Contract Farming and Poverty Reduction: the Case of Organic Rice Contract Farming in Thailand

Abstract

In the neighboring country of Thailand where the stage of agriculture development is more advanced and where contract farming has been widely adopted, there may be important lessons to be learnt for Lao, PDR and Cambodia. Due to the growing demand of organic rice in developed countries, in 2003, the Ministry of Agriculture and Agriculture Cooperatives of Thailand commissioned a study to investigate the potential of developing organic rice in Thailand for export. The study included a farm household survey covering 445 contract and non-contract rice farming in five provinces in the North and Northeastern regions of Thailand. The farms covered in the dataset share many characteristics with the rural sector in Lao PDR and Cambodia, where the vast majority are smallholder farms in marginal areas, with excess labor and little or almost no access to agricultural extension services. This data is examined here using econometric analysis to evaluate the profitability and profit efficiency of rice contract farming, as compared with rice non-contract farming, in Thailand.