problem. Irrigation is a potential solution for only approximately 10%/ of the land area in the region.
Economic Setting for NERAD
Northeastern rice farmers operate in an agricultural economy that is, generally speaking, open and competitive but also characterized by high levels of risk and uncertainty. The two major sources of economic risk and uncertainty are price fluctuations and market collapse. Price changes represent an economic risk to farmers and affects their behavior. It tends to make them very conservative decisionmakers. This is especially true for Thailand and other Third World countries where minimum price programs, which reduce producer risk and uncertainty considerably, either are not feasible given national budgets or are ineffective at the farm level.
Another source of economic risk and uncertainty is the probability that at any given time the 'market for a commodity may disappear, i.e. market collapse. In this situation the price may fall to zero or such low levels that transportation costs would not be paid if the crop were shipped to another location. This type of risk is common for local/district vegetable markets that may be saturated at certain times of the year. The Thai cassava crop also faces this possibility should the EEC change the preferential tariff structure now in place.
The breadth of economic risk facing poor Thai farmers can be displayed in the following table which relates the type of market to the magnitude of risk:
TYPE OF RISK
FLUCTUATION COLLAPSE EXAMPLES
TYPE OF MARKET
LOCAL High Ujigh Vegetables
NATIONAL High Moderate Peanuts,
INTERNATIONAL Moderate Low Rice, Kenaf
Specialization in crops with an international or national market tends to reduce the level of economic risk and uncertainty. Thus, the very structure of the agricultural economy as well as the biological capabilities of the land in the Northeast affects farmer's choice of crops.
A second economic constraint is the agricultural policies, especially the trade policy, of the Kingdom. Export trade balances are vitally important to Thailand, therefore, trade policy historically has been managed to:
(1) earn foreign exchange through agricultural exports (rice
cassava, corn, sugar cane, and tobacco); and
(2) insulate domestic prices of major commodities from world
The most obvious example is rice. Since World War II, Thailand's rice policy has had the twin objectives of earning foreign exchange and stabilizing internal' rice prices. The net effect has been a burdensome tax that has been estimated by the World Bank to exceed 75% of the farmgate price. The historical effect has been to depress farmgate rice prices and, therefore, economic incentives for the
farmer. Another example of the impact of trade policy can be seen in the 1984 ban on the export of kenaf fiber, a move designed to moderate price increases on gunny bags used for exporting rice but having the effect of stalling the farmgate price increases for raw kenaf fiber at a level of 10-11 baht/kg.
A third economic obstacle to increased agricultural productivity in the Northeast is the availability and price of credit. Although some institutional credit is becoming available, the major sources of agricultural credit still remain family members and local merchants at effective interest rates ranging from 20% to over 100%. This raises the cost of purchased inputs and reduces incentives for purchased input use. In addition, the use of credit to any significant degree introduces an additional element of risk into the farming system since default could mean loss of pledged collateral, in most cases land, and thereby threaten the subsistence food supply.
What is important to understand is that the economic constraints directly affect farmer behavior and explain their conservative approach to crop selection, cultural practices, and input use. The
case of chemical fertilizers for rice illustrates this point. For the Northeast, common Thai Department of Agriculture recommendations for chemical fertilizer are 45 Kg/rai. An agricultural input survey of farmers in NERAD changwats revealed that actual use rates by changwat varied from approximately 5Kg/rai to about 30 Kg/rai.
Agronomic data indicate that the fertilizer response of rice grown on the poor Northeastern soils under traditional cultural practices could be 10:1; 10 kg. of rice for 1kg. of fertilizer. If the price of paddy is roughly 3 baht/kg. and the fertilizer cash price of is roughly 6 baht/kg., then the price ratio is 30/6 or 5:1. Economists consider this is a favorable price ratio and indicates a strong incentive to increase fertilizer use. Why then is actual use relatively low? One reason is that structural risk and uncertainty
play such an important role in. the price ratio faced by the subsistence farmer. From harsh experience these rice farmers:
(1) know that rainfed crop yields are highly variable and
therefore they discount expected average yields based on
(2) know that middle and upper paddy may be transplanted in only
4-6 out of 10 years and therefore further discount expected
(3) know that there is virtually no down-side price protection;
(4) cannot pay cash fo r fertilizer and therefore face a higher
credit price for fertilizer; and
(5) receive "farmgate"l prices that are lower than stated prices
due to sytematic discounts for moisture and quality.
The net effect of accounting for structural risk and uncertainty is that in the farmer's view:
(l) expected yield response is lower than the averages used by
researchers and development workers;
(2) actual prices received are lower; and
(3) credit fertilizer prices much higher, as illustrated here:
YIELD RICE FERTILIZER PRICE
RESPONSE PRICE PRICE RATIO
RESEARCHER ESTIMATE :10:1. 3.0 6.0 30/6 or 6:1
FARMER ESTIMATE 5:1 2.5 8.5 12.5/8.5 or 1.5:1
Accounting for risk in fertilizer decisions for rice translates into an approximate on-farm ratio of 1.5:1, reflecting a very low incentive to use purchased chemical fertilizer. Thus, existing low levels of fertilizer use in rice appear more rational when risk and uncertainty are recognized as effective constraints on farmer behavior. There is every reason to believe a similar relationship between risk and farmers' decisions exists for other crops in the Northeastern farming system. Furthermore, output prices for most of the other crops--vegetables or upland field crops--are less stable than for rice thus making the realized price ratio to the farmer more uncertain.
Rice Farmer Behavior Under Risk and Uncertainty
A systems approach to understanding the Northeastern rice farmer's decisionmaking, which considers the most important structural constraints, reveals a model for farmer behavior under high levels of
agronomic and economic risk and uncertainty. Over years of
experience, the subsistence farmer has had a single-minded objective and has developed a strategy and many tactics for achieving this objective. The objective is security and survival of the family and the farm, i.e. a subsistence level-of-living. The farmer seeks to exploit to the maximum his only two resources, labor and land, given all the constraints. This objective is rational, very conservative, but viable in the short run.
* The general strategy to achieve the objective of security and survival is to minimize risk and uncertainty by implementing a lowinput, low-output production scheme that concentrates first on subsistence food production and secondly on cropping or off-farm employment for cash income. For the subsistence crop this strategy means cash inputs are minimized and new inputs used only when some resource in the strategy becomes constraining. .Thus, soil fertility amendments are undertaken only when rice yields fall below subsistence levels. Otherwise, the farmer continues to exploit the natural fertility of the soil. Capital: inputs such as the "iron buffalo" are considered only when labor becomes scarce during peak demand periods. This- strategy is a rational maximization of the two most important resources possessed by the subsistence farmer: family labor and land.
Within this general strategy of risk minimization via low-inputs and low-outputs, a whole host of tactics are pursued to achieve the overall objective of security, survival, and perhaps, some wealth accumulation. Examples include choice of rice varieties, on-farm rice storage, allocation of labor over the cropping season, and minimum investment in land or capital improvements that cannot be shifted from one crop to another. The farmer's tactics are easily observed but all too often they are not seen as rational.
In this model of farmer behavior, the strategy and tactics are a rational response to a risk-prone environment and represent a maximization of returns to land and labor. Unfortunately, this model of the farmer's objective and strategies is not shared by many agricultural scientists, FSR advocates, or the Ministry officials in Thailand. Frequently, these people view the Northeastern rice farmer as poor, backward, inefficient, and resistant to change. One Japanese agronomist has characterized Northeastern farmers as lacking the "enthusiasm... .temperament, knowledge, and technology to modernize". During field visits, Ministry of Agriculture economists have described rainfed rice farmers as "inefficient, unproductive, and not wanting to maximize profits." Personal field experience leads me to sharply disagree. Nonetheless, if the Thai farmer is viewed by Ministry officials and others as poor and backward, then it follows that the logical governmental response should be development assistance based on "giving" farmers modern inputs--seeds, vaccines, wells, irrigation water--and extension education. If on the other hand the farmer is seen as a rational economic man with a good sense of his own best interests, then agricultural development assistance should not create dependency-type assistance programs but concentrate on working within the farmer's objective and strategy to overcome productivity constraints, improve the farmer's decisionmaking capacity, and assist
*Ministry officials in recognizing and responding to farmer needs.
The environmental and economic structure for the NERAD project, and probably most other FSR projects, is such that the "window of opportunities" is relatively small for significant improvements in the productivity and well-being of poor farmers. Improvements will only be realized if development efforts concentrate on changes that are economically viable within the given economy, biologically feasible under on-farm conditions and farmer management, and socially acceptable within the current farmer objective and strategy. Therefore, any proposed improvement or change to the existing farming system must:
(1) Complement the current strategy and tactics given structural
(2) Reduce some element of economic and/or agronomic risk; or
(3) Remove some productivity constraint or some source of risk
In this context the spread of cassava in Thailand--now the most important upland crop--should be viewed as an improvement that is profitable and complementary to the existing system; adoption of drought-resistant rice varieties in the Northeast--the only widely adopted introduced rice technology--should be seen as a risk reduction improvement; and provision of irrigation or improved water control can be seen as a reduction in the single most constraining resource.
A report several years ago by the Mekong Committee summarized the situation in the Northeast this way:
"The traditional bunded field'-systems represent a feat
of land reclamation of tremendous magnitude in the lower Mekong basin. It is estimated that some 50 million individual bunded fields exist in the basin, all constructed by traditional means without the benefits of agronomists, foreign agricultural experts, benefit-cost analyses, and
loans from international assistance agencies.
The rich store of down-to-earth technology for
traditional agriculture efficiently adapted to each microecological situation should not be underestimated. It is remarkable how this invaluable knowledge has remained intact throughout the ages, in spite of historical vicissitudes.
Civilization may come and go, but the efficiency of the
individual subsistence farmer seems to remain untouched.
However, traditional farming systems evolved for
traditional population levels, so their potential for further expansion is very limited. Swidden agriculture is already over-extended and bunded agriculture is in many areas at the limit of maximum productivity. It has been estimated that in Northeast Thailand 50 per cent of the bunded fields are marginal rice lands which give unpredictable yields and fail
in many years. .(Agriculture in the Lower Mekong Basin, Committee for Coordination of Investigations of the Lower
Mekong Basin, Feb. 1978).
Implementation within national agricultural programs is the real test of the efficacy of FSR/E in realizing real benefits to the world's poorest farmers. FSR/E projects and programs within Third World national agricultural systems will undoubtedly encounter serious economic and environmental structural constraints and must recognize these as critical variables. The NERAD experience in Thailand illustrates that this may result in a relatively narrow "window of opportunities" possible in the face of recognized environmental and economic structural constraints.
In addition, the implementation of FSR/E within national agricultural programs will also encounter institutional constraints, another equally important structural constraint. The challenge of innovation within the institutional setting should be approached in the same manner as the farmer and his situation is approached in FSR/E methodology:
(1) rapid appraisal of the institutional "system";
(2) identification of critical institutional constraints;
(3) field testing of organizational systems designed to reward
cooperation and reduce ri.Xk,,for cooperating scientists. and
(J4) adoption of clear new policies designed to diffuse the FSR/E
approach within the national program.
It' seems evident that FSR will not survive as an agricultural development alternative unless structural constraints are recognized and field implementation modified to produce change that is economically viable, biologically feasible, and socially acceptable. That is the challenge facing those involved in FSR/E for the remainder of the 1980s.