Sugarcane: A Classic Example of Contract Farming
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| sugar cane |
Written and Photos by Tipakson Mapati, Prachadhrama News Net and Siriluk Sriprasit, Localtalk
Translated by Tipakson Manpati
Sugarcane is not only an important raw material for sugar industry. Nowadays it is more important concerning production of Ethanol fuel. The Ethanol is another means toward energy’s security improvement that many countries all over the world are focusing on, especially when the price of fossil fuel is soaring and will be exhausted from the earth by decades.
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| sugar cane |
In the Northeastern Thailand, sugarcane has been promoted by the government as a commercial field crop for 30-40 years. Numerous rice farmers began cultivating sugarcane as their extra earnings. Throughout decades, the farmers have diminished and expanded sugarcane fields from time to time, depending on the force of government’s policy and market demands. However, only few numbers of farmers who cultivate sugarcane for the factory have succeeded or become a wealthy. Meanwhile, several of them are caught in a trap of debt that hardly to disengage.
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| sugar cane |
Moreover, it is worrisome that supporting bio-fuel plantation without specific framework and appropriate procedure of land management will corrode capacity of the self-reliance on food of the farmers.
According to our fieldwork studies on sugarcanes cultivating of the farmers in Dong Dib village, Pontong district, Roi Et province. The studies found that the government’s policy in promoting bio-fuel plantation for Ethanol producing is a key factor that increases the demand of villagers in cultivating sugarcane. Moreover, sugar factory nearby the village also launched a price motivation strategy actuating farmers in expand sugarcane cultivation into the rice fields and orchard fields. Besides, dry evergreen forest-the nature food resource of the community, such as vegetable, indigenous herbs, mushrooms, and etc, is to be concerned that bio-Ethanol plants will invade it in the near future.
The country’s area of Thailand is 320 million Rai (1 Acer = 2.2 Rai). The land can be categorized into agriculture area 131 million Rai and it divided into the area of 15 main plants by the definition of the Ministry of Agriculture and Cooperative as follow: Corn, Green bean, Cassava, Sugarcane, Sunflower, Soybean, Peanut, Palm Oil Trees, Onion, Garlic, Durian, Pineapple, Coffee trees, and Rubber trees, covering 41 million Rai.The area of the Northeastern is 105.5 million Rai. It is categorized into agriculture area 37.43 million Rai. In comparison, the totaling area of sugarcane cultivating in the country is 6 million Rai while the Northeast has 2.65 million Rai.
Source: Biothai Foundation
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| sugar cane |
Diminish Rice Field to Cultivate Sugarcane: Hopeful or Risk?
Many farmers hope that commercial plant that government has been promoting such as sugarcane will increase their earnings. Conversely, agriculture procedure needed quite a big cost of investment. The farmers do not earn even benefits and some have faced deficit that trap them into debt, causing effect and deterioration to health, mentality and environment.
Mr. Pongsiri Srikammueng, Village chief of Dongdib, Pontong district, Roi Et province says that the village habitation is 153 households. The habitation area is 4,655 Rai that can be divided into:
1. Rice fields (highland and lowland rice fields) 1,655 Rai
2. Field crops (sugarcane and cassava) 1,892 Rai
3. Orchard fields such as mangoes and longans (the area is not mentioned) and
4. Others, such as public land, forest, and water sources (the area is not mentioned)
Since 2006, both highland and lowland rice fields have been decreasing because villagers have expanded cultivating sugarcane and cassava in the rice fields, totaling 100 Rai.
“Since 2006, the sugar factory has subsidized farmers to expand sugarcane cultivating in the rice fields. Sugarcane cultivators are subsidized 500 Baht/Rai/ head. In addition, in 2007 the factory displayed billboards of sugarcane-selling price tendency that it will reach to 1,000 Baht/ton. This helps encouraging villagers become interested in sugarcane cultivating for the cultivating season during 2006/2007. However, when the harvest time comes, the sugar factory purchased the sugarcane only 800/ton” Pongsiri said.
Cultivating sugarcane and cassava in the rice fields are clearly divided into 2 parts. Sugarcane is cultivated in lowland rice fields because it has long trunk which length around 3 meters, so it bears in flood for approximately 1 week. On the other hands, cassava is cultivated in highland rice fields because it is not suitable for damped-soil.
Pongsiri adds that most of the rice field in the village is located in lowland where has flood every year, during August-September for 7-10 days. Therefore, growing rice in lowland has a unique pattern. The farmers usually preparing rice seed bedding for 2 times. The first rice seed bedding is in May and then farmers will begin transplant it during May-June. The second rice bedding began before August, in order to prepare young rice plant for re-transplant the rice that is dead from the flood. The farmers will re-transplant the rice after the flood gone, around October and then harvest it in early new year.
“Many rice farmers might feel that growing rice in lowland has many things to manage, while the rice output is not much. Especially today’s family expenses are high, so the villagers who own the rice field in lowland have turned to cultivate sugarcane instead because they think it should bring more earnings” Pongsiri said.
Weerapon Sorrasit, farmer of Dongdib village says that though lowland rice field has flood every year, in the past it was not a serious problem because the rice farmer’s families still had sufficient harvesting as the rice were local species and quite bear to flood, such as Kampai rice, Sanpatong rice, Etam rice, Ehom rice. However, nowadays, those local rice species are not popular. Moreover, pesticide from the rice farming that contaminated in the water could also be a cause that causes the rice perish when the flood came.
At present, the area of sugarcane and cassava has been expanding into the rice fields. Especially replacing sugarcane in lowland rice field since the sugar factory promoted subsidy. As cassava is unsuited for damped-soil, sugarcane has become more popular field crop for lowland area.
“I have cultivated sugarcane in my lowland rice field since 2006. At that time there were not many villagers wanted to take a risk. The output of sugarcane that grew in lowland was fine, but not very successful. However, I think maybe because I am not accustomed to cultivate it yet” Weerapon said.
Cost and debt follow up
Prayad Suriyo, farmer of Dongdib village says that cultivating sugarcane in the season is called ‘yeared-sugarcane’ or ‘overed dry season-sugarcane’. Most of the yeared-sugarcane cultivate in highland fields. The cultivating season begins in late November-December. By contrast, off-season sugarcane cultivates in the dry season and is called ‘watering-sugarcane’. The cultivating season begins in January-April.
“Watering-sugarcane needs water-control system because it begins to cultivate in the dry season when the soil becomes harden. So, it is necessary to cultivate the sugarcane near water sources, such as brooks or in lowland rice fields” Prayad said.
Watering-sugarcane that cultivate in the lowland rice field after finish harvesting, will be cropped in late October-November, as same as yeared-sugarcane. The reason is because the sugar factory will start purchasing sugarcane in November-April. Some years if the amount of sugarcane output is abundant, the factory will extends purchasing period to May.
“Watering-sugarcane aged 7-10 months must be cropped and sells to the sugar factory. However, comparing the watering-sugarcane to the yeared-sugarcane, it has many disadvantages such as short-trunked, lessen-weight and low-sugary” Prayad said.
Chompoo Nampob, farmer of Dongdib village adds that when the rice farmers decided to replace sugarcane in the lowland rice fields, that means they must lose the rice field at least 2 years. This is because usual harvesting period of sugarcane is utmost 2 years, that crop once a year. However, some farmers can crop it in year 3 and 4, but to do that they must rely on nourishing the sugarcane with a lot of fertilizers.
“Cultivating sugarcane in lowland rice field needed a big cost for nourishing. For example, to provide water pump lifting into sugarcane beds, especially at the beginning of its cultivation. After that, farmers have to urge fertilizing the sugarcane for its growth before the flood season comes” Chompoo said.
He adds that most of the sugarcane cultivators have owed fertilizers credit from the sugar factory. Usually, nourishing formula of sugarcane that specify by the sugar factory is to put fertilizers 3 times/year. To do this, the sugarcane output in the first year could be at least 12-15 ton/Rai. While fertilizing sugarcane less than 3 times/year, its output in the first year gives 8-10 ton/Rai. Mostly sugarcane output in the second year is less, about 10 ton/Rai.
The Cost of Sugarcane Cultivation
Pre-planting Period |
1. Purchase sugarcane plants1 Rai of the sugarcane plants has 800 trunks (1 bunch of sugarcane plants = 10 trunks), 12,000 Bath. A trunk of sugarcane plant will be cut to length 40-50 centimeters. 1 Rai of sugarcane plants that is already cut can cultivate for 6-8 Rai. 2. Labors for carrying and lifting sugarcane plants into truck, 1 bunch = 1 Baht 3. Truck transporting the sugarcane plants (distance from purchasing place to field) - 2-3 kilometers from Dongdib village, 1 bunch = 1 Bath
- More than 3 kilometers, 500-1,000 Baht/round depending on the distance
4. Plough the field (price in year 2007) - First plough, 380 Baht/Rai
- Second plough, 220 Baht/Rai
- Third plough, 250 Baht/Rai
5. Pre-planting - Put fertilizer in the bottom of the pit, 1 sack/Rai (1 sack = 1,000-1,200 Baht). Some farmers might add carbofuran (Furadan) Chemical in the pit to prevent termites and grubs drilling the sugarcane, 150 baht/kilogram.
- Labor for cutting sugarcane-trunks, 5 people/Rai (150 Baht/day/head) either use planting machine (use credit service from sugar factory) 720-800 Baht/day
- Two meals for the labor in planting sugarcane, 5 people tolling 300/day
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Planting and nourishing Period |
1. Either spraying weed-killer or grass birth-control pesticide - Grass birth-control pesticide 200 Baht/liter (1 liter can be used for 1 Rai)
- Hiring the pesticide sprayer 200 Baht/Rai
2. First enriching by putting fertilizer since the sugarcane has planted 3. Removing grasses and weeds out from the sugarcane field before rainy season. There 2 ways as follows: - Mow the grasses (if the grass is not too thick will hire 4-5 people/Rai, but if it is too thick will hire 10 labors)
- Use weed-killer, 160 Baht/liter and hire pesticide sprayer, 200 Baht/Rai (1 liter can be used for 2 Rais, price in 2007). Most farmers choose this way because it is convenient and faster than mowing
4. Second enriching by putting fertilizer formula 16-16-8 or 21-78, 1 bag/Rai (1 bag = 1,000-1,100 Baht). Some farmers might add uria fertilizer 2-3 bag/Rai (1 bag of uria fertilizer = 1,100 Baht) 5. Removing grasses again, using weed-killer (August-September) 6. Third enriching by putting fertilizer, 1 bag/Rai |
Cropping Period |
1. Cropping period (October-November) - Labors for cutting sugarcane, 1 Baht/trunk (1 trunk = 10-12 strips)
- Labors for carrying sugarcane into the truck (50-60 Baht/ton) either hiring labor for cropping and lifting take it to the truck (180 Baht/ton)
- Two meals for labors (breakfast and lunch) 30 Baht/day/head
- Transporting truck from the sugarcane field to sugar factory (if the distance is between 15 kilometers cost 120/ton and the transporting cost higher depending on the distance)
Remark The sugar factory offers higher price for fresh sugarcane 10-27 Baht/ton because it has more sugary than fired-sugarcane. The sugar factory will make deduction on fired-sugarcane 20 Baht/ton. If the farmers cut the sugarcane trunk too long, its price will be deducted 20 Baht/ton |
Supplying Sugarcane for the Sugar Factory: The contract of debt
According to the basic cost of sugarcane cultivating, most farmers have made a credit loan from the sugar factory, such as sugarcane plants, tractor renting, fertilizers, pesticides, labor payment, and etc. The factory will note down those credit loans for evidence and then will debit all debt after the sugarcane are sold to the factory.
Chompoo says that the sugar factory provided agricultural input factor to service sugarcane farmers as credit loan, such as sugarcane plants, cash credit to plough the land, agricultural instruments renting, cash credit for renting the cultivating land, cash credit for; hiring labors, fertilizers, pesticide, and etc. According to most farmers do not have cash to invest in agriculture, so they rely on making credit loan from sugar factory.
“All credit loans will be noted down and debit the debt after the farmers sold sugarcanes to the factory. The earnings are very small amount of money, no need to mention about any profits. Some farmers are suffering with deficit and debt, so they even have to sell their own land. I think the tendency of sugarcane farmers is not going well” Chompoo said.
He adds that the farmers can ask for detail information of the credit loans they have made, however, auditing it by themselves is not possible. That is why the farmers do not know how much debt they have owed until they have sold sugarcane to the factory.
Besides, the farmers have to pay additional fees for The Sugarcane Farmer Association. Moreover, they have to sign the contract that the factory specifies its rules to deduct the amount of money from the totaling price of sugarcanes. However, it seemed that the contract let the factory takes advantages over the farmers.
1. Additional fees for the Sugarcane Farmer AssociationThe sugar factory deducts money from the totaling price of sugarcanes that each farmer could sell, 3 Baht/ton. The money is additional fees for the Sugarcane Cultivator Association |
2. Personal insurance contract The insurance contract payment is a 1-year contract between each farmer and the sugar factory, in order to guarantee the amount of sugarcane that farmer committed to sell to factory. The factory deducts 10 Baht/ton in advanced since the sugarcane was sent in, to ensure that the farmer could make at least 80% of its amount according to the contract. In case the farmer could make it, the factory will reimburse money after 45 days of purchasing period has closed. |
3. Quota insurance contract The quota insurance contract is a 3-year contract to ensure the amount of sugarcane that the quota committed to sell to the sugar factory. Usually, the quota is free to gather its membership. The contract requires the quota to make sugarcane output at least 1,000 ton/year, however the factory deducts 100 Baht/ton in advanced since the sugarcane was send in. In case the quota can make complete amount according to the contract, they will be informed by factory to prepare some documentation for reimbursement and then the quota’s memberships will allot money in their group. |
Chompoo says that the advanced deduction and reimbursement afterward according to the quota insurance contract causes inconvenient and conflict for the quota’s membership. This is because the deduction counts for all membership just incase someone cannot make the sugarcane output according to this contract.
He repeats that “Each quota member could make different amount of sugarcane product. Most of the farmers committed to sell 10 ton/Rai. If the member cannot make at least 80% of the output, the factory will deduct his/her sugarcane price 10 ton/Rai. However, the problem is that the factory also deducts money in advanced by counting from the whole amount of sugarcane output of the quota to ensure that the amount of sugarcane is according to the contract. If the amount is completed, the factory will reimburse the money. However, to do this way causes many inconveniences and conflict among the quota’s members” Chompoo said.
He adds that the quota reimbursement given as posted date cheque that farmers have to wait about 1 month to cash the cheque. However, this is not convenient for the farmers because they need cash, so they have to pay the fees service for cashing the posted date cheque.
Queuing Sugarcane to the Sugar Factory: Forcing down the price of the fired-sugarcane
In transporting the sugarcane into the sugar factory, the farmers have faced with several means of deduction, such as reducing the price of the fired-sugarcanes and the sugarcane that was cut too long. While the process of sugarcane cropping forces and urges farmers to burn the sugarcane field. The reasons of burning sugarcane are because it is more convenient and helps speed up sugarcane cropping.
The sugar factory opens the purchasing period from November-April. Some years if there is abundant amount of sugarcane, the factory will extend purchasing period until May. Usually, in the first 4-5 days in the purchasing period is free queuing for selling sugarcane. During this time, the quota that already completed their cropping can sell the sugarcane directly to the sugar factory.
After that the sugar factory will organize queuing for sugarcane quotas. While each quota is obliged to provide sugarcane outputs 1,000 tons, it is unwanted to crop sugarcanes beforehand too long due to the queue date. The reason is because it affects to the sugarcane’s heaviness toward decreasing its sugary.
Chompoo says that 70-80 percent of the farmers burn the sugarcane fields as it helps cropping more easy and increasing the amount of sugarcane that can be crop per day. For instance, fired-sugarcane 3-4 Rai, demanding 4-5 cropping labors to finish it within 1 day. In another word, 1 labor can crop fired-sugarcane in average 100-300 trunks or 2-6 tons (50 trunks = 1 ton) within morning time. To fire the sugarcane can also help saving some expenses, such as labor hiring and meals for them. By contrast, cropping fresh sugarcane is much harder.
“Fired-sugarcane 8 Rai (average amount of sugarcane 8 Rai is 100 tons) demanding 4-5 labors for cropping and they can finish it within 2 days. Although fresh sugarcane costs higher than fired-sugarcane, it is very hard to crop. Comparably, 1 ton of fresh sugarcane that a labor can crop in the morning, is excellent work” Chompo said.
Reducing toxic chemical before debt overflow and environment collapse
Chompoo believes that most farmers are willing to live sufficiency. However, they just cannot do that for now, because many of them have been trapped in the debt circle. The old debt resulted by previous deficit of agriculture investment has yet repaid. Accordingly, family’s expenses have been increasing. Therefore, theses factors have forced farmers to owe money from different credit loaners, such as the Bank for Agriculture and Agricultural Cooperatives, National Village and urban Community Fund, The Provincial Agricultural Co-operative, and another informal loans.
“In fact, the farmers have invested a lot of money, almost 100,000 baht on sugarcane cultivating. However, after subtract investment cost, only 20,000-30,000 Baht have left in each year. Moreover, some farmers encounter to bankrupt, as they owed services credit from the sugar factory more than earnings from sugarcanes. The sugarcane-selling price in 2006 was 820 baht/ton, 2007 was 800 Baht/ton and the price in this year is decreased to 638 Baht/ton. I am very stressed when the selling price in this year is very low” Chompoo said.
Apparently, agricultural farming that relies on chemical fertilizers and pesticides has destroyed the community environment. The moisture of the underneath soil has gone and it became harden dirt without any earthworm livings.
Chompoo emphasizes that “The rain has rinsed toxic chemical from the soil and it run to the village’s brook. Relatively, the toxic has affected to animals such as fish and frogs have got an ulcer in its body and the villagers dare not eat it. Therefore, the villagers have to buy food in the market outside instead. In addition, the abortion has been increasing among the cows and buffaloes that drunk water in the brook and eat grasses in sugarcane fields. Furthermore, burning sugarcane fields resulted an air pollution though the farmers have no choice to avoid it, because of the selling time limited.”
Lastly, Weerapon adds that what the villagers can do best for now, concerning to sufficiency living and caring for environment is that to reduce basic cost investment by lessening pesticides and try to use organic fertilizer instead. Conversely, keep on using chemical fertilizer, it will be a hard burden more than they can shoulder.
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| sugar cane |
The sugarcane farmer’s way of life is ongoing. While the government’s policy keep promoting economic plantation and bio-fuel plantation alongside with the inequity procedure system of the sugar factory. This is worrisome and doubt that farmers have been questioning in their mind. They do not know when all the debt will be released either when they can escape from the circle of the debt. Meanwhile, the environment is worsening. What will be happening in the route of sugarcane that driving by the sugarcane factory alongside with and Ethanol fashion, let’s think about it!
http://aanesan.wordpress.com/2009/11/09/sugarcane-a-classic-example-of-contract-farming/
