An Oil Palm Predicament

In Research on 18/08/2009 at 6:37 pm

Growing cash crops like sugarcane, cassava, eucalyptus and rubber have become appealing options for struggling rice farmers throughout the northeast.  Farmers can easily sign up with local mills and receive seedlings or seeds and plant these crops in their rice paddies, without much knowledge of how to grow these crops or the proper way to manage inputs.  For many, they are seen as potentially more lucrative and lower risk to grow than rice.  Yet these crops have mostly generated new debt and binding contracts with mills, while destroying farmers’ food sovereignty.  Prices for cassava and eucalyptus remain very low, and given high investment costs, it remains very difficult to generate any profit.  Unfortunately, this has also been the case for rubber and oil palm producers in southern Thailand.

Oil palm has long been grown in southern Thailand, as the region’s climate and soils are well suited to this crop.  Researchers and farmers have developed varieties that produce yields close to those in Malaysia, a country long known for its oil palm production.  Over the past five years, these varieties have been introduced to several provinces in northeastern Thailand for research and oil production.  It’s introduction, however, has generated both opportunities and burdens for small-scale farmers.

Over the past weekend, the AAN traveled to Loei and Nongkhai provinces to learn more about the progress of oil palm in this northern part of Esan.  Is growing oil palm an opportunity for villagers?  In terms of production and markets, what are the limitations?  Where are the connections and relationships – how are seedlings getting distributed?  How is the Oil Palm Research Center in Nongkhai involved?

Our first stop was to Ban Naa Din Dam in Loei Province, where we met with a local teacher who has developed a small-scale system to process palm oil suitable for biodiesel and animal feed.  His project has only begun recently, and there are 16 families currently selling oil palm to him.  There are 250 rai planted with oil palm in his district and the mill process 20-30 tons per month.  Farmers from Nongkhai, Udon and Pitsanulok provinces also bring oil palm to be processed at his facility.  Ajaan Gonglai told us that most farmers in the area are still unhappy with their crop, as the trees are not yet following their expectations for higher yields.

Despite the facility’s small size and many farmers’ frustrations, Ajaan Gonglai’s mill provides the only near-by place for farmers to sell their oil palm.  His mill is also pretty efficient – for every 100 kg of fruit entering the roaster, 70 kg of kernel is yielded for pressing, while 30 kg of pericarp is separated.  The press then yields 50 kg (after 20 kg of water is separated) – which breaks down into 23 kg of oil and 27 kg of pressed pericarp.  The husk and pressed plant material can then be combined as animal feed, and local farmers have been purchasing it for their livestock.  The oil is sold at 25 B per kg.

This small mill has had to develop it’s own market, and farmers we spoke with referred to the situation as “not yet having a market.”  In other words, farmers are waiting for a large-scale mill to setup a local middleman network, as they are used to with rice or other cash crops.  There is only one remaining seedling distributor, but even he hasn’t started working with mills in southern Thailand.  Growing palm oil is still viewed as risky endeavor, especially as farmers still don’t have much knowledge about caring for the plants.  For example, those researchers who have visited the area insist that farmers don’t need to spray herbicides to kill weeds and grasses around the trees, but farmers continue to spray in high quantities (this was true of every farmer we visited during the research trip).

A farmer that we visited near Ajaan Gonglai’s palm oil mill grows 400 trees on 10 rai of land, beginning in 2005.  He used to grow tamarind trees, but they stopped yielding fruits so he cut them down and planted oil palm.  His father was one of the first tamarind farmers in Loei province (which is known for it’s sweet tamarind). He is still in debt to the company that sold him the oil palm seedlings, and uses a range of fertilizers and herbicides.  The surrounding area has significant groundwater, so yields started within the first two years of production.  Rubber is an increasingly popular crop in the area – he explained that with rubber, you get yields from every tree, but with palm, you don’t get yields from every bunch – in turn, according to this farmer, oil palm cannot really compete.

Based on our first visit, it was clear that there were still major limitations in terms of a conventional market for oil palm, but that Ajaan Gonglai’s small-scale operation has much potential to provide an alternative for local farmers.  His purchase prices are still low – a 2-2.5-3 B scale based on quality – and farmers expect to earn 3-4 B over the coming year (this is the price that farmers in southern Thailand earn). Oil palm prices are also dependent on fluctuations in the price of petroleum.  If he is able to relocate his biodiesel operation and continue producing 300 liters per day and selling it at 20 B per liter, Ajaan Gonglai can create small-scale, sustainable resource for the local economy, providing compost materials, animal feed and biodiesel.  But his mill’s size is a major disadvantage, and he won’t survive if large mills start purchasing in the area.

In the afternoon of our first day, we moved on to Non Suai district to meet with a farmer who had planted 40 rai.  This farmers’ son had gone to work on an oil palm plantation in Chumphon, southern Thailand and returned home to start a farm with his father, who wanted a more stable source of income outside of growing rice and tamarind.  His fields were certainly impressive, and his trees have been yielding fruits for two years.  He has developed a sprinkler irrigation system for his 879 trees and produces organic fertilizer for use around the bases of his trees (though also uses a heavy potassium chemical fertilizer and 12 gallons glyphosate herbicides per year).  His farm yields 400 kg per cutting every two weeks.  He has also worked with the Dept. of Agriculture to recruit 400 farmers and help develop a group of mills for animal feed, organic fertilizer, palm oil and biodiesel.  It’s unclear when these projects will start, but 50,000 seedlings are waiting for the new members’ planting.  The farmer we visited said that he was “very satisfied” with growing palm.


If the series of mills coordinated with the Dept. of Agriculture are built, local farmers and their communities could benefit greatly from growing oil palm.  But the 62-year-old farmer we visited is 500,000 B invested and has had to sell off more than 70 rai of land – and if prices remain low, it will take him at least 10 years to pay of his debts.  He seemed so confident that this endeavor would be successful (though his wife was only 50%) and proud that people were visiting his fields.  Will growing oil palm prove to be a real alternative for his family?  Or will it simply pass debt onto his son?  It seemed to us that this farmer had taken on too large of a project, and that his way of thinking was too focused on the large-scale.  He is determined to succeed, but will it be at the cost of his food security?  His wife pointed out a piece of land currently flooded and growing rice that he wanted to convert to oil palm.  She refused to let that happen, but it seems an indicator of his conviction that growing oil palm is the right thing for him to do.  Yet there was a stark contrast between his rice paddies, with tamarind, papayas, mangoes, bananas and eggplants growing along the banks and his oil palm fields, which were made up of dead grass and the fast-growing oil palm trees.

After spending the night in Chiang Khan, a quiet town right on the Mekong River, we set out yesterday morning for the Nongkhai Oil Palm Research Center.  We followed the river for hundreds of kilometers, looking at the lush fields of a range of cash crops.  The region is at risk of flooding from the planned Pak Chom dam, near Ban Khok Wao (one of eleven planned for the Mekong).  High quality soils and groundwater resources characterize the region, but crops are grown with high amounts of chemical fertilizers, herbicides and pesticides.  Productive regions like these are the source for many commonly consumed vegetables – chili, eggplants, papaya, bananas, mangoes and corn – but consumer demands have driven farmers to grow quickly and in high volumes, facilitated by heavy chemical use.  Throughout our drive we passed villagers spraying or driving out to spray their crops.

We reached the Research Center in the early afternoon and sat down to talk with a young researcher.  There are currently 30,000 rai planted with the center’s support in Nongkhai.  Private planters and middlemen need permission from the research center before distributing seedlings.  Many farmers are interested in the planting process – the center will give them information about oil palm’s strengths and weaknesses and let them to decide themselves.  There is currently no policy regarding a quota for planting oil palm in Esan – the current situation is referred to as a  “testing process” by the Research Center.  Originally, the program was initiated during the Thaksin government, but policies have not been followed since the change in government.  Researchers manage seedlings and seeds are brought to Nongkhai from Surat, in southern Thailand.  There are currently 70,000 seedlings growing at the Research Center.  Seedlings are sold to farmers at 50 B per tree, and researchers will visit all fields where the seedlings are planted.  There are currently 600 farmers with seedlings from the center, many of who are small-scale farmers (10-20 rai).  Though private investors and large-scale farmers have also started planting.  While production is expanding, more seedlings produced at the Research Center were sent to southern provinces than were planted in Esan.

We had an interesting discussion with the researcher about the circumstances presented to small-scale farmers when growing oil palm.  The center agrees that there will be a need for government support as yields rise and the need for local processing and markets arises.  If farmers cannot access community-based mills or are forced into a production system oriented for industrial use – whether agribusiness or biodiesel for export – growing oil palm in northeastern Thailand will be a major burden for farmers.  Benefits will go to the corporations involved with production and sales of finished products.  As PTT continues to generate state energy policy and dominate the production of biofuels, small producers have little opportunity to create sustainable alternatives.  Farmers can realize higher yields with irrigation – as the farmer in Non Suai showed – but oil palm is a crop never before planted in this region, and needs to be critically examined as it expands.  It could be the basis for strong community economies – producing animal feed, organic fertilizer, palm oil and biodiesel for small-scale producers.  But it could also become another export-oriented cash crop that Thailand’s aging farmer population would produce under contract arrangements with agribusiness or petroleum corporations.  The AAN will continue to monitor the expansion of oil palm in the northeast and work to provide support for oil palm farmers who may be interested in developing organic methods.

After a tour of the Research Center’s fields, we went to Ban Pon Sawang, a community near the Research Center where a farmer has struggled with oil palm production.  After years of flooding in his rice fields, a little more than two years ago, Paw Saman planted 23 rai of oil palm.  Last year, however, flooding returned to his fields, destroying over 100 trees.  This year he has re-planted 60 trees and worked to revive some of his struggling plants. Paw Saman has sent his children through college and earns several hundred baht per day as a local vendor at the district market.  But he’s now invested about 150,000 B and has requested large loans from the BAAC and local lenders.

This year his fields haven’t flooded, but it is likely that they will do so in the future.  Growing oil palm simply is not suited to his land and he understands the impacts from flooding, but he is convinced that he will be able to produce oil palm in his flood-prone fields.  He is in a truly unfortunate situation, and is determined to save face.  Planting an indigenous variety of rice called kao loi which is well suited to flooding could have prevented this situation, but most farmers are unable to access this information or the actual seeds.  At first, growing oil palm must have made a lot of sense to Paw Saman, and with the Research Center nearby, he had useful resources to support his transition.  But something hasn’t worked out, and it doesn’t seem to be entirely the fault of this small farmer.  He may be called greedy for starting a crop with high profit potential, but the Research Center cannot call distribution of seedlings to indebted farmers simply a “testing process.”

  1. […] living along the Mekong River in Loei province, Esan’s frontier with northern Thailand.  AAN Esan is currently researching palm oil production in Loei province, which would almost definitely benefit from the Pak Chom Dam’s […]

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