Crop Buying

[Mobaan]

For ease of description I just state the facts as they where given to me :

A fellow here in Issan has in 2 short years established an amazing little enterprize :

motel /guest house

bought 350 Rai .

Bought several large dumper trucks to deliver sugar cane and cassava to the mills

etc etc - Hats off for that accomplishment .

He tells me in order to meet his quota of X tonnes of sugarcane to the mill per month he buys the crops 4-6-8 month before they are ready for cutting at a certain cash price to the farmer ( mutually agreed ).

The crop then is his . The transaction is recorded and signed of by an official at the Amphur ( something we would call a notary public in the States ) . He then bears all the risks of crop production . But he also can and does have the opportunity to try to boost yields buy fertilizer applications ,irrigation etc . He provides his own crews to harvest the cane -so the farmer is all out of the picture until the field is cleared at which time it reverts back to him .

Now ,so I am told there exists the opportunity for someone (falangs included!!) with some free cash money to enter into this kind of arrangements and see a fairly short term large profit potential .

The same arrangements could be made with cassava .

We are lookig supposedly at 25 to 32 % profit margins . Almost too good to be true( espec a absentee farmer ) -and that is when one needs to be especially careful.

Has anyone ever heard of such a scheme or even been personally been involved with it -and has some comments ??

[lannarebirth]

Sounds like a nice business opportunity for a smart, hard working, well capitalized person who is skilful in the Thai language and customs. That is, if those persons who were doing it before he came along aren't too upset. Best of luck to him and I hope he creates a business model where all participants receive value.

[Maizefarmer]

This is an excellent subject for a thread Mobaan - good on buddy.

Selling "crop futures" is an old practise in Thailand. Trading 4 months in advance is a pretty safe bet as a good 75% - 80% of the growth has taken place.

However, I'd be cautious as far as 8months goes, because however you look at it, you are running through 1,5 seasons.

Something else has just struck me: you wouldn't (I'll rephrase that - I wouldn't) be buying as the crop is running into the dry season - especially if it's 8months in advance. Poor rainfall can easily shift a cane crop yield 25% - 30% over the dry season in its last 8months prior to harvest date. Running into the wet season would be a different thing, and so long as you factor in detaial like this, there is good potential in "futures trading" on a small scale with local crops - thats effectively what it is: futures trading - just make sure you are on top of and understand the factors that influence cane crop yields, pricing and logistics/transport - ESPECIALLY TRANSPORT.

Sorry to write it in capitals and bold, but this whole transport thing as far as sugar cane goes is a major major issue farmers face every harvest cycle. If you go back on the forum (Farming section), I wrote up 2 sets of notes last year or year before, about suger cane logistics - and just how important the whole issue of transport was in the overall nett profit that individual farmers realised. A farmer can have a perfect/excellent cane harvest, then loose all the expected profit come harvest, if he hasn't got the issue of transport sorted out.

When you add this ex-pat has his own transport, the venture you describe Mobaan , and the success he is having doesn;t suprize me. I would think a large portion of the crops this ex-pat purchases are from farmers who have being stung previous seasons - on the transport side of things.

The sugar cane transport subject becomes even more important if the cane crop has being burn't in the field. Burning makes harvest easier and quicker, and also enables trucks to carry more per load - meaning farmers' transport costs are reduced significantly. But - it is not without risk: leave a cane crop in the field too long after burning and it starts to deterioate. Indeed you can loose the crop if it rains!

In Thailand the biggest problem sugar cane farmers face is not having transport, or control over transport of their crop to transfer points and/or the mill. Profit from sugar cane cultivation comes as much from having the transport organised as it does from having an excellent yield. Read the notes I wrote up a year or so back (search "Maizefarmer" and "sugar cane" and/or "sugar cane logistics") and it'll become clear why/how this ex-pat is doing so nicely.

Edited August 25, 2008 by Maizefarmer

[PaddyThai]

Wouldn't you be required to have a work permit or maybe set up a company.

[Mobaan]

Thanks every body for the input . As far as I know he has it al legally square ,with official company etc ,

I will follow up on this ,maybe get my feet wet a bit .

My question aboput competition by the "established local business /money people/dealers was put to ease . Supposedly he has not faced any resistance .

Has anybody on this board ever rteally done something like this ?

[Gary A]

Thanks every body for the input . As far as I know he has it al legally square ,with official company etc ,

I will follow up on this ,maybe get my feet wet a bit .

My question aboput competition by the "established local business /money people/dealers was put to ease . Supposedly he has not faced any resistance .

Has anybody on this board ever rteally done something like this ?

Quite frankly, I'd rather take my chances at a casino.

[Maizefarmer]

The problem is firstly that there is not enough trucks to carry the harvest each season, and secondly those trucks that are avalible spend 20% of their time carrying the crop to the mill or relay point, but 80% waiting for it to be unloaded.

Go to any mill come harvest time and you will see truck after truck after truck - just waiting to be unloaded: and by waiting I mean miss your slot in the que and the wait can be as much as 18hrs, 24hrs or even a day and a half! That is frustrating for the truckowner because his truck ain;t earning any money, and its rustrating for the farmer who has his labourers sitting around doing nothing while waiting for truck to load.

There isn;t a problem with "established" local haulers - they don't care for competition as there is inevatably far more than they can carry in any case. Its the queing system at mills and relay points that is controlled by the local crooks and mafia type guys - and ex-pats tend to be more willing to fork out than do the Thai truck owners.

Cane haulage is a good earner - what is important is to have work for the trucks the rest of the year.

[Lickey]

Perhaps my experence of truck/bulk tipper driving in the UK might help opos,

If i had time [tacho] i would load up 25tons of sugarbeet at night,[or my boss would] then park the truck outside sugar factory gates, ready for a 6am opening, after catchweight weigh-in [catchweight meaning dirt and mud on the beet] I have a choice, go on platform and lift whole truck plus big water power hose to wash beet out, or tip normally, always the powerwash for me, beause next load would be intervention grain or rape-seed, and i would need a clean bulker trailer for this, sometimes coal for power stations, even meat&bone meal for animal feed extras and fertilizers.

Even in the UK, i was suprized to be choosen out of a queqe to go tip first, Whats this all about i asked, 'dont say anything to other drivers ,but your wife has just given birth' ?????? Oh,mmm ok, [my boss had phoned ]

The bottom line is, at Christmas, boss would give one helluva party at a good hotel,[all paid by him for workers and other companies]..

He said to me if you have money, buy land and property, never buy trucks!! he grew up a a chicken farmer and died a millionare,

Moral of the story is, look after the people who pay you, and a little bribe is not so bad, keeps the truck wheels turning and earning.

[Gary A]

Most of my family on my father's side were in the trucking business. I found it too boring and got white line fever. However, I did join in during the sugar beet season and the money was very good. Like everything else, you had to have a better system. The common ten wheeler farm trucks spent a lot of time in the field waiting to get loaded. We had a tractor with two trailers. I would spot one in the field and take the loaded one to the processing plant. At the end of the day, I usually hauled at least twice the tonnage that the ten wheelers hauled.

That said, an ambitious young man with some money could eliminate most long sugar cane hauls by building a small juice mill. Since ethanol production doesn't require the strict sanitary conditions the edible sugar production needs, some shortcuts could be taken. If I remember correctly, it takes eight tons of sugar cane to get a ton of sugar. Cane harvesters are very efficient but are rarely used here in Thailand because the small pieces of chopped stalks deteriorate too quickly thus they should be processed within 24 hours. The savings in diesel fuel and labor should make that a profitable operation. Manual cane cutting is VERY hard work and workers are becoming hard to find. In this area most cane cutters are Burmese or Laos and immigration is forced to turn a blind eye until the harvest season is finished.

[apw]

For ease of description I just state the facts as they where given to me :

A fellow here in Issan has in 2 short years established an amazing little enterprize :

motel /guest house

bought 350 Rai .

Bought several large dumper trucks to deliver sugar cane and cassava to the mills

......http://www.apw-resort.com/home/category/apw-news/

......http://picasaweb.google.de/apwresort.udonthani/APWTruckScale#

peter

[importford]

Manual cane cutting is VERY hard work and workers are becoming hard to find. In this area most cane cutters are Burmese or Laos and immigration is forced to turn a blind eye until the harvest season is finished.

We have exactly the same problem in Isaan:

workers are indeed becoming hard to find (or illegal workers???)

that is the main reason why we are trying to mechanize the sugar cane harvesting, the sugar cane planting, the cassava planting and harvesting...

concerning the sugar cane machines.

we know they are available in South America.

But we would be interested to see a machine in Thailand

[thaidrav]

Gary,

Have you had any progress mechanizing cassava planting and harvest?