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The Growth of the Rubber Economy of Southern Thailand*

Published online by Cambridge University Press:  07 April 2011

Laurence D. Stifel
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Extract

In 1934 the Siamese Council of Ministers agreed to participate in an international rubber control scheme without understanding either the dynamics of the expansion process or the extensiveness of the planting of small stands of rubber trees in peninsular Siam. The area estimates and export statistics available in Bangkok caused the government to believe that the quota offered by the International Rubber Regulation Committee was generous, and they consequently signed agreements with the producers' organizations and cooperating countries subject only to the ratification of the People's Assembly. The State Councilors were so confident of perfunctory approval of what appeared to be a technical issue that they delayed submitting the proposal until three months after the effective date of the agreement. But when the debate opened the representatives from the South sharply challenged the government estimates for failing to account for the areas of immature trees or to recognize that low prices had depressed production below current capacity. Neither Premier Bahol's plea that negotiations with countries “which are already civilised require something substantial in the way of evidence, such as statistics,” nor the need to honor the government's commitment dissuaded them.1 A minor political crisis was precipitated as the Assembly rejected the proposal and Siam's first constitutional government resigned.

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Articles
Information
Journal of Southeast Asian Studies , Volume 4 , Issue 1 , March 1973 , pp. 107 - 132
Copyright
Copyright © The National University of Singapore 1973

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References

1 Thailand, Raingan kan Prachum, 2nd special session (Bangkok, September 12, 1934), II, p. 1414. The government resigned on September 13, 1934. The affair was fully described at the time in the Thai press, see Sri Krung and Thai Mai as well as the The Bangkok Times. The general background is presented in McFadyean, Andrew, The History of Rubber Regulation 1934–1943 (London: International Rubber Regulation Committee, 1944)Google Scholar.

2 The Bangkok Times, September 14, 1934 and Thompson, Virginia, Thailand, The New Siam (Institute of Pacific Relations, 1941Google Scholar; reprinted New York, 1967), p. 481.

3 The geographical conditions which characterize the South as a distinct region change in the area of latitude 11°N, which is roughly the northern border of changwat Chumporn. The National Statistical Office defines the South as the 14 changwats from Chumporn to the Malaysian border. About 10% of the planted rubber area is currently situated across the Gulf in the southeast corner of the country. Although this paper focuses upon the South, much of it will be relevant to the planting of rubber in the eastern changwats. The South presently contains about 12% of the population and 14% of the area of the Kingdom.

4 Rubber was the nation's second most important export from 1948 to 1966, far ahead of tin and even surpassing rice in 1962. Bank of Thailand Monthly Reports. Rubber accounted for 13% of the agricultural gross domestic product for the 1950 decade, compared to paddy with 43%. National Economic Development Board, National Income Statistics of Thailand 1964 (Bangkok, 1964), pp. 96–7Google Scholar. In the South itself, the value of rubber greatly exceeded paddy or tin after World War Two, according to the regional estimates of gross domestic product.

5 The methodology of estimating rubber area is explained in Appendix A.

6 The prewar area estimates are from Bauer, P.T., The Rubber Industry, A Study in Competition and Monopoly (London, 1948), pp. 2, 379–80Google Scholar.

7 Agricultural Statistics of Thailand (Bangkok: Ministry of Agriculture); 1958 volume, p. 82; 1963 volume, p. 87; and 1965 volume, p. 99.

8 Myint, Hla, “The 'Classical Theory' of International Trade and Underdeveloped Countries”, Economic Journal, Vol. 68 (06, 1958), pp. 317–37.CrossRefGoogle Scholar

9 Ibid, pp. 325–6.

10 Saihoo, Pataya, “Khala — A Rubber-growing Village” (Chulalongkorn University, Bangkok)Google Scholar, typewritten, undated and unnumbered manuscript. This is the only anthropological study of a rubber-growing village in the South.

11 Useful descriptions of the prewar South are found in the annual “Report on the Trade of the Senggora Consular District”, Report of the Commercial Situation in Siam (London, Department of Overseas Trade)Google Scholar.

12 Population data are from National Statistical Office (formerly the Department of Commerce and Statistics), Statistical Yearbook of Thailand, 1920–1968. Paddy area statistics are from the records of the Ministry of Agriculture for 1920 1936; from Planted Area, Harvested Area. Production and Yield by Changwats in the Southern Region 1937–1965, (Bangkok, Kasetsart University, 1967)Google Scholar; and Agricultural Statistics of Thailand 1967. Rubber area statistics are from Appendix A. One rai is equal to. 4 of an acre.

13 Arb Nakajud estimated the average labor input per rai as 13 full workdays for paddy and 26 for rubber. “Thai Agricultural Labor Supply and Demand”, Third National Population Seminar of Thailand, (Bangkok, 1968), p. 436Google Scholar. The daily labor requirements for the two activities differ in their timing and intensity, for, while the labor demand for paddy production occurs in concentrated periods, rubber tapping is spread fairly evenly over ten or eleven months of the year. Various contemporary surveys indicate that the Southern rubber planters tap about 150 days per year.

14 Dent, F.J., General Land Suitability for Crop Diversification in Peninsular Thailand (Rubber Research Centre: Haadyai, 1969)Google Scholar, Report SSR-76-1969, enclosed map.

15 Ministry of Agriculture, Land Utilization in Thailand 1965 (Bangkok, 1968), pp. 20–21Google Scholar.

16 Myint, Hla, op. cit., p. 327Google Scholar. The phrase is that of L.C.A. Knowles.

17 Great Britain. Despatch, W.R.D. Beckett to Sir Edward Grey (Bangkok: August 13, 1906), Foreign Office Archives (hereafter abbreviated FO) 371/182, p. 2.

18 Ibid.

19 The rubber carried on the Southern Line represented 33% of total production in 1934, 43% in 1935, and 67% in 1936, the first years for which data are available at the State Railways of Thailand.

20 The British Consul listed cheap goods of all descriptions available in the district bazaars, but complained that “quality is a secondary consideration, and this fact militates against the sale of British manufactures in this region.” J. Hogg, Drummond, “Report on the Trade of the Senggora Consular District for the Year ended March 31, 1928” (British Consular Report), p. 35Google Scholar.

21 The financial reports at the turn of the century contain references to the collection and export of various gums and resins. During the first decade when rubber prices rose to extraordinary heights, the “cultivation on a large scale of such rubber plants (indigenous rubber specimens resembling para rubber) as have been found best suited to local conditions were vigorously promoted.” Siam and its Productions, Arts and Manufactures — A Descriptive Catalogue of the Siamese Section of the International Exhibition of Industry and Labour, Turin, 1911 (Hertford, 1912), p. 122Google Scholar. The export of “rubber substitutes” was 16% of total rubber exports in 1925 but they fell off sharply with the precipitous drop in rubber prices and have since been of negligible significance.

22 Based upon interviews in rubber producing districts.

23 Thailand. Undated letter from Phya Ratsadanupradit to the King. National Archives Division (hereafter abbreviated NA), Fifth Reign, Agriculture 10.2/5. Phya Ratsada used approximately 1910 rubber prices in his calculations.

24 See Appendix B.

25 The net returns may have been roughly proportional to the gross returns for although rubber production required greater labor input the work was less arduous and the expenses, exclusive of labor and land but including an imputed value of family animals, were comparable. The costs of producing rice in the South are estimated in Committee to Study Costs of Rice Production, Kan Samruat Ton Thun Kan Phlit Khao (Bangkok, 1967) mimeographed, pp. 53–4Google Scholar. The costs of rubber production are based upon recent field work in rubber producing districts. No estimates are available of the comparative yields of lowland and upland paddy but Conklin has calculated the labor requirements for upland paddy in North Borneo as about 31 eight-hour days per rai. Conklin, H.C., Hammoo Agriculture (Rome: F.A.O., 1957), Table 15, p. 150Google Scholar.

26 Britain, Great. General Report on Siam for the Year 1906 (Bangkok: 05 27, 1907), FO 373 333, p. 7Google Scholar.

27 Graham, W.A., Kelantan — A State of the Malay Peninsula (Glasgow, 1908), p. 78Google Scholar, and Thailand. W.A. Graham, “General Report of Affairs in the State of Kelantan for the Year, August 1903 — August 1904,” NA, Fifth Reign, Interior, 62/124, p. 13.

28 Numonda, Thamsook, “The Development of the Northwestern States of Malaya, 1909–1941” (unpublished Master's thesis, University of Hong Kong, 1961), pp. 148–9Google Scholar.

29 Westerngard, Thailand. J., “Report on a Journey through the Malay Peninsula” (Bangkok: 12. 24, 1906)Google Scholar, NA, Fifth Reign, Interior, 2014/50.

30 Prince Damrong rejected Graham's first request for land in Kelantan for rubber planting because of the conflict of interest with his official responsibilities there. Graham's second request was for land in tambol Bang Nara, changwat Naratiwas and this wa s approved by the King upon Damrong's recommendation. NA, Fifth Reign, Finance 49.1/55. The first report of the Bang Nara Rubber Co., Ltd. was issued in 1910. NA, Sixth Reign, Agriculture, 1/9.

31 Britain, Great. Siam. Annual Report, 1910 (Bangkok: 03 1, 1911)Google Scholar, FO 371 1221, p. 13.

32 For example, Britain, Great. Siam. Annual Report, 1928 (Bangkok: 01 11, 1929), FO 371 13980, p. 6Google Scholar.

33 Britain, Great. Siam. Annual Report, 1913 (Bangkok: 02 22, 1914), FO 371 1752, p. 16Google Scholar. In spite of fears of British expansionary designs on the whole peninsula, the Siamese gave in to British pressure for a junction on the east coast on the Kelantan frontier. Phya Ratsada hoped to develop Trang as the Southern Line's chief outlet to the sea on the west coast in competition with British Penang. Siam agreed, however, in 1913 to a junction on the Kedah frontier also after studies, following Phya Ratsada's death that year, indicated the inadequacies of Trang as a major port and serious engineering difficulties were encountered on the alignment to Kelantan. The Southern Line was connected with Federated Malay States Railway in Kedah in 1918 and in Kelantan in 1921.

34 Great Britain. Despatch, Beckett to Grey, FO 321/182. “If such advantage and influence be allowed to extend to the Malay peninsula by the absorption of Malay Peninsula hues under the German Railway Department the results to British interests in Siam will be little short of calamitous.” p. 3.

35 Even in the absence of economic interests, many British called for intervention. For example, Great Britain. Vice Consul W. A.R. Wood to Mr. Beckett (Senggora, September 22, 1908), FO 371 524. “Patani is being misgoverned by an alien and semi-civilized race on our very frontiers… I have the honour to submit that it is our moral duty to interfere, and to insist that the State of Patani be governed in a proper manner for the benefit and in accordance with the wishes of the inhabitants.”

36 Britain, Great. Siam. Annual Report, 1927 (Bangkok: 02 2, 1928), FO 371 13264, p. 4Google Scholar. The following analogy is more cutting: “Malaya … is apt to be intolerant and critical of Siam's backwardness, just as an up-to-date fanner with a poor and slipshod neighbour resents the weeds and other nuisances which impede his own operations.” Despatch, S.P. Waterlow to Sir Austin Chamberlin (Bangkok: December 22, 1926), FO 371 11720.

37 Graham, op, cit., preface.

38 Pataya Saihoo, op. cit., unnumbered.

39 Based upon discussions with Trang residents; Nakorn, Senanuwongphakdi Na, Prawat Lae Ngarn Phraya Ratsada (Bangkok: Thai Wattana Panich, undated), pp. 39–46Google Scholar; and Great Britain. Despatch, Mr. Beckett to Sir Edward Grey (Bangkok: April 13, 1913), FO 371 1751.

40 Skinner, G. William, Chinese Society in Thailand: An Analytical History (Ithaca: Cornell University Press, 1957), p. 74Google Scholar.

1938 and 1953 data are from the Rubber Division, Ministry of Agriculture, and 1944 and 1950 data are from Ingram, James C., Economic Change in Thailand Since 1850 (Stanford: Stanford University Press, 1957), p. 100Google Scholar. 1963 estimates refer to holdings over 60 rather than 50 rai and are calculated from data in the National Statistical Office, Census of Agriculture 1963 (Bangkok)Google Scholar.

42 The unit value of Thai rubber exports increased from 68% of the London price in the decade starting 1930 to 80 % in the decade starting 1955, although reduced transportatio n costs and greater marketing efficiency may have been responsible for par t or all of the improvement.

43 By 1959 an F.A.O. report estimated that less than 4 % of total area was planted with clonal seedlings or budgrafted material. Lloyd, W., Report to the Government of Thailand on the Rubber Replanting Industry (F.A.O. Report 1253, THA/TE/LA, Rome 1966), p. 19Google Scholar.

44 Production was more stable in the estate sectors, which experienced drops of only 1% in Malaya an d 2% in the Netherlands East Indies during the same period. , Bauer, op. cit., pp. 42–51Google Scholar.

45 British Consular Report, Close of the Third Quarter 1930, p. 24.

46 For example, the imports into Patani of silk which the Malays enjoyed wearing on festive occasions dropped in successive years from B 143 thousand to B 98 thousand to B 10 thousand n i 1931. Department of Customs.

47 British Consular Reports, 1929–1934.

48 Ministry of Finance, Report of the Financial Adviser 1933 (Bangkok), p. 19Google Scholar.

49 The commercial reports of the period cite the lack of tappers as a serious constraint on expansion. The estate owners pleaded with the Ministry of Economic Affairs to relax the immigration laws to encourage the migration from Malaya of Chinese tappers who were discouraged by the increases in the residence fee. , Skinner, op. cit., p. 177Google Scholar, The village labor, especially in the Muslim changwats, was not mobile.

50 The original quota of 52,500 tons is the annual quota of 15,000 tons multiplied by the guaranteed Permissible Exportable Amount (PEA). , McFadyean, op. cit., p. 231Google Scholar. Siam reported lower exports to the International Rubber Restriction Committee than the official customs data noted above.

51 Ministry of Finance, Report of the Financial Adviser 1937 (Bangkok), p. 32Google Scholar.

52 Ayal, E.B., “Public Policies in Thailand under the Constitutional Regime — A Case Study of an Underdeveloped Country” (unpublished Ph.D. dissertation, Cornell University, 1961), pp. 197–201Google Scholar.

53 For example, see Ministry of Finance, Report of the Financial Adviser Covering the Years 1941–1950 (Bangkok), pp. 28–30Google Scholar.

54 For example, there has been a stream of migration from the island of Samui, off the coast of changwat Suratthani, to the mainland since World War II because of the shortage of land and the declining yields from the coconut trees which provide most of the employment on the island. The migrants initially practised shifting cultivation of rice but they soon began to plant rubber seeds simultaneously in the clearings, for rubber was more attractive than upland rice at even the lowest rubber price levels. Based on interviews with traders in Surattani. Frazer reports that the fishermen from the coastal village of Yala which he studied are increasingly moving to the interior to plant rubber because the village catch of fish has been dropping. Frazer, Thomas M. Jr, Fishermen of South Thailand: The Malay Villagers (New York: Holt, Rinehart and Winston, Inc., 1966), pp. 16–20Google Scholar. Peasant rubber producers have also been moving, singly and in groups, to plant rubber in new areas beyond the village because of the exhaustion of the local supply of land.

55 The following multiple regression relates the supply response, S (three-year moving average of new plantings from Appendix A), to two independent variables: (1) PR, the twoyear average real rubber price (the current rubber price deflated by the paddy price from Appendix B) and (2) Q, the annual production three years earlier, a measure of the diffusion of rubber planting. (41 observations: 1913–1941, 1948–1962)

The regression indicates a significant and positive response in supply with respect to price and the extent of market expansion but the low R2 and the unsatisfactory Durbin-Watson suggest they are only a partial explanation of changes in rubber capacity.

56 In a rubber growing village in Trang which I recently studied, the pattern is to tap every day except for four interruptions. Firstly, rubber trees are deciduous and they lose their leaves in March or April, during a period of “wintering” when the yield drops to its annual minimum and most villagers stop tapping for about four to seven weeks. Then during the period of peak labor requirements for planting paddy in June to July, depending upon the variety, and paddy harvesting in January or February, about half of the villagers reported halting tapping for a number of weeks. The other half said they had time to work on the paddy fields after regular daily tapping of their rubber in the morning. The third interruption occurs when rainfall has soaked the bark panel and prevents tapping. Many mornings during the rainy season the tappers will arise not certain whether they will be able to tap and they frequently make different decisions, depending upon the condition of their trees and their need for cash. Starting after dawn permits the tapping of some stands which would have appeared too wet at 2:00 a.m. by the light of acetylene lamps. Finally, the villagers say they stop tapping every week or ten days for a day simply to rest or to carry out personal business. Most of the village plots consist of the original old trees with massive girths, some later replacements and irregularly located stunted trees from natural regeneration — all of which from a distance merge together in a jungle—like appearance. The villagers select these trees to tap which experience indicates are worth the effort at the prevailing prices.

57 The trends in per capita production are presented for the monthons by which the early data classified: (kilograms per person)

Population data are from the Statistical Year Book of Thailand. Paddy statistics are from the Ministry of Agriculture; paddy calculations have been based on a three year average to reduce the effect of weather factors, except for 1919 when the data for only two years, 1920 and 1921, were available.

Annual per capita consumption has been estimated at 233 kilograms of paddy (154 kilograms of rice) for use in constructing the official national accounts. National Economic Development Board, National Income of Thailand 1965 (Bangkok, 1966), p. 108. Total regional paddy consumption must also include an estimate of the requirements for seeds and other minor uses.

58 Prewar —48 observations (1926—1937), R2 = .9414, Durbin—Watson Statistic = 1.3324. Postwar — 76 observations (1950—1968), R2 = .8185, Durbin—Watson Statistic = 2.4851. (t values are in parentheses below the coefficients)

Statistically significant at the 95 % level.

Statistically significant at the 90% level.

Sources of Data: Prewar rubber production is total Siamese rubber exports from U.S. Department of Commerce, Rubber Statistics, 1900—1937 (Washington, 1938)Google Scholar. Postwar production is the sum of exports (Rubber Division tabulation of Customs data) plus estimated domestic consumption of rubber starting in 1957 and rising to an estimated 5,000 tons per year in 1968. Prewar rubber prices are the New York wholesale prices from Rubber Statistics, 1900—1937, p. 45. Postwar rubber prices are Bangkok wholesale prices collected by the Rubber Division, Ministry of Agriculture. The price is an average of the five export grades (weighted according to the year's actual grade distribution of exports) for the second month in the quarter. In the absence of quarterly data, annual paddy prices were used, see Appendix B for sources.

The regression equations indicate the significance of seasonal variations, especially the seasonal decline in the second quarter due to the cessation of tapping during the period of “wintering” when the leaves fall in March and April. The seasonal decline in the third and fourth quarters occurs only in the postwar period because the southwest and northwest monsoon storms create turbulent seas which interfere with shipping on the east coast, whereas before World War II most of this rubber was transported overland for sale in Malaya.

59 While the impression exists that rubber producer s are increasingly unable to grow enough rice for family requirements, there are no statistical surveys to substantiate this. In the Trang village, mentioned above, 70% of the families in 1970 had a partial rice deficit although almost all families cultivated some paddy.

60 Nakasavasdhi, Uthis, Rai Ngan Kan Samruat Sum Yang Nat Prathet Thai, Phaw Saw 2506–07 (Bangkok: Kasetsart University, 1964), p. 12Google Scholar.

Districts with Chinese owning over a quarter of the total rubber area trace the railroad line from Sadao on the Malaysian border to Suratthani and the road north from Phuket to Ranong. Rubber Division, Ministry of Agriculture.

62 This is contrary to Skinner's assertion that “most of the planters and tappers, whose total number in the late 1930's is estimated at 70,000 were Hakkas” and other Chinese speech groups. , Skinner, op. cit., p. 216Google Scholar.

Customs Department. Monthon Phuket consisted of the changwats on the west coast of the peninsula. Monthon Patani consisted of the three Muslim changwats, Patani, Yala and Narathiwat. The data for Monthon Nakhon Srithammarat include all the rubber exporting changwats on the east coast plus Phathalung.

64 Landon, K.P., Siam in Transition (Chicago: University of Chicago Press, 1937), p. 87Google Scholar.

Data are from the Rubber Division, Ministry of Agriculture. The Four Muslim Changwats include amphur Betong, an enclave of large Chinese plantations.

66 See Appendix A.

67 See Appendix A.

68 The assumptions are that the average family holding is 17 rai (footnote 41); that the yield on these holdings averages 65 kilograms per rai during the 1950's and declined to 35 kilograms by 1971 (Appendix A); that the rubber prices in Appendix B approximate village prices; that the villagers tap about 150 days per year (footnote 13); and that a villager would normally not tap more than eight rai per day. According to the 1960 Census, the average size of rural family in the South was 5.3 members.

69 The time cycle for the development of a clone, from first pollination to the recommendation for large scale commercial planting, is about 25—30 years. Rubber Research Institute of Malaya. Planting Material (Kuala Lumpur, 1966)Google Scholar, mimeographed lecture notes.

70 Bank Negara Malaysia, Annual Report and Statement of Accounts, 1971 (Kuala Lumpur), p. 65Google Scholar. The average yield on West Malaysian estates was 182 kilograms per rai in 1970.

71 Quoted in Yah, Lim Chong, “The Malayan Rubber Replanting Tax,” The Malayan Economic Review, VI, 2 (10, 1961), p. 44Google Scholar.

72 Negara, Bank, op. cit., p. 65Google Scholar.

73 Although plantations realize only minor economies of scale, particularly in processing and marketing, they can adopt the new varieties mor e readily because of their higher savings, their better access to capital and information, and the size of their holdings which permits continuous, partial replanting.

74 In the 1960's the primary taxes on rubber have been an export tax, a business tax an d a replanting cess, which in total equalled about 17% of the value of rubber exports and an even higher percentage of the prices received by the village growers. Taxes on Malaysian rubber exports have been similarly high and the tax differential between the tw o countries affects the direction of smuggling.

75 Office of the Rubbe r Plantation Aid Fund. Estimate d mature area is from Appendix A.