An economic analysis of the performance of the agricultural cooperative system in Thailand

Abstract

The multi-purpose agricultural cooperatives of Thailand play an increasingly important part in the economic life of the country. They are an instrument of Thai government policy, intended both to help modernize farming and to perform welfare functions, especially in relieving farmers from debt. They are expected to carry out a number of purposes, i.e., credit, selling farm supplies, purchasing crops etc. The data available were mainly aggregates, so that the study is essentially a macro study. But it is combined with attempts to

probe the situation also at the micro level. Thus, the study was primarily concerned with analysing data from the agricultural cooperatives in the aggregate but also presents a case study of 3 individual societies. The whole study was based on time series analysis and cross sectional analysis. The study stresses the inadequacy of management of the cooperatives in decision-making, financial skills, attracting business to the societies and in maintaining the loyalty of their members. It also shows that the aims of the. government are not being effectively realized. Some assistance is being given through the cooperative system to the modernization of agriculture, but this seems to be only limited. The movements' welfare aims, however, are hardly being carried out. The farmers that benefit from subsidised state assistance channelled through the cooperative system are the middle income class. The poorer farmers so far seem to be missing out on the benefits. Overall, less than 10 percent of all farmers are members of societies. On the financial aspects of the societies, the accountancy system was found to be inadequate. The accounts are not presented in a conventional way and fail to make adequate provision for doubtful debts, depreciation and stock changes. They also lack a flow of funds statement which would help make the financial position clearer now that the societies are undertaking multi-purpose activities. The concluding chapter of the thesis gives some recommendations for remedial action. More specifically, it makes three main recommendations. First, that the efficiency of primary level cooperative management should be improved through incentive payments and greater training, especially in financial skills. Second, that the societies should be granted greater flexibility to respond to market conditions, in offering higher prices or in paying higher interest rates, so as to attract more membership and greater loyalty from their members. Lastly, that much more extensive research should be carried out on agricultural cooperatives in Thailand.