Crystal Balls And Farang Farmers

[PaddyThai]

Hi Farmers,

In the last few weeks the number of posts to this forum seem to have dropped markedly. Perhaps everyone is distracted by the global economic situation. If that is the case it would be interesting to know what changes the members plan to make in their lives as a result. So treat this topic as an opportunity to exchange survival thoughts.

As a starter we are a disparate group, with members such as Maizefarmer whose 1500 Rai dwarfs us all, and many like me with under 20 Rai that now see their "perfect plan" now undercapitalized. We are also split between those that live in Thailand and those for whom Thailand is an occasional oasis for a period of time each year.

General opinion I hear is that Thailand, internally at least, will begin to feel the effects more at the grassroots level over the next months. What is going to happen? Has it effected you already? What changes will you make? How will the future pan out?

Speaking for myself the noticeable effect over the last 18months has been the cost of energy (diesel). That though is now going to start dropping - Brent Crude hit $65 a barrel a few days back - compared with the $145 it touched on a few months back.

These lower price contracts will start landing in Thailand over the winter, and we can expect to see a drop in the price of road fuels.

But make no mistake about it; the cost that fuel rose to over this last summer was a shocker.

What impact will the international credit crunch have on Thailand? Good question: To start with, it will be delayed by a good 12months - 18months (as it is in respect of most developing countries with a manufacturing base).

Its primary impact will be on manufacturing: Thailand can expect to see a drop in Western consumer demand for branded goods, and that will reflect on factory production throughout South East Asia. Making the situation worse is the strength of the Baht against the $ - today at around Baht35. It was worse - it dropped to around 29 a few weeks back. If the trend back towards 40 continues, that will be good.

My opinion: hold onto to your forex till at least 39 - 41 - now is not the time to be converting forex into Thai Baht, and for heavens sake - don't go buying Thai property using forex. If it goes that way (i.e. 39/41) we can (I think) avoid another devaluation. But so long as it sits in the high20's and low 30's there is considerable pressure on Thailand's balance of payments, manufacturing will be expensive and the downturn in manufacturing (of Western brand name goods) will pressure the central bank to look hard at devaluation again..

That's my take on it guys.

Let me touch on the issue of ex-pats farming in Thailand. Other than for the exchange rate, which determines your capitalization, I think the issues that determine ex-pat farming success are of a more "down to earth" nature, and have little to do with the status of international finance!

While the OP makes the observation between myself and other ex-pats, its perhaps a good idea I put that difference into context.

Yes, my farm is large by Thai standards. In contrast to most ex-pats who followed other careers before coming out to Thailand, I have been here my entire adult/working life (indeed, I spent large parts of my childhood here as well, as both my parents and grandparents lived and worked in Thailand). Farming and Thailand for me was not a career/lifestyle change. However, I do share with many other ex-pats the "relationship with a Thai girl" as a part motivating factor in my decision to settle in Thailand. Rather, it was my language skills (as a result of spending large parts of my childhood in Thailand) that prompted my higher education sponsor to send me to Thailand to work in the 80's, and it was those same language skills that brought myself and the future wife together (who was studying in the US at the same time as me).

I never qualified as a farmer. I qualified as an agricultural engineer. Farming was a passion, though my training as an Ag engineer has played a large role in my farming success, so too has my wife's support, and above all, her fathers support - who has acted as guarantor for bank loans/mortgages I have had to take out over the years.

There are 2 points in what I have shared above that I think go a long way towards determining weather or not an ex-pat is going to succeed in Thailand (farming, that is). If you came here firstly on the basis of a relationship with a local lass, would you be motivated to continue farming if that relationship folded?

If one can answer yes to that, then good for you - you have one of the requirements satisfied (requirements to succeed that is). My personal feeling has always been that those who set out to Thailand on the basis of a relationship with a local girl, and then take up farming as a career are not going to make much of it.

I can just hear the screams of disagreement ..................... let me put it this way: there's a big diff between running a small holding to generate enough income to pay for the weekly beer, local bills ect and generate a little extra ....... If That's your profile (and perhaps you have a pension income from back home to support you as well), no prob's - you can get by just fine.

This is not the same as been a career farmer. Its those ex-pats who come out to Thailand in the anticipation that they are going to farm to generate enough income to pay the mortgage, support land purchase, purchase equipment, have and support a family, take the family away once a year to where ever for a holiday, save for the kids higher education - and save sufficient for you & yours retirement.

Now farming takes on a very different tone ............

It requires capitalization, education/training/experience - it is no less skill based than law or medicine - and however honorable and ambitious ones intentions maybe, the truth of the matter, is that for most ex-pats farming in Thailand, or attempting to do so at this level, it will be a "tempory life experience". Most will move on at some point down the line for some or other reason (usually - but not always - when the relationship with the partner starts to crumble) - which is why I say: would you carry on farming in Thailand if you were not in a relationship with a Thai? If the answer is no, then it's my opinion (note: my opinion) you shouldn't start in the first place - there's a load of other things to do.

This is not a criticism guys - it's a straight forward observation. As it happens I take my hat off to all ex-pats who try farming. As all TV Farming in Thailand members know, it is not easy. It requires lots of hours and a lot of hard work to make a success of it. It takes balls.

Notwithstanding weather or not you agree with what I have said, it still stands that I do not believe now is the time to be starting any Ag type project if you are using forex to capitalize that project.

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Either is going to release for you significantly more TB than you are going to get at the moment. Hang onto your forex for the time been if you can. This has to be the best piece of "survival" advice I can add to the thread.

Very interesting and informative piece maizefarmer.

I notice you re-iterated some points you made in previous posts.

My own view is that the many small time farmers or 'hobby' farmers that are in Thailand are probably in a much better position to survive the Financial and economic chaos currently unfolding, than those in Cities in the West.

As long as there's fish in the pond, rice in the store room (or fields), fruit on the trees and veggies in the field you're not doing too bad. Presuming you got a few euros stashed away or a pension coming in.

[Maizefarmer]

Hi Farmers,

In the last few weeks the number of posts to this forum seem to have dropped markedly. Perhaps everyone is distracted by the global economic situation. If that is the case it would be interesting to know what changes the members plan to make in their lives as a result. So treat this topic as an opportunity to exchange survival thoughts.

As a starter we are a disparate group, with members such as Maizefarmer whose 1500 Rai dwarfs us all, and many like me with under 20 Rai that now see their "perfect plan" now undercapitalized. We are also split between those that live in Thailand and those for whom Thailand is an occasional oasis for a period of time each year.

General opinion I hear is that Thailand, internally at least, will begin to feel the effects more at the grassroots level over the next months. What is going to happen? Has it effected you already? What changes will you make? How will the future pan out?

Speaking for myself the noticeable effect over the last 18months has been the cost of energy (diesel). That though is now going to start dropping - Brent Crude hit $65 a barrel a few days back - compared with the $145 it touched on a few months back.

These lower price contracts will start landing in Thailand over the winter, and we can expect to see a drop in the price of road fuels.

But make no mistake about it; the cost that fuel rose to over this last summer was a shocker.

What impact will the international credit crunch have on Thailand? Good question: To start with, it will be delayed by a good 12months - 18months (as it is in respect of most developing countries with a manufacturing base).

Its primary impact will be on manufacturing: Thailand can expect to see a drop in Western consumer demand for branded goods, and that will reflect on factory production throughout South East Asia. Making the situation worse is the strength of the Baht against the $ - today at around Baht35. It was worse - it dropped to around 29 a few weeks back. If the trend back towards 40 continues, that will be good.

My opinion: hold onto to your forex till at least 39 - 41 - now is not the time to be converting forex into Thai Baht, and for heavens sake - don't go buying Thai property using forex. If it goes that way (i.e. 39/41) we can (I think) avoid another devaluation. But so long as it sits in the high20's and low 30's there is considerable pressure on Thailand's balance of payments, manufacturing will be expensive and the downturn in manufacturing (of Western brand name goods) will pressure the central bank to look hard at devaluation again..

That's my take on it guys.

Let me touch on the issue of ex-pats farming in Thailand. Other than for the exchange rate, which determines your capitalization, I think the issues that determine ex-pat farming success are of a more "down to earth" nature, and have little to do with the status of international finance!

While the OP makes the observation between myself and other ex-pats, its perhaps a good idea I put that difference into context.

Yes, my farm is large by Thai standards. In contrast to most ex-pats who followed other careers before coming out to Thailand, I have been here my entire adult/working life (indeed, I spent large parts of my childhood here as well, as both my parents and grandparents lived and worked in Thailand). Farming and Thailand for me was not a career/lifestyle change. However, I do share with many other ex-pats the "relationship with a Thai girl" as a part motivating factor in my decision to settle in Thailand. Rather, it was my language skills (as a result of spending large parts of my childhood in Thailand) that prompted my higher education sponsor to send me to Thailand to work in the 80's, and it was those same language skills that brought myself and the future wife together (who was studying in the US at the same time as me).

I never qualified as a farmer. I qualified as an agricultural engineer. Farming was a passion, though my training as an Ag engineer has played a large role in my farming success, so too has my wife's support, and above all, her fathers support - who has acted as guarantor for bank loans/mortgages I have had to take out over the years.

There are 2 points in what I have shared above that I think go a long way towards determining weather or not an ex-pat is going to succeed in Thailand (farming, that is). If you came here firstly on the basis of a relationship with a local lass, would you be motivated to continue farming if that relationship folded?

If one can answer yes to that, then good for you - you have one of the requirements satisfied (requirements to succeed that is). My personal feeling has always been that those who set out to Thailand on the basis of a relationship with a local girl, and then take up farming as a career are not going to make much of it.

I can just hear the screams of disagreement ..................... let me put it this way: there's a big diff between running a small holding to generate enough income to pay for the weekly beer, local bills ect and generate a little extra ....... If That's your profile (and perhaps you have a pension income from back home to support you as well), no prob's - you can get by just fine.

This is not the same as been a career farmer. Its those ex-pats who come out to Thailand in the anticipation that they are going to farm to generate enough income to pay the mortgage, support land purchase, purchase equipment, have and support a family, take the family away once a year to where ever for a holiday, save for the kids higher education - and save sufficient for you & yours retirement.

Now farming takes on a very different tone ............

It requires capitalization, education/training/experience - it is no less skill based than law or medicine - and however honorable and ambitious ones intentions maybe, the truth of the matter, is that for most ex-pats farming in Thailand, or attempting to do so at this level, it will be a "tempory life experience". Most will move on at some point down the line for some or other reason (usually - but not always - when the relationship with the partner starts to crumble) - which is why I say: would you carry on farming in Thailand if you were not in a relationship with a Thai? If the answer is no, then it's my opinion (note: my opinion) you shouldn't start in the first place - there's a load of other things to do.

This is not a criticism guys - it's a straight forward observation. As it happens I take my hat off to all ex-pats who try farming. As all TV Farming in Thailand members know, it is not easy. It requires lots of hours and a lot of hard work to make a success of it. It takes balls.

Notwithstanding weather or not you agree with what I have said, it still stands that I do not believe now is the time to be starting any Ag type project if you are using forex to capitalize that project.

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Either is going to release for you significantly more TB than you are going to get at the moment. Hang onto your forex for the time been if you can. This has to be the best piece of "survival" advice I can add to the thread.

Very interesting and informative piece maizefarmer.

I notice you re-iterated some points you made in previous posts.

My own view is that the many small time farmers or 'hobby' farmers that are in Thailand are probably in a much better position to survive the Financial and economic chaos currently unfolding, than those in Cities in the West.

As long as there's fish in the pond, rice in the store room (or fields), fruit on the trees and veggies in the field you're not doing too bad. Presuming you got a few euros stashed away or a pension coming in.

Thats true - farmers in Thailand (ex-pats and Thais) on a local economic basis are probably less exposed to the credit crunch than are their Western coutner parts.

Yes - both retirement/pension has featured high on my list of priorities over my whole working life. Its offshore and safe.

[slapout]

My take on farming and its future for expats in Thailand is tighten your belt. Farm Prices for farmer (rice) is going down, the gasohol plants are not coming on line as predicted, many fruit and veggie market prices (to farmer) are already at or below production cost. That said, I doubt if any of us invested in farm land as an individual, to make a living. Those who come here on retirement are probably looking for a hobby, or in some cases a earner for Thai family (get them out of our hair) If you have a bonified retirement it did not come from farming in Thailand. I do not see any retired auto worker, engineer, doctor, etc going into to farming to make a living. Most of us looked at the purchase of land in Thailand as an investment for family which we can participate in while we are still puttering around and breathing.The young bucks who would entertain the thought of farming here had better have a job paying a living wage, thus they will be in the same boat as us old retired farang, just younger while having a outside income to support their farm venture. Now that I have stirred up a few people, I admit some small farmers???? have found a nitch with specility items but they are the exception as they had the required experience, guidence, finances, and location to make their ventures work. The reason the young people have been leaving the farm world wide over the past 50 to 60 years is they can not afford the diverse equipment/livestock investment required to handle the farm size needed to have a lifestyle comparable to a blue collar worker, much less the so called educated elite. Thailand is getting to this stage even though the farm sector is comparable to the substance farms 60+ years ago in the rest of the world. I reckon the global financial problems will have little effect on my farm unless my retirement funds go broke, then its no more international school for kids, move to the farm and subsist like my grandparents did.

[IsaanAussie]

Hi all,

There have been some interesting points made here but a general theme emerges that farming is a supplementary income source for most. There are exceptions such as a life of farming in Thailand for MF and from personal knowledge of a few whose small pensions allow life as a farmer to be continued much as it was in their homeland.

For me, retirement is achieved when you're in a box grasping the lily. Recent events could not have been timed any worse and holding AUD is not the place to be. Yet roll the two factors together tells you what motives me and always has. The thrill of the chase.... Where there is a will, there is a way, all I have to do is find it.

Slapout, you indicated that if all else failed you would settle for a subsistence life on the farm. For me, I wont settle for that, I welcome it. As you said, that is what farming has been all about for many years and it is unlikely it will change any time soon. Sustainable subsistence.... LIFE.

Rise to the challenge and leave the bears and the bullshit behind.

Isaanaussie

The Battler's Buddy

[Mali1964]

In the short/med term the annual rice harvest should show a good return around here (Sisaket), farm gate prices are 50% up on last year @ Bt14/kilo whilst diesel is now only slightly higher. The rains seem to have been OK for most so the rice farmers should show a comparatively good return.

From PTT website 23/10/2007 diesel 27.74 today 23.44 so some what cheaper than a year ago so we should be expecting the farmers to haggle down the harvest price even futher now.

http://www.pttplc.com/en/nc_oi.aspx

[IsaanAussie]

Mali,

You raise an interested issue here when quoting "pnustedt", that being the government price guarantee of Bt14/kilo. That promise has already been reneged down to 12 Baht and there is no evidence to suggest that the rice traders will even pay that. Remember, those same crops were fertilised at twice the price of the 2007 crop. Who knows where a "fair return" will be for people like PN on his 4 million baht investment in two stainless harvesting wonderments, let alone for the rice farmer who may employ him. Two things are certain, one limited funds to use subcontractors, and secondly, many more machines vying for the business.

When I spoke to PN last, he was going to wait and see what prices were being charged and then make sure he was competitive. As raised by others on this thread, farm produce prices are declining and will continue to do so. Return on investment this year will be negative for most. As PN said, any small return is better than none.

I pity those that listened to the hipe earlier this year and borrowed against potential returns. Sadly I fear, NPL's, repossessions and foreclosures appear the short term future for many. I doubt people will seriously consider a finance ministerial comment of the US problems not coming here because they are 12 hours away as informed comment.

Isaanaussie

Edited October 25, 2008 by IsaanAussie

[Mali1964]

Mali,

You raise an interested issue here when quoting "pnustedt", that being the government price guarantee of Bt14/kilo. That promise has already been reneged down to 12 Baht and there is no evidence to suggest that the rice traders will even pay that. Remember, those same crops were fertilised at twice the price of the 2007 crop. Who knows where a "fair return" will be for people like PN on his 4 million baht investment in two stainless harvesting wonderments, let alone for the rice farmer who may employ him. Two things are certain, one limited funds to use subcontractors, and secondly, many more machines vying for the business.

When I spoke to PN last, he was going to wait and see what prices were being charged and then make sure he was competitive. As raised by others on this thread, farm produce prices are declining and will continue to do so. Return on investment this year will be negative for most. As PN said, any small return is better than none.

I pity those that listened to the hipe earlier this year and borrowed against potential returns. Sadly I fear, NPL's, repossessions and foreclosures appear the short term future for many. I doubt people will seriously consider a finance ministerial comment of the US problems not coming here because they are 12 hours away as informed comment.

Isaanaussie

I also have 1 KPI tractor the smaller 1 than PN but what is over looked here when buying these machine,s is depreciation they are about nackererd after 6000 Rai most say 3 years thats 2000 Rai per year we managed 1500 rai last year so 2000 is going some, at least 2 harvests thats around 300 baht per rai just in depreciation.

So even without the market tensions discused here there,s not as much money to be made from harvesting as were lead to belive.

[pnustedt]

I've started taking orders for harvesting at Bt600/rai which appears to be the going rate - about the same as the end of harvest last year. Harvesting has started in limited areas for early rice here, it will start in earnest at the end of next week. The farm gate price here is Bt14/kilo (50% up on l/yr). The Generli (sp.) harvesters which I have will last more than 3 years or 6,000 rai. A 3-yr-old m/c in good con. with reasonable hrs will still fetch Bt1mill. I should recoup my investment in less than 5 yrs. A depreciation over 7 yrs for accounting purposes would not be unreasonable.

There is a workshop a few kms. out of town which recons harvesters - they strip down old ones and rebuild and sell at a fraction of the new cost, the Generli's are the m/c's of choice and 7-yr-old m/c's are being restored for production. Incidentally, I am told by a dealer that Generli have a new smaller m/c out at Bt1.5mil and I have been promised an early demo. but have yet to see it.

One report I am hearing is that Kubota are selling harvesters to paid for next year - there should be quite a few second hand ones on the market in 2009.

[Mali1964]

I've started taking orders for harvesting at Bt600/rai which appears to be the going rate - about the same as the end of harvest last year. Harvesting has started in limited areas for early rice here, it will start in earnest at the end of next week. The farm gate price here is Bt14/kilo (50% up on l/yr). The Generli (sp.) harvesters which I have will last more than 3 years or 6,000 rai. A 3-yr-old m/c in good con. with reasonable hrs will still fetch Bt1mill. I should recoup my investment in less than 5 yrs. A depreciation over 7 yrs for accounting purposes would not be unreasonable.

There is a workshop a few kms. out of town which recons harvesters - they strip down old ones and rebuild and sell at a fraction of the new cost, the Generli's are the m/c's of choice and 7-yr-old m/c's are being restored for production. Incidentally, I am told by a dealer that Generli have a new smaller m/c out at Bt1.5mil and I have been promised an early demo. but have yet to see it.

One report I am hearing is that Kubota are selling harvesters to paid for next year - there should be quite a few second hand ones on the market in 2009.

Have you done any major work on your tractors yet i mean just remove the tracks for inspection like we did the ware is frightning for 1 year old,cost's are expensive to maintain after 3 years old.

I have 2 second hand one,s in my area the dealer's want to clear as part ex price 250,000 & still standing idle, You can not sell these machine's on at a good price, 30% loss a year at the very least.

The only way is to take care & recondistion make them work as many rai as possible but this also come's with a heavy price tag, the wear rate is nothing like i've seen on any machine before, now i understand why only a 1 week to 3 month if ya lucky warrenty is given.

The only thing in our favour right now is the price of diesel at around 100 baht per Rai, but add in depeciation, cost's of the six wheeler hino, driver, middle man, & maintence costs without any major over hall work that is required, cheating farmers on there Rai count & diesel theft if you turn ya back on the driver for 5 min. You will find this soon adds up to little profit for a lot of agro.

but i wish you the best of luck with this harvest.

[Maizefarmer]

........ a slightly different take on the subject of Maintanance: firstly, not to be skipped on - and even less so with Thai made machinary. Thai made harvesters are crude machines in many respects. For every hour spent on maintanence 10hrs can be added to working life - or something like that.... and of all the consumables used in maintenance your 2 most important are:

- monitoring of and regular change of oil

- change of oil filter

There are 2 problems in rural Thailand associated with oil and filters - the proliferation of counterfeit oil and counterfeit filters (hydrualic, engine oil and fuel filters). because the oil comes from a branded tin/container is no assurance it is genuine - cleaned/filtered old oil is commonly presented in counterfeit containers as new oil. Brand name filters suffer much the same problem. I don;t remember offhand the percentage figure, but its something like 50% of all ag machine filters sold in rural Thailand are counterfiet and will not protect your engine.

The biggest give away to counterfeit oil and filters is a comparison between packaging and graphics: comparing counterfiet printing on a suspected counterfeit product with a known genuine product will almost always show spelling and/or typsetting erros on the counterfeit artical. A good idea is to have a known genuine filter (packaged) and a known genuine container of oil. Side by side with counterfeited oil and filters there is a very good chance you will find spelling errors on the the counterfeit product - usualy somewhere in the small print. That of course is easy for you and I to notice (because there is usualy English typeface on many of the oil filters/packaging), but for rural Thai's it is usualy close on impossible to notice - hence they so easy to introduce into the retail sales chain.

The other give away of course is the cost: the counterfiet will usualy be priced up much cheaper than the genuine artical, but in reality the saving is zero - a filter with no filter paper inside will end up costing you a lot in engine repairs.

The best way to avoid the problem is not avoid purchasing from small rural shops and to confine your purchase of oil and filters to authorised dealers (though that too I have to say is no garuntee as authorised dealers have on many occassion been prosecuted for selling coutnefeits branded as genuine).

In short: the 2 most important consumables related to regular maintainance and the life of your machine, are the 2 consumables which are potentialy the most likely to land up doing your machine the most harm - if not selected with care.

Buy 2 filters - and strip one down (break it open) to compare it with a known genuine filter - other than for text/typsetting errors the counterfeits are usualy missing filter paper - then use the 2nd one (purchased at the same time from the same source), if it ties in with the known genuine, otherwise dump and go looking for a genuine filter.

Edited October 25, 2008 by Maizefarmer

[IsaanAussie]

For me the last few posts show farmers that are serious. There is no emotional help the family, they are talking nuts and bolts business outcomes. The realities of that so scarce a commodity here in the Thai farming community, money. I applaud your enterprise in investing in the equipment and as we say in Australia "having a go", good luck.

At 600 Baht per rai, you have my business my friend and as much more as I can point your way to justify the small acreage I have (around 13 rai). In terms of perspective, it has cost me 5-6000Baht for locals to hand cut our rice in past years, then a few bags of the outcome go to the guy with the thresher, on and on goes the drip....

End result for bagged rice at your rates...1. economical...2. under my control Sounds good to me

Isaanaussie

[Mali1964]

For me the last few posts show farmers that are serious. There is no emotional help the family, they are talking nuts and bolts business outcomes. The realities of that so scarce a commodity here in the Thai farming community, money. I applaud your enterprise in investing in the equipment and as we say in Australia "having a go", good luck.

At 600 Baht per rai, you have my business my friend and as much more as I can point your way to justify the small acreage I have (around 13 rai). In terms of perspective, it has cost me 5-6000Baht for locals to hand cut our rice in past years, then a few bags of the outcome go to the guy with the thresher, on and on goes the drip....

End result for bagged rice at your rates...1. economical...2. under my control Sounds good to me

Isaanaussie

You must also take into account the loss of rice when done by hand i belive this can be in the region of 10/15% loss where as the tractor is around 3/5% loss & in 3 hour's (13 rai) your rice is ready for the mill or dry & store whatever your plan's are.

[slapout]

The oil and filter problems noted above should be a non issue for the owner of large farm machinery. These two items can be purchased from the dealer and a oil jobber (wholesaler) in quanity to last thru the season/year. On second thought, this is Thailand. We always bought motor oil by 55 gallon barrel and filter, (fuel/oil/air) either from the dealer or a supply store, which carried manufactor brand and clones. We did cut a clone open one time (made in China) and they used a roll of tolit paper as the filter material. This was when the filters became throw away. A properly serviced diesel engine can just keep on going, if handled correctly. 15000 to 20000 hours is common. It would not surprise me if the old filters which dealers replace, are not resold after a clean up.

[pnustedt]

Have you done any major work on your tractors yet i mean just remove the tracks for inspection like we did the ware is frightning for 1 year old,cost's are expensive to maintain after 3 years old.

Yes - this week I replaced the main track sprocket on my older m/c which had a broken cog. Cost Bt3.4K. I also got a new track (about Bt20K) and got the old one reconned (Bt11K) for a spare. We are going over the m/c's thoroughly, the objective is to ensure that there are no breakdowns during the too short harvesting period.

[Lickey]

Preventive Maintainance at its best??? really? of all the things i could leave on our farm would be an oil can and a grease gun! they would never be stolen, because thais dont know what they are for!

I dont have any machinery to let me down, only a few steel tools with bamboo handles, which i can easily replace, if we need a tractor, its hired in on a pay by rai basis, and the driver has a bad memory if there is a beer and some baccy at the end of the day,

If you machinery owners are worried about "oil filters ect" fit an after market centrifuge filter system, They can be bought for any application, after 35 years in comercial engine rebuilds, Scania engines were the best in the way of less worn components, because of the centrifuge filtering system, i cant think of any other system that looks after the oil better.This site mey help,

Cheers, Lickey.

http://www.baplpune.com/prod.htm

[pnustedt]

Preventive Maintainance at its best??? really? of all the things i could leave on our farm would be an oil can and a grease gun! they would never be stolen, because thais dont know what they are for!

I have to say that this is not my experience at all. I have a number of quite expensive tools which are available for others to use, e.g. the local kids use my compressor to blow up their cycle/motorcy tires, I have the only mobile welder in the village, etc. and when my m/c's go out they go with (and come back with) a set of tools.

We have set routines for pre-running m/c's which are followed diligently and this has been my experience when working with operators from various parts of Thailand.

[Smithson]

Interesting regarding the harvesters, my neighbors are very excited about these, saying anyone who buys one is guaranteed to get rich. I think we'll see a lot more of these, Thais loves gadgets and anything that brings status.

What impact will the international credit crunch have on Thailand? Good question: To start with, it will be delayed by a good 12months - 18months (as it is in respect of most developing countries with a manufacturing base).

Its primary impact will be on manufacturing: Thailand can expect to see a drop in Western consumer demand for branded goods, and that will reflect on factory production throughout South East Asia.

This is interesting, I would have thought it would hit sooner. My business is export and this is always our busiest time of year. However, I'd been expecting a downturn shortly after Xmas.

- The Baht is going to get significantly weaker

- the Baht will devaluate

I hope you're right. The Baht seems invincible, take a look at how it's strengthened over the past 2 years, despite the problems with the government.

[THAIPHUKET]

I picked this up from today´s Bkk Post

The government also aims to encourage farmers to unite as agricultural co-operatives to establish their own silos and learn how increase their bargaining power.

How are you selling at present?

Would it make sense to stimulate your village / area into something like this assuming that you yourself plus the community profit?

What does it take to build a silo which functions ?

[IsaanAussie]

I picked this up from today´s Bkk Post

The government also aims to encourage farmers to unite as agricultural co-operatives to establish their own silos and learn how increase their bargaining power.

How are you selling at present?

Would it make sense to stimulate your village / area into something like this assuming that you yourself plus the community profit?

What does it take to build a silo which functions ?

Hi Phuket,

As we would say in Oz, that is really "feeding the chooks" (casting your seed on the ground). Thailand is full of agricultural co-ops. They are controlled by the same chinese thai trading interests that buy at rock bottom farm gate prices from farmers and sell inputs to the farmers at retail. The same interests that sell finance to the farmers at 3baht rates (3% per month). Membership of the co-op is often unaffordable to the average farmer and some shun the rules and restrictive trading regulations that some of the co-ops impose.

I would like to see the background work that went into that government statement. I would think that anyone who has lived in a Thai village would question any possibility that would work. Do they honestly think that the likes of CP can be tackled by a group of rag arsed thai farmers? Study Thai agricultural history and is apparent that few things have changed since the days when slave grown wetland rice funded the God-Emperor kingdoms of a few hundred years ago.

Rhetoric my friend, nothing but a press opportunity..... read the attached final chapter of a book published about 2001.

thai_ch15.pdf

Isaanaussie

[JungleBiker]

I thought I might ask how much marketing or even research effort went into the efforts mentioned above? Or for that matter into the non "Backyard Farming to quote GD" income making schemes that we farangs get involved with? How do you judge viability or is it just for fun?

Isaanaussie

Rather than undertaking serious research, I think it's a matter of seeing an opportunity and taking advantage of it. Having a longer term vision is good, but taking small steps at a time and not investing too much is important. In my case I'd be happy to make the petrol money, if I can achieve that then I'll set a new goal.

Look at JB's example, I bet his wife has an interest in ornamental plants and things took off from there. It's much easier to devote time to something you enjoy and you'll be happy with small gains. Again, the quality of life aspect comes in.

I've seen a lot of ppl come up with fancy business plans and models, but these things are usually not suited to the 'uniqueness' of LOS.

It's also good to have a balance. I'm full of crazy ideas and will lunge at anything. My Mrs. on the other hand is cautious and doesn't believe anything will work. 90% of my ideas are crazy, so I'm lucky she's around to pick holes in them.

Hi IsanAussie,

Regarding my wife's business (which I started for her) I didn't write a business plan but I did research the market - nothing fancy... I knew of some interesting plants that were selling in garden centers in the UK and then tried to find them here in Thailand. I did find some in one shop in Chatuchak Market, but they were imported from the US and therefore selling at high prices. I knew I could import them far cheaper from a lower cost country (I used the internet to find suppliers). Then as Smithson says about "taking small steps", I started with a small shade house using cheap materials (bamboo and eucalyptus) to grow the first batch of plants. The shade house started to fall apart about one year later but by that time the business had proven to be profitable. So we moved to a new house with more land so that we could build a bigger shade house and this time we used more durable materials (steel pipes and cables); that was 9 years ago and that shop in Chatuchak is now our biggest customer. We wholesale not retail.

JB.

[IsaanAussie]

I thought I might ask how much marketing or even research effort went into the efforts mentioned above? Or for that matter into the non "Backyard Farming to quote GD" income making schemes that we farangs get involved with? How do you judge viability or is it just for fun?

Isaanaussie

Rather than undertaking serious research, I think it's a matter of seeing an opportunity and taking advantage of it. Having a longer term vision is good, but taking small steps at a time and not investing too much is important. In my case I'd be happy to make the petrol money, if I can achieve that then I'll set a new goal.

Look at JB's example, I bet his wife has an interest in ornamental plants and things took off from there. It's much easier to devote time to something you enjoy and you'll be happy with small gains. Again, the quality of life aspect comes in.

I've seen a lot of ppl come up with fancy business plans and models, but these things are usually not suited to the 'uniqueness' of LOS.

It's also good to have a balance. I'm full of crazy ideas and will lunge at anything. My Mrs. on the other hand is cautious and doesn't believe anything will work. 90% of my ideas are crazy, so I'm lucky she's around to pick holes in them.

Hi IsanAussie,

Regarding my wife's business (which I started for her) I didn't write a business plan but I did research the market - nothing fancy... I knew of some interesting plants that were selling in garden centers in the UK and then tried to find them here in Thailand. I did find some in one shop in Chatuchak Market, but they were imported from the US and therefore selling at high prices. I knew I could import them far cheaper from a lower cost country (I used the internet to find suppliers). Then as Smithson says about "taking small steps", I started with a small shade house using cheap materials (bamboo and eucalyptus) to grow the first batch of plants. The shade house started to fall apart about one year later but by that time the business had proven to be profitable. So we moved to a new house with more land so that we could build a bigger shade house and this time we used more durable materials (steel pipes and cables); that was 9 years ago and that shop in Chatuchak is now our biggest customer. We wholesale not retail.

JB.

JB,

Well done. It doesnt take much but it does require an effort to know if you are making headway. Perhaps a way of defining the different approaches we TV farmers take is to add

A farmer, is a man who makes his money on the farm and spends it in town. An agriculturist is a man who makes his money in town and spends it on the farm.

Who knows?

Isaanaussie

[IsaanAussie]

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Either is going to release for you significantly more TB than you are going to get at the moment.

I would like to spur the "future" debate a little with the above extract from Maizefarmer. I agree that one or the other will happen and would be interested in other views on

(a) which is the more likely?

( what are the relative consequences of the two options?

It would appear that the government is allowing the baht to float, much as they are drifting along at the moment. It is unlikely they will ever devalue out of choice. If you remember the fury hurled at the IMF when devaluation was forced on Thailand after 1997, despite the fact that it was a "rescue" package.

Since 80% of GDP in derived from export, the baht simply must go down. Australia for instance would benefit if it stays up to decrease the trade deficit, imports into Oz must decline if 30% increases continue. Britian is in the same position.

Since public opinion (under many different guises) effects things here so much, will the next major crisis be caused by the mob, currency spectulators, or just a lack of effective government?

Isaanaussie

[Soi224]

What do you folks think about land? Will the prices on farmland in general suffer due to the global crises? What is the likelihood there will come a magic combination of a rising dollar and falling real estate prices to allow an even great buy or rental ability that might not have otherwise happened if you are dealing in dollars?

We have been looking at various properties, some closer to Bangkok, others in the hinterland. I find the prices on selling real estate here strangely out of skew with the rental rates which seem overall fairly reasonable.

On our farm in the states, we ran about a 40-60 split, 40% of the land we worked was ours and about 60% percent was rented to allow the scale we needed to operate profitably. But with what I generally see people asking for here on land prices, I am tending to develop my initial plans far more towards rental, though I worry about locking in a significant enough rental period, which brings me back to thoughts of buying if the market undergoes a correction.

Any thoughts are appreciated.

Soi224

[Smithson]

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Either is going to release for you significantly more TB than you are going to get at the moment.

I would like to spur the "future" debate a little with the above extract from Maizefarmer. I agree that one or the other will happen and would be interested in other views on

(a) which is the more likely?

( what are the relative consequences of the two options?

It would appear that the government is allowing the baht to float, much as they are drifting along at the moment. It is unlikely they will ever devalue out of choice. If you remember the fury hurled at the IMF when devaluation was forced on Thailand after 1997, despite the fact that it was a "rescue" package.

Since 80% of GDP in derived from export, the baht simply must go down. Australia for instance would benefit if it stays up to decrease the trade deficit, imports into Oz must decline if 30% increases continue. Britian is in the same position.

Since public opinion (under many different guises) effects things here so much, will the next major crisis be caused by the mob, currency spectulators, or just a lack of effective government?

Isaanaussie

I'm having a little bit of trouble understanding the devaluation. As I understand it the Baht has been floated since 97, there was never a devaluation. Since it is floated it cannot be devalued by the government because the market defines it's rate. Sure the govt could buy $ to try and lower the rate, but they tried this a while back and ended up with too much $.

The mob or government doesn't effect the currency, as has been shown by the Bahts strength over the last 3 years, a period which saw political turmoil and even a coup. I've now realized what the average Thai has known all along - the govt is just there for their %, there's been no effective govt here for close to 3 years.

I'm not sure currency speculators can have that much effect either, the situation is different to '97 when the baht was pegged.

So I'm interested to here theories on why the Baht would drop, Thailand exports a lot of food, which is a pretty basic necessity.

[Smithson]

What do you folks think about land? Will the prices on farmland in general suffer due to the global crises? What is the likelihood there will come a magic combination of a rising dollar and falling real estate prices to allow an even great buy or rental ability that might not have otherwise happened if you are dealing in dollars?

We have been looking at various properties, some closer to Bangkok, others in the hinterland. I find the prices on selling real estate here strangely out of skew with the rental rates which seem overall fairly reasonable.

On our farm in the states, we ran about a 40-60 split, 40% of the land we worked was ours and about 60% percent was rented to allow the scale we needed to operate profitably. But with what I generally see people asking for here on land prices, I am tending to develop my initial plans far more towards rental, though I worry about locking in a significant enough rental period, which brings me back to thoughts of buying if the market undergoes a correction.

Any thoughts are appreciated.

Soi224

There is no real 'market value' for land here, you can find two pieces next to each other with huge differences in price. Unless a person is desperate they will hold on for a long time, if they are desperate they will sell very cheaply and the place will go quick.

Don't forget that anyone who mentions land for sale will be looking to get a % from the owner. This is why they tell you how good it is. The price will be based on what they think you are willing to pay, not what they want and they generally think we have limitless funds.

Edited October 28, 2008 by Smithson

[IsaanAussie]

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Either is going to release for you significantly more TB than you are going to get at the moment.

I would like to spur the "future" debate a little with the above extract from Maizefarmer. I agree that one or the other will happen and would be interested in other views on

(a) which is the more likely?

( what are the relative consequences of the two options?

It would appear that the government is allowing the baht to float, much as they are drifting along at the moment. It is unlikely they will ever devalue out of choice. If you remember the fury hurled at the IMF when devaluation was forced on Thailand after 1997, despite the fact that it was a "rescue" package.

Since 80% of GDP in derived from export, the baht simply must go down. Australia for instance would benefit if it stays up to decrease the trade deficit, imports into Oz must decline if 30% increases continue. Britian is in the same position.

Since public opinion (under many different guises) effects things here so much, will the next major crisis be caused by the mob, currency spectulators, or just a lack of effective government?

Isaanaussie

I'm having a little bit of trouble understanding the devaluation. As I understand it the Baht has been floated since 97, there was never a devaluation. Since it is floated it cannot be devalued by the government because the market defines it's rate. Sure the govt could buy $ to try and lower the rate, but they tried this a while back and ended up with too much $.

The mob or government doesn't effect the currency, as has been shown by the Bahts strength over the last 3 years, a period which saw political turmoil and even a coup. I've now realized what the average Thai has known all along - the govt is just there for their %, there's been no effective govt here for close to 3 years.

I'm not sure currency speculators can have that much effect either, the situation is different to '97 when the baht was pegged.

So I'm interested to here theories on why the Baht would drop, Thailand exports a lot of food, which is a pretty basic necessity.

Well Smithson,

Lets beg to differ on the devaluation issue. For me it must happen and can do so in any number of self serving ways through the complex intrigue that exists here between armed forces, business interests and government. I know of no model like it after nine years and direct contact with many of those players. Anything can happen here, and over time usually will.

Thai exports now there is a typical case in point. Yes rice is in the top ten exports at about No 8 but it is not significant in value against say the auto industry at no 2. Thailand now manufactures more exports than for sale here by a large margin. The industry is global and parent companies rule. Pre-crisis local interests had controlling interest in every car company here, that has all changed. Now the operations are split, finance is controlled from home base, Japan, via a regional sales, procurement and export/trading division. In Thailand as elsewhere in ASEAN the local manufacturing operations are owned by the car company and sales by a combination of company owned and dealer networks. Globally the manufacturing arms compete on cost of production and the size of the domestic market to get their slice of the export assembly pie. If resiting means more profit, then assembly lines are moved. Hilux is the perfect example with everything now focused in Thailand globally for all five variants to the basic vehicle. All other pickup makes have moved here from Japan as well and for the same reason, cost of production and domestic market decline.

So will a blind eye be turned here for the sake of business interests? Hilux Fortuner, a PPV or modified pickup under Thai rules has coil rear springs where the excise rules clearly state leaf springs to qualify for the concessionary rate. Toyotas new plant was granted full BOI benefits but is in Zone 1 and the laws smudged. Single cab pickups must be under 1600 kgs, none are.

The mob. Well I do not know of a single Issan farmer that would travel to Bangkok to protest without someone paying his way. It's Rent a Crowd my friend, its not the mob that will change things but the money behind it.

Will the baht loose value? It has to. Thai GDP is export based at 80% and the last ten years have been all about attracting investment to industrialise the nation. Now exports are primarily manufactured goods made by foreign owned MNCs that vote with their feet.

Hope that answers your doubts.

Isaanaussie

[IsaanAussie]

What do you folks think about land? Will the prices on farmland in general suffer due to the global crises? What is the likelihood there will come a magic combination of a rising dollar and falling real estate prices to allow an even great buy or rental ability that might not have otherwise happened if you are dealing in dollars?

We have been looking at various properties, some closer to Bangkok, others in the hinterland. I find the prices on selling real estate here strangely out of skew with the rental rates which seem overall fairly reasonable.

On our farm in the states, we ran about a 40-60 split, 40% of the land we worked was ours and about 60% percent was rented to allow the scale we needed to operate profitably. But with what I generally see people asking for here on land prices, I am tending to develop my initial plans far more towards rental, though I worry about locking in a significant enough rental period, which brings me back to thoughts of buying if the market undergoes a correction.

Any thoughts are appreciated.

Soi224

There is no real 'market value' for land here, you can find two pieces next to each other with huge differences in price. Unless a person is desperate they will hold on for a long time, if they are desperate they will sell very cheaply and the place will go quick.

Don't forget that anyone who mentions land for sale will be looking to get a % from the owner. This is why they tell you how good it is. The price will be based on what they think you are willing to pay, not what they want and they generally think we have limitless funds.

Hi Soi224

I will follow on from what Smithson has told you, perfectly true. Thailand has only had land ownership laws for some 40-50 years and title transfers are easy enough, once your get all the "interested parties" to agree. Say a father wants to sell land, the local land office will call a meeting of all of his children and sometimes relatives and they all have to agree to the sale.

If the guy is "hot for money", that is, in debt or wants to be, the price will be low. But that doesn't mean it will be high enough for his kids. TIT

Isaanaussie

[Smithson]

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Aussie, thanks for the explanation. It makes sense and I hope you're right. My main query was with the statement by of the Baht getting weaker OR devaluate. Surely it's the same thing as only a pegged currency can be devalued?

[IsaanAussie]

One of 2 things are going to happen sometime over the next 18months.

- The Baht is going to get significantly weaker

- the Baht will devaluate

Aussie, thanks for the explanation. It makes sense and I hope you're right. My main query was with the statement by of the Baht getting weaker OR devaluate. Surely it's the same thing as only a pegged currency can be devalued?

Well if I'm half right, and we for the moment agree that the government here will just let the Thai float, then who can benefit from affecting the exchange rate? MNC's with a lot to loose, massive investments, shrinking markets, a desperate shortage of cash and a global imbalance of trade for them, could be? How would or could they do it? Change currencies they use, sell short buy long to even out the base flow of Yen and USD. Reinvest excess currencies in the origin country and attract tax concessions for doing so. Yeah all possible.

As for pegging it is just a word in reality. Just like your washing, pegged, unpegged. Consider the need for balance between trading nations, especially ones that have the best interests of the same MNC at heart. The Baht is still as tied to the USD as it ever has been when you consider that relationship to other currencies.

Attahed is a graph of the recent FOREX rates of the AUD to both USD and Baht. Yes the USD is climbing under government intervention and the increasing value of US Treasury bonds in time of crisis, but they are still travelling in unison. To me, maybe rubbery pegs but still pegged.

AUD_THB_USD_30_day_Oct_08.pdf

Isaanaussie

[Smithson]

Sounds good Aussie, I've got a loan in AU$, so I'll be sending as much cash back over the coming months. It's ridiculously low! Then I'll look forward to a strengthening US$ and making some money before the crash really hits.