Development of Agribusiness Enterprises - Asian Productivity ...

substitution, export requirements and raw materials for local processing industries. However,
such development has had a significant adverse impact on farmers. The income gap between
farmers and those engaged in other occupations has widened to the point where farmers are
now considered as the poorest group.
The need to alleviate the various obstacles has been recognized. Those obstacles
include:
(a) income problems faced by farmers; and
(b) the downward trend in the growth of the agriculture sector due to factors such as
irrigation water shortages, inconsistent distribution and lower amounts of rainfall,
deterioration of farmland, growing competition in global trading of agricultural
commodities, and domination through protectionism by several nation groups.
The Ministry of Agriculture and Cooperatives has therefore established a policy of
restructuring the agricultural production system with a view to maintaining the growth rate
of the agriculture sector and raising farmers’ income. The policy will divert emphasis from
the promotion of increased production to the increase of farmers’ income and the alleviation
of prevailing problems of poverty. This will be done by providing the farmers with
alternative income-generating opportunities suited to the potential of their area, their
readiness to take up such opportunities, and market opportunities. Thus, they will be able to
make decisions on restructuring their own production system while balancing the utilization
of natural resources.
Problems in Agro-industry
Agro-industry in Thailand is facing several problems, among which the problem of
managing raw material quality is the most obvious.
1. Processing Problems
Raw material supply is a serious problem for processing industries, in terms of both
quantity and quality. The processing industries have been attempting to solve the problem
of unreliable supplies in various ways, which include:
C direct purchasing during the harvest period at market prices.
C contractual arrangements with farmers and through middleman.
C producing raw materials on their own plantations.
Due to the lack of technical expertise and/or adequate capital, some small- and
medium-scale factories have installed obsolete or used production machinery imported from
closed-down plants. This contributes to low productivity and poor quality of finished
products, which adversely affects exports and payments to farmers for raw material supplies.
2. Farmers’ Problems
Production schedules appear to be the main factor behind unreliable raw material
supplies. Most farmers are unaccustomed to following a fixed schedule of cultivation, such
as planting times, irrigation and chemical input application. Moreover, a number of farmers
are still applying improper techniques for handling harvested produce, i.e., cleaning, grading,
sorting and pre-cooling, etc. before transportation to the collecting houses or factories. This
results in the deterioration of raw material quality.
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