**5. Policy conflict**

After the implementation of the agricultural zoning, the agricultural sector in Thailand has transformed in the dimensions of crop diversification. Using the formula of Gibbs and Martin with the data from OAE, crop diversification index was calculated and presented in **Figure 3**. The index showed that Thailand has moved from mono-cropping pattern to a more diversified cropping pattern especially during the 1980s and 1990s which after the agricultural zoning was implemented. In 1977 and 1978, before the implementation of the zone, the index was 0.51, but in 2015, it was increased to 0.68. More farmers switch from rice to perennial crops such as coffee, sugarcane, cassava, corn, oil palm, fruit, vegetables, and flowers, livestock, fisheries, etc. Despite that agricultural zoning has caused a significant agricultural transformation in Thailand, the level of success is considered to be limited considering that it has already been implemented for over 35 years. Only my work [30] analyzes the root cause of failure of the agricultural zoning in Thailand. The work found that the agricultural zone in Thailand was set based on physical and environmental characteristics and failed to consider crop prices, input price, and property right, which farmer prioritizes as their top priorities when allocating production to their agricultural land. These missing factors except property rights are economic factors. The zoning control results in land-use efficiency fail because variable factors that the government considers are not in line with private demand. The government fails to adequately perceive the private demands existing in land use of landowner and responds instead to the political pressure of organizing land use at the country level. The analysis of the work is however limited to the farm-level variable. The external factors at the country level such as the government policies are not included in the analysis. In reality, such factors have tremendous effect on the zoning program. Therefore, in the next section, we will go over some of the governments' agricultural

64 Land Use - Assessing the Past, Envisioning the Future

policies that conflict with the zoning program and cause it to fall short of expectation.

**Figure 3.** Crop diversification index of Thailand between 1977 and 2015.

Most of the agricultural policies in Thailand were found to be conflicted with each other especially the policy of agricultural zoning and crop subsidy schemes. Agricultural commodity price in Thailand has been intervened by its government from time to time (more appropriate phase is "all the time"). There were mortgage schemes for rice, cassava, longan, rubber, oil palm, shallots, sunflower seed, and many more. On top of this, there are aid fund, act, strategic plan, and programs for many agricultural commodities such as rubber aid fund, the Sugarcane and Sugar Act of 1984, rubber price stability program, oil palm industry strategic plan, etc.

The most notorious program that ruins the agricultural zoning program is the rice mortgage scheme. Rice production is the largest portion of the Thai economy and labor force; therefore, any policy on rice will produce a widespread effect in the country. In 2011, while the agricultural zoning is functioning, the rice mortgage scheme was implemented with the objective to increase the rice price, create stabilize Thai economy through increased domestic consumption, increase Thai farmers' well-being, and control the world market price of rice. The attempt to replace rice paddy field with sugarcane field by agricultural zoning failed because most farmers switch from other crops to rice in order to obtain the guaranteed price. Likewise, this incident happens in the case of the mortgage scheme for cassava, longan, hevea, oil palm, etc. While one of the main objectives of agricultural zoning is to control the supply quantity of products, so that the product price is not fluctuated, the price is in fact the cause of the change in the quantity supply. This happens because the agricultural commodities are in fact in the perfectly competitive market. In microeconomics theory, equilibrium price in the perfectly competitive market is determined through a process of interaction between the market demand and market supply not the market supply alone. Therefore, by introducing the series of mortgage scheme for each crop, the zoning policy has failed to function properly.

Another program to be discussed is the government's strategic plans for palm oil year 2008– 2012 which aim to expand the plantation area of oil palm from 2.5 million rai in 2007 to 5 million rai in 2012, and the strategic plans for palm oil year 2015–2026 which aim to expand the plantation area of oil palm from 5 million rai in 2017 to 7.5 million rai in 2026. The strategic plan is part of the government's alternative energy development plan for 2015–2036. Oil palm is a primary raw material for biodiesel production which is an alternative energy of the country with an increasing demand in recent year. In 2012, the Ministry of Energy has a target of biodiesel production of 3100 million liters per year to increase the country's' energy security. According to the Agri-map of the MOAC, the suitable area for oil palm production is in the south of Thailand where there is the highest rainfall in the country. The rainfall in the south of Thailand is regular and scattered throughout the region. Oil palm needs plenty of water and 6 hours of sunlight each day with the plantation area lower than 300 meters above sea level. Each tree needs 5–350 liters of water daily, monthly rainfall of 150 millimeters, and dry season not more than 60 days [31]. Therefore, the zone set for oil palm is in the southern area of Thailand. However, the high demand of domestic palm oil and the oil palm strategic plan creates an attractive economic incentive for farmer to switch the production from other crop to oil palm. In 2015, the Ministry of Agriculture and Cooperatives (MOAC) introduced the oil palm to northeast of Thailand through the pilot projects in Nong Khai province. Northeast of Thailand is not suitable for the production of oil palm as it has poor soil, low rainfall, and a long dry season. However, the expansion of oil palm plantation area has been promoted through various interventions, such as seedling, low-interest rate funding, input, mills, and refineries. As a result, oil palm plantation area has rapidly increased in the northeast of Thailand. The attempt to encourage land use according to its suitability of the zoning program has again failed due to an attractive economic incentive created by the government. Besides, the other objective of zoning which is to stabilize the crop price also failed. Consider **Figure 4**, it presented the price of oil palm during 1997–2018. The oil palm price has been fluctuated even during the period of both oil palm strategic plans (2008–2012 plan and 2015–2026 plan). In 2017, only 2 years after the implementation of the second plan, oil palm price starts a dramatic fall due to the excess supply of the crop. The government tries to solve the low-price issue by exporting the residual quantity to global market, but the attempt has not succeeded in solving the excess supply problem and low oil palm price in the country. As of March 2018, the oil palm price is as low as 3.02 baht per kilogram. The government is now considering an income compensation scheme for farmer as a short-term assistance and a cut down oil palm tree program with compensation as a long-term measure to combat the low-price issue.

farmers and factories try to push the domestic price up to share the set benefit. The country exports approximately 70% of sugar product, and only 30% was distributed for domestic use. The agricultural zoning again could not resist the expansion of land use in sugarcane produc-

Agricultural Zoning and Policy Conflict: Thailand's Experience

http://dx.doi.org/10.5772/intechopen.80262

67

The government tends to implement the policy to tackle the issue at hand without considering the existing active policies. These actions make each agricultural issue more complicated to be handled and result in a high government budget spending in each incident. After the implementation of the agricultural zoning, the government should have a minimum interven-

The most crucial factor that causes failure on agricultural zoning in Thailand at the farm level is the agricultural commodity price, while the governments' latter crop subsidy scheme is the

Obviously, the finding reveals that the most crucial factor that causes agricultural zoning in Thailand to fail at the farm level and at the country level is actually agricultural commodity price. This suggests that agricultural zoning in Thailand should undergo major revision by taking the agricultural commodity price into account. Therefore, a proposal to revise the agricultural zoning used in Thailand based on this finding will be discussed in the next section.

The revision of agricultural zoning proposed here is based on the principles for dealing with two critical issues that agricultural zoning program in Thailand tries to solve: the mismatch-

The proposal is to set agricultural commodity price based on its production area or in other words its origin. This zone pricing is to be included in the existing zoning program. The Land Development Department (LDD) has completed the country soil survey and matched the land quality with each crop growth requirement in order to help the government to determine the crop zone. They have divided land suitability into four categories: highly suitable (S1), moderately suitable (S2), marginally suitable (S3), and not suitable (N) [33]. The government will be able to set the crop price according to these criteria. The crop that is grown in the area with highly suitable category will have the highest price followed by the crop that is grown in the moderately suitable area, marginally suitable area, and not suitable area, respectively. The proof of the commodity origin is the certificate of origin issued by the local government office. By setting the agricultural commodity price based on its production area, an incentive for farmer to allocate their land to the most suitable crop set by the government is initiated. The method will eliminate the price risk for farmer and the mismatch land-use problem at the same time. The factory and the mill are assured of the quality of the product as it was

most crucial factor that causes the failure of agricultural zoning at the country level.

**7. A proposal for a revision of agricultural zoning in Thailand**

ing between land use and land suitability and the crop price instability.

tion because of the high economic incentive initiated by the act.

**6. Findings of the study**

tion in the market, so that the instrument will be able to function properly.

The last instrument to discuss is the Sugarcane and Sugar Act of 1984. The act was enacted after the implementation of agricultural zoning. Since the enactment of the Sugarcane and Sugar Act of 1984, sugarcane production area has considerably expanded by almost 160% from 1982 to 1996 [32]. According to the act, sugarcane farmers and sugar factories share the profits from production at a rate of 70:30 under the condition that the sugarcane field must not be located more than 80 km from the factory. The objective of the act is to stabilize the sugarcane price for farmer. After the enactment of the act, the sugar factory has been expanded to 53 factories in 2015 from 17 factories in 1984. The sugar price remains quite high as sugarcane

**Figure 4.** Oil palm price between 1977 and 2018.

farmers and factories try to push the domestic price up to share the set benefit. The country exports approximately 70% of sugar product, and only 30% was distributed for domestic use. The agricultural zoning again could not resist the expansion of land use in sugarcane production because of the high economic incentive initiated by the act.

The government tends to implement the policy to tackle the issue at hand without considering the existing active policies. These actions make each agricultural issue more complicated to be handled and result in a high government budget spending in each incident. After the implementation of the agricultural zoning, the government should have a minimum intervention in the market, so that the instrument will be able to function properly.
