Middlemen profit on rocky road that is the food-supply chain

 But on the very same pages I also find pictures and stories of protesting farmers, complaining about low prices for their produce. What's going on here?

Veteran agri-businessman Paichayon Uathaveekul had the explanation all laid out at a recent discussion at Thammasat University. At first it sounded like a familiar story of greedy middlemen taking advantage of poor farmers. But then his insights left an average consumer like me astounded.

Before the produce from farmers reaches us consumers, it travels through not one, or even two, but up to nine types of different middlemen, Paichayon says. Each makes profits from the same produce, so by the time the food from the farm arrives at the retail markets, the price is significantly marked up.

Disturbingly, the lack of adequate post-harvest handling and packaging leaves more than half of the produce spoiled and wasted. Paichayon showed a picture of a mountain of green cabbage waste on a truck that was destined for the rubbish dump.

"Farmers end up paying for these losses," the businessman says. "The produce from the farm might well be worth Bt10 per kilo, say, but the traders know the wastage is going to be huge, so they pay the farmers just Bt7 in order to make up for the loss."

It is often suggested farmers could increase their bargaining power by grouping together and transporting the produce directly to market themselves, cutting out the middleman and multiple transportation costs. But Paichayon says that is not so easy to implement as the traders operate within a tight network and will not buy from outsiders.

"It's not because they are mean people, but they have their own people in the supply network to take care of," he says. "Traders will buy from their network in different parts of the country to make sure there is no shortage of produce in the markets. For example, chillies from different provinces are harvested at different times. A farmers' group from one location could not maintain supplies to all markets in the same way every day."

While farmers get more or less the same price for their produce, their production costs don't always remain so constant. The costs of chemical fertilisers, pesticides and labour have already gone up because of rocketing oil prices and the cost of living. Additionally, farmers are consumers themselves, so they too have to pay more for their food and other essentials.

Dr Nipon Poapongsakorn, dean of Thammasat University's Economics Faculty, looks at the problem from a slightly different angle. He argues farmers own the land, the key asset for food production. The high market prices for food and biofuels are an incentive for them to produce more.

"The ratio of land per head in Thailand has actually increased because there are fewer people in the farm sector," he said. "The problem is a lack of labour and water, and this is where the government needs to step in and help."

Nipon expressed deep concern for the burden put on the urban poor by the higher cost of foodstuffs. His suggestion is to have the government give food coupons to those most in need to help ease their burden. But Poonsap Suanmuang, who works with labour groups, decried the idea, contending it would turn the poor into beggars. A fair increase in the minimum wage is a better solution, she says.

Prayong Doklamyai from the Northern Farmers Network disagreed with Nipon that farmers own the land. He said Thailand has only 120 million rai fit for agriculture, but 90 per cent is owned by the rich. To him, the only way to help farmers is to tax the rich for the land they leave unproductive.

Paichayon says farmers are also losing the land they own while climate variability caused by global warming is adding more uncertainty. Debt accumulation is becoming so large that they eventually lose their land to banks or loan sharks.

"Agri-businesses are waiting to take over the land and small farmers will disappear from Thailand," Paichayon says.

If that is the case, are we ready to leave our food production in the hands of a few giant agri-businesses?