Three years ago Noi Warakan, a 45-year-old rice farmer in Buriram province, was in debt up to his ears and thinking of selling his eight-hectare farm. Today, Noi is still a rice farmer, but has cleared his old debts and saved enough money to buy a further 3.2 hectares of land. And now his wife doesn't need to help him with the back-breaking farm work. "She just stays at home and powders her face,' jokes Noi.
Noi is one of 2,400 farmers in Buriram, in the arid, impoverished northeast region of Thailand known as Isan, who have chosen to specialise in growing jasmine rice, or "fragrant rice', a type of rice unique to Thailand that fetches top prices in export markets such as Hong Kong and Singapore.
The drawback to jasmine rice is that the usual yield is about 2.5 tonnes a hectare, compared with normal long-grained rice that yields more than six tonnes. Jasmine rice is also difficult to grow: if farmers don't time their planting correctly, the paddy may not flower and produce grain, leaving them facing bankrupt
Charoen Pokphand (CP) Group, Thailand's largest agro-conglomerate and one of the largest foreign investors in China, decided to go into the jasmine rice business about four years ago. Group chairman Dhanin Chearavanont was reportedly drawn to the "good-smelling' rice business for two reasons - to make money for CP, and for Thai rice farmers."CP wanted to do a project that would help develop farmers' incomes, because they are ultimately our customers,' says Vichai Poonpiriyasup, general manager of Charoen Pokphand Seeds Co, which handles CP's rice-growing scheme in Buriram.
CP Group started out in feedmeal and diversified into chicken breeding. It was one of the first overseas companies to invest in China in 1979 and now claims almost 10% of China's massive feedmeal market, with 70 feedmills in 27 of China's provinces.
Recognising that the kind of agri-business where large companies own and manage big farms doesn't really work in the small-farm environment of Asia, CP has tried to develop symbiotic relationships with small farmers in both Thailand and China. If farming isn't profitable in these countries, CP's long-term future in agro-industry is arguably dim.
Farmers are big customers for CP, buying a wide range of the company's products such as seed, fertilisers, pesticides and farm machinery. They're also big suppliers: CP depends on them to supply it with raw materials for feedmeal, to raise chickens and, now, to grow jasmine rice.
Dhannin wants to create a brand of jasmine rice that will not only be competitive on the world market, but will also fetch prices that will attract farmers to grow it. If CP can achieve that elusive combination, the prospects for Lotus brand rice, which is already sold on the Thai market, are promising.
In 1993, CP began to experiment with new techniques in growing jasmine rice in Isan. The greatest challenge the project faced was convincing small farmers to switch to a different crop. To do that, CP hired Sathien Promchainan, a retired Ministry of Agriculture official with life-long expertise in growing jasmine rice."The key to jasmine rice is timing,' says Sathien. "This variety is very light-sensitive and flowers during the part of the year when the days are longest, so you have to know when to plant.' This has been the most difficult concept to get over to the farmers of Isan, who have always planted as soon as it rains. With jasmine rice, this results in poor yields.
Sathien has spent three years in Buriram province persuading farmers that his jasmine-growing techniques work. Most farmers were persuaded to start by allocating small sections of their farms to jasmine rice. After two or three successful crops, many are now switching to growing jasmine rice exclusively. The 2,400 farming families who are part of the programme farm about 8,000 hectares of land. By 2000, CP hopes to triple that area.
CP's input into the project has been in terms of technology, capital investment and marketing. While Sathien coaches the farmers on how best to grow the rice, CP has invested B100 million (US$4 million) in a state-of-the-art rice mill (a joint venture between CP and Satake Co of Japan) and four combine-harvesters to rent to farmers. Most Buriram farmers have already switched from buffaloes to tractors to plough their land before planting.
Because of Sathien's rice planting methods, which make labour-intensive transplanting of young seedlings unnecessary, and also thanks to mechanisation, CP has essentially encouraged labour-efficient rice farms, something the Thai government has been promoting for decades without success.
Noi, for example, uses a tractor to plough his field, sows the rice by hand and rents a combine to harvest it. He runs a one-man, eight-hectare farm. Thanks to Sathien's planting methods, Noi's annual harvest is about five tonnes a hectare - twice the traditional jasmine rice yield.
Last year, jasmine rice fetched B5 a kilogram, so Noi's income was about B200,000 (US$8,000). "Before, I used to make a profit of less than B20,000 off my rice, but now I'm keeping 50% of the income, after paying the overheads,' he says.
Mechanisation key to cost cutting
The main factor in cutting costs is machinery. The minimum wage for a farm labourer in Buriram is between US$4 and US$5 a day, and Noi's farm used to need about nine labourers at harvest time, costing about US$40 a day. A combine-harvester does the same work for US$16 a day.
CP hopes to start selling combine-harvesters by instalments to farmer co-operatives and has even promised to turn its rice-mill over to the farmers in eight years by giving them shares in it. "According to our business plan, the rice-mill will break even in about eight years, and then we'll let the farmers be members of the rice mill - the owners,' says Vichai.
He admits that CP's jasmine rice programme is an odd mix, part business and part rural development project. But, he says, "if we succeed in this project, it will be useful for our related businesses'. CP is already retailing its Buriram jasmine rice at US$3 a kilogram through its rapidly spreading marketing network, which in Thailand includes Seven-11 franchises, Makro wholesale outlets and its Lotus and Sunny supermarkets.
With China potentially the world's largest market for top-quality jasmine rice, it's not difficult to envisage the long-term prospects for CP's Lotus brand rice. China has been unsuccessful in growing jasmine rice, which only flourishes in the warmer, sunnier climates of Southeast Asia.
More important, however, is CP's attempt to prove that rice farming is still viable in Thailand, currently the world's largest rice exporter. Thailand is likely to lose its competitive edge in low-quality rice exports to neighbouring countries where labour is cheaper, such as Vietnam, Cambodia, Myanmar and even India."In the future, I don't think we can compete in low-quality rice, so we need a lot of technology to develop a high-quality product,' says Vichai.
For that to happen, Thai rice farmers are going to need to become more mechanised and work larger pieces of land. To some extent, this appears to be happening already. "About 20 years ago, it would be very unusual, even impossible, to see a 300-rai [48-hectare] rice farm. But nowadays I see people who grow 300 rai of rice,' says Ammar Siamwalla, rice expert at the Thai Development Research Institute. "Over time you'll see more mechanisation taking place; the mechanisation of land preparation is more or less complete already.'
That's good news for the efficiency of Thai farms, and CP has proved with its project in Buriram that farmers can make more money growing rice. And, if jasmine rice can be grown in the poor soil of Buriram, it can be grown anywhere in Thailand."Some academics said it would be impossible to grow jasmine rice in Isan, but we've shown that's not true,' says Sathien. "Jasmine rice can be grown anywhere in Thailand, provided farmers know the right techniques.'