Agri co-ops: Thailand’s way

Thailand calls its agriculture ministry the Ministry of Agriculture and Cooperatives. There’s no better sign that the Thais consider co-ops to be central to agricultural development. I wish our government would think the same way. We all know how Thai agriculture has left ours far behind.

Cooperativism officially started in the Philippines in 1914, when the Philippine Congress passed the rural credit law. Thailand’s Ministry of Finance established a cooperative section a year later. Both countries saw the birth of their first formal cooperatives in 1916: the Agricultural Credit Cooperative Association of Cabanatuan, Nueva Ecija in the Philippines, and the Wat Chan Cooperative Unlimited Liability in Phitsanulok, Thailand. Both were inspired by the German Raiffeisen credit cooperative model, which had become popular in Europe at the time. Both countries saw the number of credit co-ops multiply in succeeding years, and by 1930, there were 571 such associations all over the Philippines.

Fast-forward to the present, and our Cooperative Development Authority (CDA) reports having 7,092 agricultural co-ops registered as of 2022 with a total of 1.89 million members—which is only about a third of our 5.56 million farm households nationwide. The latest figures I could find for Thailand were for 2017, when they had 3,982 agricultural co-ops with a total of 6.81 million members, covering nearly all (95 percent) of their 7.15 million farm households. Average farm size in Thailand is 4.01 hectares, three times our 1.29 hectares, which means that their co-ops not only cover a far higher proportion of their farm households, but far greater farm area as well. These numbers give us a strong clue on why Thai agriculture has left ours far behind, be it in production, diversification, or export volumes. Thailand has clearly made good use of agri co-ops to boost productivity in their farms and raise their farmers’ incomes.

What exactly did they do differently to widen and strengthen their agri co-ops? The glaring difference has been in the institutional and budgetary support that the Thai government has provided for them, especially their promotion, expansion, and development. How they named their agriculture ministry already speaks volumes. The legal mandate covering their co-ops is the Cooperative Act of 1999 (Buddhist Era 2542) which superseded the original Cooperative Act of 1968 (B.E. 2511). The updated law provides for an impressive comprehensive package of institutional and resource support for co-ops, which in Thailand are predominantly agricultural co-ops (56 percent of all co-ops, vs only 29 percent in the Philippines).

Key elements in the law are (1) a top-level inter-ministry Board of National Cooperative Development, providing policy guidance and coordination; (2) the Cooperative League of Thailand, a nongovernment apex body created by the 1968 act that is supported by mandatory contributions from its co-op members; (3) separation of promotion and developmental functions from regulation and audit functions within the Ministry of Agriculture and Cooperatives via the Cooperative Promotion Department (CPD), Cooperative Auditing Department and a Registrar of Cooperatives; and (4) financing support from the Bank for Agriculture and Agricultural Cooperatives that was established in 1966, and a Cooperative Development Fund (CDF) to support co-ops, funded by national budget subsidies, donations, proceeds from sale of properties, and interest income. I couldn’t find a more recent figure, but even 20 years ago, the CDF alone amounted to 3 billion baht (P4.26 billion then), dwarfing our CDA’s entire budget of P700 million this year, split between its development and regulatory functions. CPD’s annual budget then was 3.64 billion baht (P5.17 billion), with 2,304 permanent employees nationwide. Our CDA now has 882 positions, with only 670 filled.

Besides funding support, our agri co-op system needs far broader institutional and governance support as well, which CDA alone cannot provide. Restoring the Bureau of Agricultural Cooperatives Development in the Department of Agriculture (abolished when CDA was created) would provide our counterpart to Thailand’s CPD to focus on promotion and development of farmers’ co-ops, and loop in the remaining two-thirds of our farmers still not belonging to one. Despite its name and mandate, many see CDA to be more prominently focused on and equipped for regulation, a function usually at odds with promotion and development in the same agency. President Marcos himself has declared farmers’ cooperatives to be crucial to improving Philippine agriculture and ensuring food security. But unless we dramatically boost the institutional and budgetary support for them, all that would remain rhetoric, and will get our deeply troubled agriculture sector nowhere.

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