Rice Production in Thailand - Government Policy

Government Policy

The government wanted to promote urban growth and one of the ways it accomplished this was by taxing the rice industry and using the money in big cities. In fact, during 1953, tax on rice accounted for 32 percent of government revenue. The government set a monopoly price on exports, which increased tax revenue and keep domestic prices low for Thailand. The overall effect was a type of income transfer from farmers to the government and to urban consumers (who purchased rice). These policies on rice were called the "rice premium," which was used until 1985 when the government finally gave into political pressure. The shift away from protecting the peasant rice farmers by the government moved the rice industry away from the egalitarian values that were enjoyed by farmers to more of a modern-day, commercial, profit-maximizing industry.

The Thai government had strong incentives to increase rice production and they were successful in most of their plans. The government invested in irrigation, infrastructure, and other pro-rice projects. The World Bank also provided finance for dams, canals, locks, ditches, and other infrastructure in the Greater Chaophraya Project. These policies helped lead rice land to increase from 35 million to 59 million rai from 1950s to 1980s. The graph on the next page, Figure 2, shows the increased paddy rice production in Thailand from 1961 to 2007. The rice production has about tripled in terms of total paddy rice produced. While Thailand's rice production has not increased every year, which is not to be expected, one can see a trend line for steady significant increases since the 1960s.