Business as usual

FARMERS' COOPERATIVE: While many big enterprises in Thailand are going out of business, a rice mill run by farmers in Yasothon province is prospering well into its eighth year of operation


Story by Vasana Chinvarakorn

Her clothes are old and soaking wet, and at first glance Ma Lapang looks no different from other Thai rice farmers going about their back-breaking business in the paddy fields. One by one, Mrs Ma plants the fragile seedlings in the muddy earth. The heavy monsoon rain is no impediment to the Yasothon native. In fact, it is a welcome sight after months of drought.

But unlike most farmers, the mother of three doesn't worry about what the future has in store for her.

If she falls sick, Mrs Ma knows she can seek help from a nearby temple. Wat Talaad in Kud Chum district has run a small but reliable health centre for over a decade now. There is even a free herbal sauna on Buddhist religious days where she can chat with neighbours while steaming herself in the scented mist.

Being cheated by greedy mill operators? For the past seven years, Mrs Ma has been selling her rice to a mill run by her peers in the nearby village of Sok Khumpoon. Known as the "Rice Mill of the Raksa Thammachart Club, Nasoh Farmer's Group", the cooperative has paid her a better price and guaranteed that their measuring weight will not rob her of a few kilogrammes here and there as happened in the past.

"Even if outside traders offered me a higher price, I wouldn't sell them my rice. We have all chipped in to have the mill built. It belongs to us," said Mrs Ma.

For Mun Samsee, headman of Sok Khumpoon village and one of the mill's founders, such a testimony is a happy paradox.

"When we first started, we were worried that nobody would bring their rice to our mill. Now it's the other way round: we can't keep up with the work. That's why we had to build a second mill," said Mr Mun.

He has good reason to be proud. While some big conglomerates are downsizing or going out of business, his rice mill has consistently been operating in the black. Last year, it posted a net profit of 1.6 million baht, a small sum perhaps, but it's all in cash.

Sales of the mill's products, notably the jasmine rice carrying the Thung Ruang Thong brand, have risen steadily over the last 7 years from 3 million baht to 22 million baht. Its market has expanded from supplying major mills in Thailand to a recent contract to export organic rice to Switzerland.

And while most investors are snatching their money out of the stock market as fast as they can, shares in the mill continue to sell steadily, now covering well over 1,000 households in the Kud Chum district.

And as one company after another dismisses workers, the mill is pondering how to generate jobs for the youngsters, especially those laid off in the cities.

According to Phra Khru Supajarawat, abbot of Wat Talaad, the real measure of success is not the size of profits but the integrity of the community. For example, the temple health centre is well-funded now, but he still prefers it to remain small and helpful rather than fancy-looking and indifferent to the needs of the people.

"We should not let business cause us to abandon our culture," said the monk. "We must always be caring and generous, helping people as much as we can. I believe that the more profit we get, the more likely we are to deviate from our original mission."

Mr Mun agrees: "Despite all the positive signs, I still feel there is a long way to go to improve people's lives. Part of the profit has been set aside for the community welfare fund. But there's only enough money to provide for staff at the mill. We have been asking villagers what services they would like to get from the fund."

AGAINST THE ODDS

Their first attempt in 1982, when Mr Mun and his friends felled some trees to build a mill, was brought to an abrupt halt. Some members of the team were briefly jailed on charges of subversive acts. The only form of community business allowed by the authorities at the time was a retail shop.

The entrance of a non-governmental organisation called the Traditional Medicine for Self-Curing Project in 1984 offered the villagers another way to put into practice the concept of self-sufficiency: sustaining one's own health. Through collaboration with a local group of folk medicine men, Wat Talaad and government officers, villagers set up their first local health centre and herbal garden in the temple compound.

"Back then, we didn't have regular staff," recalled Phra Khru Supajarawat. "Each of us just contributed in whatever way we could. After a day's work in the rice fields, mothers and children would collect the herbal plants and bring them to the temple to be ground and mixed and boiled into medicine. Both the village and temple would share the yield equally."

As a result of their collective efforts over six years, the villagers' medical bills were reduced to only a quarter of what they were.

The success of one project sparked off another. In 1989, the Kud Chum villagers initiated a "Pa Pah Tree Ceremony" with a difference which has since been emulated by many others. Instead of following the religious custom of raising funds to build or redecorate a temple hall, the modified ritual involved collecting tree saplings to distribute to villagers, while directing the money earned toward irrigation schemes in the areas.

The result was an 80-rai community forest which villagers managed themselves.

With concrete achievements behind them, the Kud Chum residents took a bolder step: this time their goal concerned the very mainstay of their livelihoods. Long engaged in the commercialised cultivation of jasmine rice, they saw themselves becoming part of a rat's race in which they were always on the losing end. To earn more income, the farmers had to keep on adding more expensive chemical fertilisers and pesticides to their fields, damaging the soil and putting them into debt to unscrupulous mill operators.

Said Pradit Kaewsai, another co-founder of the mill: "The mill operators would devise every possible technique to squeeze profits out of us."

Another concern at the time was how to promote the integrated farming methods the villagers had learned about during meetings and field trips organised by the Traditional Medicine for Self-Curing Project.

"The villagers came to the conclusion that the best thing to do was to start their own rice mill," said Sunee Thongchai, one of the project's coordinators.

THE MONDAY MILL

Seven years ago this month, the four mill pioneers - Mun, Pradit, another village leader Vijit Boonsoong, and NGO worker Thawatchai Tositrakul - oversaw the birth of what they hoped would be a new era of farmers taking control of their future.

The atmosphere was filled with hope and agitation. After 10 months of preparations, and facing objections from whoever learned about the project, they managed to raise 300,000 baht through offering shares, and another 400,000 baht as an advance payment for milled rice from two NGOs.

"Back then, people would call us the Monday Mill," said Mr Mun.

"Our cash flow was pretty tight, so if farmers came to sell us their rice, we would tell them our situation and ask them to wait until Monday for the money. But if they were in a hurry, they could take their rice elsewhere."

Fortunately, in many cases, the farmers chose to wait, partly because they trusted the operators and had shares in the mill themselves. Another major appeal was the privileges that come with membership of the mill. A study by Nanthiya Hutanuwat of Ubon Ratchathani University, found that the Kud Chum mill paid on average 167 baht more per tonne of rice than the market rate. In turn, it sold husks and bran to members at lower than market rates.

Moreover, members are not only entitled to annual dividends based on the number of shares they have, but also, since 1996, an extra 100 baht per tonne of rice they sell to the mill.

With the higher price offered to farmers and their emphasis on honesty, the mill's profit margin remained relatively small. But instead of cutting costs as in other mills by using machines for processing and packaging, the farmer-run cooperative continued the time-honoured practice of hiring people living near the mill.

The Kud Chum mill still enjoys tax-free status. It has also sought interest-free or low interest loans from certain institutions.

To avoid paying a large amount of cash simultaneously, the mill has created a "rice savings system" in which farmers may keep their rice at the mill and choose to sell it when they feel satisfied with the price.

Another strategy is to pay farmers in installments with the unpaid sum considered as a savings account with a nominal interest rate.

LEARNING FROM MISTAKES

Lack of experience in technology has caused the mill to make some expensive mistakes in the past. Improper ordering of machines, for example, resulted in underproduction for several years. However by 1996, researcher Nanthiya estimated that the mill had reached 85 percent of its operating capacity, processing 2,130 tonnes of paddy in that year.

The improvement in milling know-how has resulted in higher quality, and price, for its products. Mr Mun said he has recently acquired a machine that allows the mill to churn out top-grade jasmine rice for the first time.

Auditing the buying and selling of the rice, however, has proved to be a little more difficult. Mr Thawatchai, also of the Traditional Medicine for Self-Curing Project, ran a series of classes to teach the skills to farmers. After several experiments, the villagers settled in 1994 on a format that is both easy to understand as well as to inspect. The log books will be audited in three different rounds: daily, monthly and yearly.

Vijit Boonsoong noted: "The secret of success is less about capital size - we can always raise funds - than about transparency in how we run things. Anyone can come to check on us any time they want; we are not worried at all. In fact, we want them to come to monitor our work more often."

Due to the relatively small size of the community, members of the mill are able to check on one another. Mr Mun recalled various episodes in which some members would inform the mill of possible cheating by another.

"One guy tried to increase the weight of his crop by pouring water onto it, and then arranged for us to pick up the rice. However, somebody had warned us about the trick, so we kept delaying the delivery date. By the time we arrived at his farm, all the rice has turned into flour, thus ruining his plan," said Mr Mun.

NEW FRONTIERS

For all their accomplishments, Mr Mun and his friends concede it is a far more daunting task to promote a concept of business among the mill members that is geared not only toward making profits but also sustaining ecological balance.

One of their original aims - to promote chemical-free farming - does not have wide appeal. Despite financial incentives - the mill offers extra remuneration for pesticide-free and organic rice - the total number of farmers who have abandonned the use of pesticides is only a little over 100. Far fewer are those who have completely turned their farms over to organic farming.

Among the latter is Mr Mun himself. He adopted organic farming (kaset insee in Thai) shortly after the mill was started.

"I used to sell pesticides to tobacco planters. So I know well how it affects the environment," he said.

"As for fertilisers, the effect is no less damaging. The soil is hardened, and fish in nearby rivers develope strange symptoms and finally die."

Mr Moon Pholchai, who has joined the Kud Chum farmers against the use of pesticides, echoed similar observations: "This will be the third year since I went organic. I have noticed life coming back to the soil. Even in the dry season, I can see grass shoots springing out. That never happened before."

At present, the Kud Chum mill prohibits all use of urea-type fertilisers on rice farms. The chemical substance in the fertiliser is believed to cause soil erosion and may contribute to causing cancer, if it accumulates in the human body.

Moreover, the mill sells natural fertilisers at lower prices. It has also organised customary gathering of northeastern farmers, called so-leh, to get organic farmers to exchange opinions and experiences on ecologically-friendly methods of cultivation.

Mr Moon said old habits make it difficult for northeastern farmers to turn away from chemical fertilisers. Economic necessity - rice is the main income-earner for most Yasothon farmers - adds to the perpetuation of the practice.

According to Sunee Thongchai, the Traditional Medicine for Self-Curing Project has, since 1995, been working on campaigns to encourage Kud Chum villagers to not only grow more herbal plants for their own consumption, but also as a way to generate income.

"But it should always be on a small-scale basis. Otherwise, it may lead to encroachment on the natural forest."

After all, the ultimate goal of all these endeavours is to ensure that farmers will have a healthy life and fertile land, nothing more nor less. Phra Khru Supajarawat sums up well this simple desire:

"I believe that more and more people will come back to nature. It's a bit interesting to observe a rise of new fashion. Now, a village must have a community forest to boast to others; a temple must be able to show off its traditional wooden ubosot!

"People always ask me why I don't try to generate jobs to keep people at home instead of roaming around in search of jobs in the cities. What we are striving to do is to help people have enough to eat and live on here. So that even though they may be lured by the lights and sounds of modern life, they will always think about their home. And if they happen to get laid off, there is always a place they can come back to."

For details about the Kud Chum Rice Mill, see Nanthiya Hutanuwat's research paper entitled Experience and Lessons of Community Business: The case of the Raksa Thammachart Club, Nasoh Farmer's Group Rice Mill, Local Development Institute (1998).