Welfare: the Missing Dimension in Contract Farming

Farmers in developing countries belong to the informal labor sector, by definition of the International Labor Organization. In most countries, social welfare schemes do not extend to benefit farmers (only 20% of informal labor around the globe has adequate social welfare). In Thailand, it is only recently that Thai citizens have received very modest social or public health insurance. As for the social welfare policy, the Thai government targeted only 0.3 million informal labor workers in the agricultural sector to be covered in 2006. In Northern Thailand, 86% of the farmers reported belonging to least one of these schemes. None of the contract farmers in Thailand and elsewhere receive welfare benefits from formal contract firms. Interviews with the management of international firms confirmed there was no provision of health insurance etc. in the contract.

As contract farming has been expanding in Thailand and extending into new areas in the Greater Mekong Sub-region, it is imperative to consider the welfare issue in addition to fair trade and market access aspects. This is especially recommended for projects under development of agencies like ADB and the Regional Economic Cooperation—e.g., the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS).

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