Re-regulating Labor and Market Re-regulating Labor and Market through Trade Liberalizationthrough Trade Liberalization

in Agriculturein Agriculture

MIYAKE YukiMIYAKE Yuki

RCSD, Faculty of Social Sciences, RCSD, Faculty of Social Sciences, Chiang Mai UniversityChiang Mai University

Regional Academic Seminar Regional Academic Seminar

"Changes and Challenges in Greater Mekong Sub-"Changes and Challenges in Greater Mekong Sub-region”region”

17-19 January 200817-19 January 2008

Introduction Introduction

Running after the late-20Running after the late-20thth century’s century’s Western trend, Thailand has rushed Western trend, Thailand has rushed negotiation and conclusion of bilateral negotiation and conclusion of bilateral Free Trade Agreements (FTA) with Free Trade Agreements (FTA) with several countries including China since several countries including China since the beginning of the 21the beginning of the 21stst century. century.

Thai FTAs Progress

Country Agreement Implementation

ASEAN Free Trade Area (AFTA)

- 1993

Bahrain 2002 Delayed

China 2003 October 2003*

India 2003 September 2004*

Australia 2004 January 2005

New Zealand 2004 July 2005

Peru 2005 Not yet

Japan 2006 November 2007

USA Delayed Delayed

* Implemented as Early Harvest Scheme * Implemented as Early Harvest Scheme

Why Trade Liberalization? Why Trade Liberalization?

Trade liberalization: One way of practice of Trade liberalization: One way of practice of neolneoliberalismiberalism..

Neoliberalism: A process of Neoliberalism: A process of deregulationderegulation. . In agricultural sector, it is a challenge against tIn agricultural sector, it is a challenge against t

rade barriers, domestic subsidies for farm prodrade barriers, domestic subsidies for farm products, and government intervention through sucucts, and government intervention through such as restriction of chemicals. h as restriction of chemicals.

Thai Merit of FTA with ChinaThai Merit of FTA with China - E- Economic welfare conomic welfare = revitalization of domestic e= revitalization of domestic e

conomy through trade liberalization. conomy through trade liberalization.

Argment against NeoliberalismArgment against Neoliberalism

Neoliberalism is discourse. Neoliberalism is discourse.

It in fact increases It in fact increases re-regulationre-regulation and and contcontrol of localrol of local by the state and market. by the state and market.

Objectives Objectives

1. To show how trade liberalization under 1. To show how trade liberalization under neoliberalism imposed new regulation neoliberalism imposed new regulation on small-scale farmers in terms of boton small-scale farmers in terms of both production system and labor procesh production system and labor process. s.

2. To show the complex and diverse respo2. To show the complex and diverse response to it by local farmers. nse to it by local farmers.

Case Case Studies Studies

Trade liberalization of garlic in ThailandTrade liberalization of garlic in Thailand

Garlic is most affected product by FTA in a Garlic is most affected product by FTA in a negative sense. negative sense.

After FTA with China, cheaper Chinese garlic (1/3 After FTA with China, cheaper Chinese garlic (1/3 price of Thai garlic) flowed into Thai market. price of Thai garlic) flowed into Thai market.

Thai government provided 12,000 baht of Thai government provided 12,000 baht of monetary compensation for the cancellation of monetary compensation for the cancellation of garlic production. garlic production.

The local farmers response: Receive and not The local farmers response: Receive and not receive. receive.

Research SiteResearch Site

Sii Dong Yen sub-district, Chai Pra KarSii Dong Yen sub-district, Chai Pra Karn district, Chiang Mai province in nortn district, Chiang Mai province in northern Thailand. hern Thailand.

Because Chai Pra Karn is one of the Because Chai Pra Karn is one of the most garlic producing district in Thailamost garlic producing district in Thailand. nd.

• Garlic production area size and amount Garlic production area size and amount of garlic production of region in 2005of garlic production of region in 2005

RegionArea size of

production

Amount of productio

n

Amount of production per r

ai

  (rai) (ton) (kg)

North 100,563 102,745 1,027

Isaan 5,007 3,546 749

Central 416 307 751

The whole country 105,986 106,598 1,013

Source: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on tSource: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on the Global South)he Global South)

• Garlic production area size and amount Garlic production area size and amount of garlic production by province in 2005of garlic production by province in 2005

Source: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on tSource: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on the Global South)he Global South)

ProvinceArea size of production

Amount of production

Amount of production per rai

  (rai) (ton) (kg)

Chiang Mai 29,773 34,734 1,175

Mae Hong Son 19,603 20,113 1,028

Lamphun 17,835 19,201 1,078

Phayao 11,182 8,927 802

Chiang Rao 9,179 9,020 993

Lamphang 8,267 6,810 813

Other 5 provinces 4,724 7,920 3962

The whole Northern region 100,563 102,745 1,027

• Garlic production area size and amount Garlic production area size and amount of garlic production by district in 2005of garlic production by district in 2005

Source: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on tSource: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on the Global South)he Global South)

District Area size of production

  (rai)

Mae Ai 4,772

Chai Pra Karn 4,526

Wieng Heng 2,778

Chieng Daw 2,508

Research SiteResearch Site Sii Dong Yen sub-district have grown garlic as a cash crSii Dong Yen sub-district have grown garlic as a cash cr

op for more than 30 years…op for more than 30 years…

Outline of PresentationOutline of Presentation

1. Theoretical Background of Trade 1. Theoretical Background of Trade Liberalization: From Regulation to De-Liberalization: From Regulation to De-regulation of Market and Laborregulation of Market and Labor

- Introduction of a Case: Thai FTA with ChinaIntroduction of a Case: Thai FTA with China

2. Trade Liberalization as Re-regulating 2. Trade Liberalization as Re-regulating ProcessProcess

- A case studyA case study

3. New Regulation as Contested Space3. New Regulation as Contested Space

1. Theoretical Background of 1. Theoretical Background of Trade Liberalization: From Trade Liberalization: From Regulation to De-regulation of Regulation to De-regulation of Market and LaborMarket and Labor

1919thth century economy century economy Neoclassical economy Neoclassical economy Keynesianism Keynesianism Neoliberalism Neoliberalism

19th century economy

1817 • ‘Comparative advantage’ by Ricardo: Each country should sell their most competitive products

1861 • ‘The survival of the fittest’ by Spencer

• Libertarian thoughts: The role of the state should be minimized as much as possible in order to maximize individual freedom.

Neoclassical economy

1870s –

• Idea: Allocation of goods and resources through the market system of the production, distribution, and consumption.

• Markets is self-regulating mechanisms.• ‘Invisible hand’ by Smith.

Theoretical Background of Theoretical Background of Trade LiberalizationTrade Liberalization

Keynesianism

1930s – post-World War II era

• Interventionalist approach by Keynes: The role of state is to mediate and stabilize the business activities.

• Era of regulation• Fordism (since 1914): • To enhance technical control, centralize and rationalize the labor process. • Agro-food industry was also controlled.

1970s Inability of Keynesianism for capitalism became apparent.

Fordism: Problem of ‘rigidity’ without flexibility.

Neoliberalism1980s onward

• Friedman: Markets are efficient for flourish of wealth and the diffusion of democracy.• Reduce the role of the state in social and economic affairs.• Individual liberty

• Era of deregulation.• The establishment of the WTO.• Post-Fordism / Flexible accumulation.

A Case Study: Impact of Thai A Case Study: Impact of Thai

FTAFTA GainerGainer Tapioca producers (export to China)Tapioca producers (export to China) Automobiles and its parts sectors (lose Automobiles and its parts sectors (lose

with China but gain from export mainly with China but gain from export mainly to Australia)to Australia)

Shrimp and seafood sectors (to various Shrimp and seafood sectors (to various countries)countries)

CP Group CP Group

LoserLoser Garlic producersGarlic producers Diary farms sectorsDiary farms sectors

Garlic Price ChangeGarlic Price Change

2002/3 (before

FTA)

2003/4 (after FTA)

Fresh garlic

8.54 6.25

Dried garlic

25.64 18.37

Source: Office of Agricultural Economy www.oae.go.th (cited by Kingkorn 2006)Source: Office of Agricultural Economy www.oae.go.th (cited by Kingkorn 2006)

Price (baht/kg)Price (baht/kg)

2. Trade Liberalization as Re-r2. Trade Liberalization as Re-regulating Processegulating Process

Globalization is a Political ProjectGlobalization is a Political Project

Under WTO, the Under WTO, the Agreement on Agriculture (AoAAgreement on Agriculture (AoA) ) promotes promotes deregulationderegulation by reducing trade protec by reducing trade protection, farm subsidies, and government interventition, farm subsidies, and government intervention.on.

TT he world agricultural product price fell by 3he world agricultural product price fell by 30 % or more.0 % or more.

AAgribusinesgribusiness has grown s has grown The small-scale farmers went bankrupt. The small-scale farmers went bankrupt. = Globalization is a political project = Globalization is a political project (McMichael 2004) (McMichael 2004)

Trade Liberalization as Trade Liberalization as Re-regulating ProcessRe-regulating Process

WTO: Re-regulation than deregulation (HarverWTO: Re-regulation than deregulation (Harvery 1990)y 1990)

Flexible accumulation increased insecurities Flexible accumulation increased insecurities in financial sector. in financial sector.

Government interventionGovernment intervention

In agro-food sector, TNCs have come to reguIn agro-food sector, TNCs have come to regulate production and consumptionlate production and consumption

= ‘= ‘Private global regulationPrivate global regulation’ ’ (Friedman 1993)(Friedman 1993)

Various Processes of Re-regulationVarious Processes of Re-regulation

Competition under market mechanism. Competition under market mechanism.

‘‘Food insecurity’ Food insecurity’ Food controlFood control by the devel by the developed countries or TNCs, oped countries or TNCs,

and ‘re-colonization’. and ‘re-colonization’. RRegulates and disciplinesegulates and disciplines farmers. farmers.

Quality control (QC): Regulation at the local lQuality control (QC): Regulation at the local level.evel. And cam emphasize power relatio And cam emphasize power relations.ns.

A Case Study: A Case Study: Trade Liberalization of Garlic and Re-Trade Liberalization of Garlic and Re-regulationregulation

Re-regulation by market Re-regulation by market mechanismmechanism

Before 1950s or 60s: Self-subsistence or sBefore 1950s or 60s: Self-subsistence or small selling mall selling

Capitalist economyCapitalist economy Global market competition under globalizatGlobal market competition under globalizat

ionion

Today, small-scale farmers are vulnerable anToday, small-scale farmers are vulnerable and have to be rigid and to discipline themselvd have to be rigid and to discipline themselves. es.

Re-regulation of Labor by Quality CoRe-regulation of Labor by Quality Control (QC)ntrol (QC)

Quality control is found also in the Quality control is found also in the garlic production process, garlic production process,

in the process of post-harvest in the process of post-harvest product processing. product processing.

In order to compete cheap Chinese In order to compete cheap Chinese garlic, importance of QC is garlic, importance of QC is increasing.increasing.

Power relations among local Power relations among local producers and traders or consumers.producers and traders or consumers.

Sorting the cloves as quality control.Sorting the cloves as quality control.

- Need to be sorted by size and quality for selling.- - Need to be sorted by size and quality for selling.-

Government Support Scheme with ‘CGovernment Support Scheme with ‘Conditions’onditions’

1. Monetary compensation 12,000 baht per1. Monetary compensation 12,000 baht per rai rai for the cancellation of garlic plantation (200for the cancellation of garlic plantation (2005-). 5-).

2. A guarantee of garlic price at 18 baht in 2002. A guarantee of garlic price at 18 baht in 2005 and 12 baht in the next year of 2006. 5 and 12 baht in the next year of 2006.

[Conditions][Conditions] No future growing garlic in the reported land No future growing garlic in the reported land

plot.plot. New crops should NOT be New crops should NOT be shallot, onion, tanshallot, onion, tan

gerine orange, longan, and litchigerine orange, longan, and litchi. .

Decrease of Garlic Planted Decrease of Garlic Planted AreaArea

YearProduction area size

Amount of production Amount of pro

duction per rai (kg) 

(rai) (ton)

1997 171,000 147,000 874

1998 148,000 119,000 814

1999 137,000 118,000 873

2000 138,000 126,000 927

2001 150,000 132,000 893

2002 141,000 126,000 916

2003 132,000 105,000 806

2004 98,000 96,000 989

2005 106,000 107,000 1,013

Source: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on tSource: Office of Agricultural Economy www.oae.go.th (cited by interior report by Focus on the Global South)he Global South)

Contract Farming is also Contract Farming is also Re-regulation ProcessRe-regulation Process

Thai government also recommended Thai government also recommended contract farming in stead of “instable” contract farming in stead of “instable” garlic production. garlic production.

However…However… Production system is strictly regulated. Production system is strictly regulated.

Farmers easily take subordinate Farmers easily take subordinate

position to the companies, and are position to the companies, and are controlled and regulated by them. controlled and regulated by them.

Re-regulating Labor: Increasing FeminizRe-regulating Labor: Increasing Feminization in Garlic Processingation in Garlic Processing

Lastarria-Cornhiel (2006): Due to high compLastarria-Cornhiel (2006): Due to high competition among agri-business firms to reduce etition among agri-business firms to reduce costs, agribusiness corporation employs wocosts, agribusiness corporation employs women with low-wage, long-hour working.men with low-wage, long-hour working.

= Feminization of labor under post-Fordism= Feminization of labor under post-Fordism = Re-regulating process= Re-regulating process

This is applicable to garlic processing. This is applicable to garlic processing.

Breaking the bulb into a small cloves for selling or Breaking the bulb into a small cloves for selling or for seeds.for seeds.

Tying good-looking garlic bulbs up again in a Tying good-looking garlic bulbs up again in a beautiful way as decoration for sale. beautiful way as decoration for sale.

Impact of Falling Prices on Wage Impact of Falling Prices on Wage

LaborersLaborers

The piece rates is changed in line with the fluctuatiThe piece rates is changed in line with the fluctuation of the garlic prices. on of the garlic prices.

The middle-woman: “When the wholesale price of gThe middle-woman: “When the wholesale price of garlic is bad, I have to buy garlic at a lower price froarlic is bad, I have to buy garlic at a lower price from farmers, pay lower wage for processing to decream farmers, pay lower wage for processing to decrease costs, and yet face difficulty in selling because tse costs, and yet face difficulty in selling because the price is he price is

low everywhere. low everywhere.

Problems of piece-work job under fleProblems of piece-work job under flexible accumulationxible accumulation

Both seasonal and temporary, insecure, useBoth seasonal and temporary, insecure, uses long-hours, under unhealthy conditions, pas long-hours, under unhealthy conditions, pays low wages, and comprises mainly unskilleys low wages, and comprises mainly unskilled labor.d labor.

Decrease in wage, especially after trade libeDecrease in wage, especially after trade libealization. alization.

Discipline and control labor. Discipline and control labor.

To sum up, thanks to such positive and yet expTo sum up, thanks to such positive and yet exploited and flexible female labor, agro-food comloited and flexible female labor, agro-food commodity in Thailand is kept price lowmodity in Thailand is kept price low . .

3. New Regulation as Contested 3. New Regulation as Contested SpaceSpace

Look at actors with anthropologist apprLook at actors with anthropologist approach. oach.

New Regulation as Contested Space: DiverNew Regulation as Contested Space: Diverse Responses by Farmersse Responses by Farmers

Toward the government recommendation of cancellation of gToward the government recommendation of cancellation of garlic productionarlic production

Some followed.Some followed. Some have not follow but tried to survive by themselves. Some have not follow but tried to survive by themselves. (Both continued to grow garlic and stopped it.)(Both continued to grow garlic and stopped it.) Some pretended to follow, received a monetary compensatSome pretended to follow, received a monetary compensat

ion, and yet continued grow garlic in practice.ion, and yet continued grow garlic in practice. Some stopped growing garlic a part (such as 2 rai), receiveSome stopped growing garlic a part (such as 2 rai), receive

d compensation for it, and continued growing garlic for the d compensation for it, and continued growing garlic for the other.other.

Some stopped plantation for a few year, received a money, Some stopped plantation for a few year, received a money, and come back to grow garlic again after that.and come back to grow garlic again after that.

Diverse Response by FarmersDiverse Response by Farmers

* Reason of not following * Reason of not following Did not like given conditions by the government (pDid not like given conditions by the government (p

rohibit 6 crops). rohibit 6 crops). The 12,000 baht of compensation is not enough. The 12,000 baht of compensation is not enough.

* Reason of continuation of growing garlic* Reason of continuation of growing garlic Do not know what they should grow instead of garDo not know what they should grow instead of gar

lic.lic. The garlic price may regain in the future. The garlic price may regain in the future.

After all, there is no way to control or regulate peoplAfter all, there is no way to control or regulate people as such in a top down manner although it worke as such in a top down manner although it works to some extent. s to some extent.

A Symptom of Monopolization of GarA Symptom of Monopolization of Garlic Plantationlic Plantation

Farmers who own land tend to continue Farmers who own land tend to continue growing garlic, while farmers who rent lgrowing garlic, while farmers who rent land stop growing garlic. and stop growing garlic.

Some farmers who continued growing Some farmers who continued growing garlic expanded the area of garlic plantgarlic expanded the area of garlic plantation by newly renting a land plot from ation by newly renting a land plot from others.others.

Female Labor are also not Female Labor are also not

passive but positivepassive but positive Garlic processing makes small wage, but sometimGarlic processing makes small wage, but sometim

es can make up to 200 baht in a day (cf. A normal es can make up to 200 baht in a day (cf. A normal daily wage in agriculture: 120 baht/day for womedaily wage in agriculture: 120 baht/day for women). Give motivation. n). Give motivation.

Women’s narrationWomen’s narration: Garlic processing is an exclusi: Garlic processing is an exclusively female sphere, because “men cannot do this vely female sphere, because “men cannot do this kind of detailed and sensitive job.” kind of detailed and sensitive job.” Female laborers are much positive than pasFemale laborers are much positive than passive in making money through the piece work. sive in making money through the piece work.

Conclusion Conclusion

Trade liberalization under neoliberalisTrade liberalization under neoliberalism is not increasing profit for people bm is not increasing profit for people based on the comparative advantage based on the comparative advantage but rather increase the state and markut rather increase the state and market control of small-scale producers thet control of small-scale producers through new regulation by the state anrough new regulation by the state and market mechanism. d market mechanism.

By doing so, they promote uneven deBy doing so, they promote uneven development.velopment.

However, local people are also constantly negotiating and However, local people are also constantly negotiating and contesting such a large structural flow coming down from contesting such a large structural flow coming down from the top. the top.

The neoliberal idea is also embedded into local practice.The neoliberal idea is also embedded into local practice.