Seed Provision Policy in Thailand

Nipon Poapongsakorn

Kamphol PantakuaTDRI

ReSAKSS-International Conference on Agricultural Tranformation in Asia: Policy options for Food and

Nutrition security. Organized by IFPRI,

Siem Reap, 25-27 September 2013

1. Objectives This paper will answer 3 questions:• What are the salient characteristics of the seed

market? …..not discussed today• What were the major changes in the public

policies of seed provision in the last two decades? And how did the policies affect the private seed market?

• What are the key take –home messages?

Main findings Though the rice seed provision is still dominated

by the public sector, the private seed market has thrived recently, thanks to (1) the strong government support, (2) long-term investment in research and training of plant breeders, (3) limited public resources and the Seed Division policy not to compete with the private sector in seed trading business.

The government has also proactively support the role of private sector in hybrid seeds for the same reasons.

Outline A brief overview of the markets for rice and

maize seeds….not discussed today• Rice seed is inbred varieties, maize is hybrid

A brief development of agricultural research and seed policy in Thailand

Law, regulations and policy in the seed markets

Some challenges in the future

2. The seed markets in Thailand2.1 Rice seed market: rising demand, smaller govt share Demand for rice seed is estimated at 1.14 million tons/year (2012)

• KDML 105 (26%) and RD.6 (22%) is the most popular varieties (Figure 3.1(b))• Chainart1,2 (8%) and Supanburi60,90 (2%) are the most popular non-photosensitive

varieties.

1976

1982

1988

1994

2000

2006

2012

0.0

200,000.0

400,000.0

600,000.0

800,000.0

1,000,000.0

1,200,000.0

Demand for seed 1976 - 2012

Non-Pho-tosensi-tive32%

KDML 10526%

RD.6 glutinous22%

Pho-tosensi-tive13%

Other Landrace

8%

Seed used 2012 (1.1 M.ton)

Source: Office of Agricultural Economics.

2.2 Maize seed market: dominated by a large-scale Thai firm and a few MNCs• Demand for maize seed is 23,500 tons/year, most of which are field

maize (Table 2 and Figure 5)• 96% of farmers used hybrid seed

Type of maize

Planted area (Ha)

Seed use per area (kg/Ha)

Seed demand

(ton)Field maize

1,178,719 18.8 22,100.99

Sweet corn

36,392 9.4 341.17

Baby corn

30,072 34.4 1,033.73

Source: Napasintuwong, O. 2013.

19811985

19891993

19972001

20052009

0.0

500,000.0

1,000,000.0

1,500,000.0

2,000,000.0

2,500,000.0

05,00010,00015,00020,00025,00030,00035,00040,000

Figure 5 Planted area and demand for maize seeds in 1981-2011

Planted area (Ha) Maize seed demand (ton)Hybrid seed (ton)

Table 2: Planted area and seed requirement for corn

Source: Suwantaradon et al., 2011

3. The development of rice research and seed policy in Thailand

3.1 Brief history of genetic improvement

Between 1960 and 2010, the Department of Rice successfully developed 100 of varieties

1956-1968 1969-1978 1979-1988 1989-1998 1999-2008 2009-20120

5

10

15

20

25

30

35

19

13

22

14

29

11Number of Registered Varieties

Nu

mb

er o

f G

enet

ic

Imp

rove

men

t

Modern Plant breeding

Source: Rice Department

Figure 7-a: Number of Registered Rice Varieties,1956-2012

Thailand have 2 major problems in agricultural research. • Declining of agricultural and rice research

intensity Rice research budget received by DOR is 200 mil bath,

comparing to the output of 350 billion baht

• Shortage of researchers, especially plant breeders

2523

2525

2527

2529

2531

2533

2535

2537

2539

2541

2543

2545

2547

2549

2551

2553

0

0.2

0.4

0.6

0.8

1

Figure 8: Declining agricultural and rice research intensity

Rice AgricultureSource: Waleerat 2009, NRC and NESDB

The Thai governments have always put emphasis on the production and export of “quality rice”. In the first agricultural trade exhibition in 1910, King Rama V stated that

“ the Oriental Nation,…, felt the need again of opening the country to commerce as it was necessary for the prosperity add strength of the nation. Such a nation can now be seen, which by fostering agriculture and commerce, and by changing its methods, has, in a short space of time, brought itself to the foremost rank, in power and prosperity…….Many of the samples of rice (at the First Annual exhibition of Agriculture & Commerce in 1910) were of high class…. And they (rice millers) told us that it was very seldom that they get such fine samples of rice as shown at this Exhibition; and that if they could get such good rice to send to Europe, they would be able to get prices equal to Patna rice…”

(J. C. Barnett, 2004).

3.3 Brief history of rice seed production and provision

3.3 Brief history of rice seed production and provision

The main policy objective has always been “quality rice”. The production of “registered seed” began even before the

Green Revolution.

A law in 1942 stipulates that the rice seed varieties must be measured at least 7.00 mm long, 2.00 mm wide and a thickness not less than 1.60 mm.

The 1975 Plants Act regulates the quality of seed production and seed trade (see Figure 9).

The government began to establish 23 seed centers between 1976 and 1985 (DOAE 1995).

In 1982, the government began to encourage the farmers to exchange their seeds with the improved varieties.

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0.0

500,000.0

1,000,000.0

1,500,000.0

2,000,000.0

2,500,000.0

3,000,000.0

3,500,000.0

Planted area of dry-season rice

Community Seed centers

Figure 4.8: Chronology of rice seed policy: quality of rice has been the main objective

Seed replacement II

Co-op seed centers

A private seed company entered the market

Source: OAE and DOR.

Rice seed wholesaler association

Registered Seed Centers

Seed replacement

Plant quarantine Act1964, 1999, 2008

Plants Act1975, 1992, 2007

Plant varieties protection Act 1999

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

2011

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

0.0

100,000.0

200,000.0

300,000.0

400,000.0

500,000.0

600,000.0

700,000.0

800,000.0

900,000.0

1,000,000.0

Production Export chicken

Promotion of maize cultivation : land distribution and price support 1950s

Maize breeding investment by RF and establishment of NCSRC 1966

Release of first OPV maize, Suwan1 1975

Seed Development Loan & by USAID 1975

Investment promotion of maize seed 1970s and commercialization of suwan1 seed by a private company, BSI-1979

National program of hybrid maize development 1979

Supporting private production of hybrid seeds 1990sand hybrid seed subsidize for farmers1994

CP released the single cross hybrid, CP.DK 888 1991

Source : O.Ekasingh,2013 and FAO.

Figure Chronology of maize seed policy & production of maize

3.4 Brief history of maize seed production and provision: promoting the private sector

4. Law, regulations and policy in the seed markets

Question: why the private seed markets – both the rice inbred varieties and the maize hybrid varieties – thrive?

4.1 Overview of laws and regulations

Breeders

Registered

certification

New varieties, Landrace, Endemic varieties.

Varieties with unique characteristics.

Controlled seedNo.

renewal fees every 5 year but send sample of every production lot to test

Collector register

Wholesale register

renewal fees every year

renewal fees every year

Wholesalers

resellers register renewal fees every yearRetailers

Import seedFor restricted or forbidden seed need

permission from the director of Department of agriculture and phytosanitary certificate.

Import seedFor restricted or forbidden seed need

permission from the director of Department of agriculture and phyto-sanitary certificate.

Plant quarantine

act

Plant varieties

protection act

Plants act

Import policy

Figure 4.1: Laws governing the seed market

Trade policy

Seed standard

-Seed suppliers & collectors must have collection permits & seed certificates. -All seed traders must apply for the sale permits

• Seed centers• Community

seed centers• Wholesalers

(Collectors)

Who are seed collectors

• Seed centers• Community

seed centers• Wholesalers

(Collectors)• retailers

Who are seed sellers

1. Collections permit

2. Sales permit

3. Seeds certificate

Department of Agriculture

Ministry's Announcement

Plants Act

(1) Apply

Seed standard (see figure 3)1.Pure Seed2.Other Crop Seed and Other Varieties3.Weedy seed4.Germination5.Moisture

(3) Apply

(2) Apply

Note: 3 procedures.

• Seed standards Apply only for controlled seed Rice: highly regulated but new standard are lower

(Table 4.1)

Rice seed standard

Thai 2006 Thai 2009 USA 20121. % of Pure Seed - Pure Seed 98% 98% 99% (Minimum) - Inert Matter 2% 2% 1% (Maximum)2. Other Crop Seed and Other Varieties - Foundation None 0.03% 0.007% (Maximum) - Registered 0.10% 0.09% 0.013% (Maximum) - Commercial 0.20% 0.12% 0.026% (Maximum)3. Weedy/Red Rice - Foundation None None None (Maximum) - Registered None 0.03% None (Maximum) - Commercial 0.02% 0.06% None (Maximum)4. Germination 85% 80% 85% (Minimum)5. Moisture 12% 14% N.A. (Maximum)

Source: DOR and The California Crop Improvement Association

Table 4.2: Maize seed standards, Thailand and USA

Maize seed standard Thai 1993 USA 2011

1. % of Pure Seed

- Pure Seed 98% 99% (Minimum)

- Inert Matter 2% 1% (Maximum)

2. Other Crop Seed and Other Varieties None 0.5% (Maximum)

3. Weed seed None None (Maximum)

4. Germination 90% 90% (Minimum)

5. Moisture 12% 14% (Maximum)

Source: DOR and The California Crop Improvement Association

Enforcement of seed certification Thailand has the reasonably efficient enforcement

mechanism to detect lower-standard seed, deteriorated seed, contaminated seed.

Yet there are two weakness• The sampling method is loose• Though the enforcement is quite active, the penalty is

quite light.

Note that a few leading “rice” seed wholesalers (collectors) put in place a rigorous process of seed farm inspection

4.2 Seed provision system• Rice

The seed provision system had been dominated by the public sector (Figure 4.2). But recently the private sector has played increasing role in supplying the seeds used by farmers.

The National Research Center is responsible for the genetic improvement and production of foundation seed, while the main unit that produces the extension seeds is the public seed centers , who contract the farmers to grow the extension seed and registered seed (Figure 4.2).

The DOR helps the farmers to set up the “community seed centers) to produce commercial seeds

27 Research centers

Breeder seed

Foundation seed

Genetic improvement

23 Seed centers

Extension seed

Commercial seed

Contract farmers

2,199 Community Seed center

Commercial seed

Contract farmers

Collected* Collected*

97 Wholesalers(Collectors)

Contract farmers

Collected*

Retailers

CooperationRegistered Retailers

FarmersFarmers in near by

villagesFarmers

with good crop

Collected*

Sale

Supply

Sale

Note: *Collection regulation is explained in figure 2 Sale

SaleSale

Rice seed provision system is still dominated by the public sector

Figure 4.2: Rice seed system

4.3 Role of private rice seed suppliers

• The private seed suppliers have just entered the market since 1998 but their market share has increased sharply (to 35%) because of 4 reasons cultivated area of dry season rice surged after 1998 limited capacity of the government’s seed centers, i.e., budget &

small staff

• the Seed Division has a clear policy to encourage the private sector

• Enabling factor: seed certification and sale permit regulation The private seed suppliers focus on the non-photosensitive

seeds which are demanded by the commercial farmers who grow 4-6 crops in two years in the irrigated areas of Central Plains and Lower Northern provinces.

0.0

500,000.0

1,000,000.0

1,500,000.0

2,000,000.0

2,500,000.0

3,000,000.0

3,500,000.0

Planted area of dry-season rice

Community Seed centers

The first major private seed suppliers entered the market in 1998

Co-op seed centers

A private seed company entered the market

Source: OAE and DOR.

Rice seed wholesaler associatio

n

Seed Centers

Plants Act1975, 1992, 2007

Limitation of the public seed production capacity leaves room for the private sector

Figure 4.4: Seed used and capacity of government rice seed production

0

200000

400000

600000

800000

1000000

1200000

Capasity Seed used

The private seed suppliers focus on the non-photosensitive seeds for farmers

growing 4-6 cycles in 2 years

Non-Photo-

sensitive32%

KDML 10526%

RD.6 glutinous22%

Photo-sensitive

13%

Other Landrace8%

Seed used 2012 (1.1 M.ton)

Private78%

Seed centers

12%

Other10%

Seed used 2012 (0.5 M.ton)Non-Photosensitive

Source: Estimate form OAE 2008 and interview private seed producer.

(of which 11% from SCs)(0.4 M.tons)*

Figure 4.6: Market shares of photo-non-sensitive variety seed market

Market share of private rice seed suppliers is much larger than that of the public sector

Rice department8%

Agricultural co-opera-

tion2%

Community rice cen-

ters11%

Private sector15%

Self seed and gray market

64%

Seed production capacity in 2012 (1.13 M.tons)

Rice department8% Agricultural

co-operation0%**

Community rice centers

1%**

Private sector35%

Self seed and gray market

55%

“Most likely” actual market share in 2012 (1.13 M.tons)

Note: *and interview private seed producer. ** Chaowagul 2013 argues that only 10% of cooperative and CRCs are active in seed production.Source: Rice Department .

(0.4 M.tons)*

Figure 4.5: Capacity and market shares of rice seed

The private rice seed market has not only expanded, but become competitive because • The products are almost homogeneous • There are large number of small sellers and farmers can

save their own seeds• No entry barriers

Performance : the profit margin is only 1,000 baht per ton or less than 6% of the pledging price.• Many wholesalers are now entering the market to provide

the services of planting rice using the machine

4.4 Factors explaining the development of the maize hybrid seed market

The emergence of the private maize hybrid seed market was in response to the increase in the export of chicken in the early 1990s (see Figure 4.7) which followed the introduction of the modern poultry industry

Unlike the private rice seed market dominated by the public provision, the private maize seed market has been • (1) proactively developed by the closed cooperation of the

government and the private companies • (2) the introduction of hybrid seeds by private firms

MNCs use Thailand as seed production base, thanks to availability of plant breeders & skilled maize farmers

Export of frozen chicken surged

1991

1994

1997

2000

2003

2006

2009

-

200,000

400,000

600,000

Thailand export of poultry, froze and precooked (tons)

Cut and frozenPrecooked and semi-cookedTotal

Source: Ministry on Commerce

19611967

19731979

19851991

19972003

2009 -

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Poultry Meat Pig meatMilk

tons

Production of poultry meat 1961 – 2010

29

4.4 Factors explaining the development… (cont.) Two groups of policies and factors that helped support the

development of the private maize seed (see Ekasingh 2013) :• Direct policies• Enabling factors

The direct polices (see Figure 4.10)• Maize breeding investment and the establishment of the maize

research center in 1966• Seed development loan by USAID in 1975 • Investment promotion of maize seed production in the 1970s• Commercialization of Suwan1 variety (OPV) by Bangkok Seed

Industry Co. in 1979• National program of hybrid maize development in 1979• Supporting the private production of hybrid seed in 1990s, e.g., the

research of Thai firms depend on germplasm and free ride on research from NCSRC and CIMMYT (O. Ekasingh, 2013).

• Legislation of the plant protection law in 1999 and the use of trade secret clauses

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

2011

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

0.0

100,000.0

200,000.0

300,000.0

400,000.0

500,000.0

600,000.0

700,000.0

800,000.0

900,000.0

1,000,000.0

Production Export chicken

Promotion of maize cultivation : land distribution and price support 1950s

Maize breeding investment by RF and establishment of NCSRC 1966

Release of first OPV maize, Suwan1 1975

Seed Development Loan & by USAID 1975

Investment promotion of maize seed 1970s and commercialization of suwan1 seed by a private company, BSI-1979

National program of hybrid maize development 1979

Supporting private production of hybrid seeds 1990sand hybrid seed subsidize for farmers1994

CP released the single cross hybrid, CP.DK 888 1991

Source : O.Ekasingh,2013 and FAO.

Fig 4.10: Chronology of major maize policies

31

4.4 Factors explaining the development… (cont.)

The enabling factors• Land distribution to veterans and poor farmers to produce

maize in 1950s• Turning blind eyes to the illegal expansion of maize

production in the national forests since the 1970s• Scholarship and training of plant breeders in 1960s and

1970s generated skills and knowledge of breeders both in the public and private sectors

• Plants Act in 1999• Promotion of contract farming for the production of

broiler (by Thai companies) and maize seeds (by MNCs) • Investment privilege for the establishment of chicken

slaughtering house in the late 1970s

Structure and competition in the hybrid maize seed market

Structure: oligopoly but competitive• More than a dozen companies – both MNCs and Thai

Dominated by one largest Thai agri-firm (CP) and a few MNCs (Syngenta, Monsanto, Pacific, Pioneer)

• 7 companies have the export shares of 73.8% 3are Thai companies belonging to the CP group with combined market share of

21.85%

Competition• MNCs have huge competitive edge, i.e., using their own germplasm

from their parent companies and share research and seed production among regional branches

• Thai firms can make use of research and germplsm materials from the public research system and CIMMYT. A few Thai firms are also seed exporters.

• Thus there are competition both among big and small firms and between Thai firms and MNCs

As a result, farmers have alternatives in buying quality seeds.

5. Conclusion: take-home messages Seed provision policy: the government can create the

“competitive” markets for seed: smart regulation, facilitating factors, enabling environment, and reduce entry barriers

Fertilizer policy: neutral trade policy (i.e., duty-free) on fertilizer and minimal intervention will allow farmers to make rationale and efficient use of fertilizer

Public sector does not have to compete with private sector because of no serious market failure

Government still needs to provide information for farmers to make informed choices, e.g., regulating advertising, monitoring & enforcement of the “quality” and “standards” of commercial seed and fertilizer

Thank you