Maize Seed Production in Thailand: Costs, Returns, and Contract Participation

Thailand has aimed at becoming a “Seed Hub” in the region given that it is the second largest exporter of seed of field crops in Asia. Maize contributes the largest share of seed exports and is the prototype crop for seed industry promotion. One of the goals of the Seed Hub policy is to develop and export high quality Thai brand-name seeds. The structure of the maize seed industry, however, is such that it is concentrated in a few Multinational Companies (MNCs), and the question remains as to whether national and local companies could give farmers the same benefits as the multinational companies. This study aimed at comparing costs and returns across groups of maize seed companies and determining factors associated with farmers’ participation in contracts. The results show that despite a higher cost of production, overall, MNCs give farmers the highest net income because of a higher productivity and higher price they give to the farmers from complying with the strict requirements of the contract specifications, followed by national companies, while local companies give the least. Requirements in household labor, investment in irrigation, size of farm, land rent, and age are important factors in farmers’ participation in different groups of seed companies.

Keywords:

Choice model , Contract farming , Multinational companies , Production contract.