IJERD – International Journal of Environmental and Rural Development (2022) 13-1

Research article
erdDiscussion about A Model in Operation and Accumulation of
Joint-Use Fund Management by Rice Farmer-groups
YUKI TOYAMA*
United Graduate School of Agricultural Sciences, Tottori University, Tottori City, Japan
Email: yukiuki1019@gmail.com

ASRES ELIAS
Faculty of Agriculture, Tottori University, Tottori City, JapanKUMI YASUNOBUFaculty of Agriculture, Tottori University, Tottori City, Japan

PANATDA UTARANAKORN
Faculty of Agriculture, Khon Kaen University, Khon Kaen District, Thailand
Received 30 January 2022

Accepted 22 April 2022(*Corresponding Author)

Abstract Substantial number of rice farmer-groups are established under the promotion ofgroup farming policies in Thailand. The groups voluntarily form joint-use funds and operate
their business with them. The objective of this study is to make the model of joint-use fundmanagement by rice farmer-groups with two approaches: 1) observing the characteristics of
successful cases in the rice farmer-groups established by two policies in Northeastern
Thailand; and 2) simulating a fund management on the groups based on one case group in
Khon Kaen province. The case groups established funds using the resources provided by
the government. Through operating the group’s business, members invest in-cash or in-kind
input and pay the service charges into the fund. Then the accumulated capital was used forproviding returns to members’ investments and scaling-up the groups’ business. Based on
actual accounting data of one case group, we simulated revolving joint-use fund by rice
farmer-group. The result showed that the group assumed to accumulate enough amount ofassets to provide sufficient service for all members using the initial fund derived fromgovernment support. A conceptual model of joint-use fund management for the rice farmers
group was described. The model will be utilized to guide rice farmer-groups in developing
their business and becoming independent from government support.
Keywords group farming, community, government support, northeastern Thailand

INTRODUCTION
Small and family-run farms are evaluated as important agents to achieve a stable and sustainable
food supply (FAO and IFAD, 2019; FAO, 2014). Generally, in the area where small family farms
are dominant, most farmers face challenges to scale-up their business because of land
fragmentation and lack of production resources (HLPE, 2013). On the other hand, group farming is
one of the major means to improve the productivity of small family farms facing resource
constraints. It helps to achieve economies of scale and respond to the external environment. For
instance, East Asian countries (e.g. Japan and South Korea) achieved a dramatic improvement inagricultural productivity through spreading group farming (Wong, 1977).
In Thailand, the government adopted group farming concept into agricultural development
policies and established many farmer-groups, especially related to rice production. Some studies
mentioned that the rice farmer-groups received in-cash and in-kind resource supports fromgovernment and operated their business through managing and utilizing joint-use funds (Ohara etal., 2021; Tanaka and Yasunobu, 2019). It is also indicated that a substantial number of groups
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(Uchook, 2018). At present, the joint-use funds are voluntarily operated by members of the groups.
However, to the best of our knowledge, there is no manual and/or guideline regarding how suchkind of activities have been implemented. Therefore, to suggest a model of handling joint-use fundis supposed to be benefitable for encouraging farmer-groups to continue/expand their business.
OBJECTIVE
We consider a model of joint-use fund management by rice farmer-groups in Thailand throughachieving the following objectives: 1) To investigate the characteristics of joint-use fundmanagement among the groups which continuously accumulate the fund; 2) To simulate the cycleof accumulating joint-use fund and scaling-up the business; and 3) To conceptualize joint-use fundmanagement for depicting a model based on the above results.
METHODOLOGY
To achieve the objectives of this study, we adopted the following approaches. First, we explored
the actual situation of how rice farmer-groups manage their own business and joint-use fund, withthe cases of rice farmer-groups established by the encouragement of policies. Then, we conducted
the simulation of revolving joint-use fund based on one case which conducted the lending businessof combine harvester and kept its account record, and finally, the conceptual model was induced
from the results.
Survey Site Selection
In this study, we selected cases of rice farmer-groups located in Khon Kaen and Ubon Ratchathani
provinces in, the Northeastern region. The groups were established under the promotion of twopolitical programs: Community Rice Seed Center (CRSC) and Large Land Plot of Rice (LLPR),
proceeded by the Ministry of Agriculture and Cooperatives (MOAC), Thailand.

Fig. 1 Changes in the distribution of rice production scale among farmers in Thailand
Source: Author’s creation with the data opened at the website of Office of Agricultural Economics, Ministryof Agriculture and Cooperatives, Thailand [https://www.oae.go.th].
Remark) 1 rai = 0.16 ha.

To consider modeling of joint-use fund management, the domain (area and crop) which needs
the model is suitable for the target in this study. In Thailand, Northeastern region and Central
region are the main production areas of rice. The production scale of rice on each farm inNortheastern region is smaller than Central region and group farming policies aiming at small-scale
rice farmers are mainly extended in Northeastern region. Moreover, in Northeastern region, theratio of large-scale farmers is decreasing in total number of rice producers. Fig. 1 shows thechanges in production scale of rice among farmers from 2008 to 2018. At the national level, theratio of farms operating more than 20 rai (= 3.2 ha, 1 rai = 0.16 ha) decreased from 29.2% to 20.0%Ⓒ ISERD

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and this tendency was especially clear in Northeastern region; the decrement on the ratio of farms
operating more than 20 rai in each region is as follows: whole country, -31%; Central, -16%;
Northeast, -44%. From the above, the model proposed by this study will be mainly applied to thefield in Northeastern Thailand and it is reasonable to adopt rice farmer-group located in
Northeastern Thailand as the cases.
Sampling and Data Collection
Various policies related to group farming have been introduced in Thailand. This study aimed thegroups established under two policies targeting rice farmers: Community Rice Seed Center (CRSC)
and Large Land Plot of Rice (LLPR).
CRSCs have been established since the beginning of 2000s (1,650 CRSCs was existed in
2016/2017) as a local supplier of rice seed (Orachos, 2018). To cope with the shortage of rice seedcertified the quality, Thai government tried to realize the self-supply of rice seed in each ruralcommunities through establishing the groups of rice farmers for engaging the multiplication ofcertified rice seed provided by the government institutions (Moonfoui et al., 2007). LLPRs are also
rice farmer-group targeting to perform the economics of scale on rice production in Thailand. The
program was started from 2016 and 3,759 plots were established until March 2022, and about 60%of them were in Northeastern region (DOAE, 2022). The activities of LLPRs are jointly
procurement and use of capital, equipment, and materials (e.g., machinery, miller, storage, rice
seed, group fund), joint shipment to the contracted miller and produce GAP certified rice or riceseed. Both two policies are promoted by the Rice Department, the Ministry of Agriculture andCooperatives, and certain number of LLPRs are established based on existing CRSCs.
Surveyed groups were 34 CRSCs (Ubon Ratchathani: 21 in 90 groups, Khon Kaen: 13 in 92
groups), and 4 LLPRs in 48 groups in Khon Kaen province. All groups were sampled randomly.
Regarding the case CRSCs, the data was originally used in Tanaka and Yasunobu (2019). Face-toface interview was conducted for group leaders with structured questionnaire in August and
September 2015. The data of case LLPRs included both of which deriving from Ohara, et al.
(2021) and which was collected by authors. On our survey, group interview to a few members
including leader was conducted regarding how to manage joint-use fund in August 2018 and July
2019.
RESULTS AND DISCUSSION
Exploring Actual Situation of Joint-Use Funds Management among CRSCs and LLPRs
Table 1 shows how CRSCs accumulated their joint-use funds. All groups accumulating more than
100,000 THB (1 Thai Baht (THB) = 0.031 US$, average in 2021) managed their funds more than
10 years. The larger funds have the tendency that the average amount of fund per member is larger.
The groups which accumulate and enlarge the funds continuously supposed to succuss increasing
the amount of resource which each member can use.
Table 1 Accumulation of joint-use funds among CRSCs
Accumulation classof joint-use fundFrequency(N = 19*2)

Averagenumber ofmembers(unit: THB*1)~99,999
100,000~149,999
150,000~199,999
200,000~

5
4
6
4

31.0
35.5
41.0
42.0

Average term ofaccumulating
fund(unit: years)
05.6
14.5
13.2
13.8

Averageamount of fund

Average amount offund per member(unit: THB)
049,547
130,000
166,417
282,413(unit: THB/member)
1,411
4,040
5,170
7,859

Source: Reorganized by author with the data treated by Tanaka and Yasunobu (2019).
Remarks) *1: THB is an abbreviation of Thai Baht (1 THB = 0.031 US$, average in 2021).
*2: Excluded 8 groups which did not answered amount of fund from 34 surveyed groups.
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Table 2 Activities for input and use of joint-use funds among CRSCs (N=27)
Input to fundIn kind return of rice seed with interest
Share sales
Membership fee
Resales of provided materials
Machinery use charge

Frequency
18
8
7
4
4

Use of fundLoan service
Purchasing materials
Purchasing seeds from members
Investment for machinery and facility

Frequency
18
13
12
8

Source: Reorganized by author with the data treated by Tanaka and Yasunobu (2019).
Remarks) Using the data of 27 groups, excluding 7 groups which did not have joint-use fund from 34 surveyed groups.

The activities for accumulating and using joint-use fund among the case groups are itemized
in Table 2. All case groups received certain amount of free rice seed as government support.
Eighteen groups divided the seed to members and then members return for the dividend in kindwith interest after harvesting. Apart from that, some groups collected membership fee or soldshares to members. The groups having machinery provided lending service for members.
Regarding use of the funds, the most major use of join-use fund was loan service for supporting
members’ livelihood. Other ways of using the fund were joint procurement of materials, investment
for expanding equipment, and compensation of rice seed sales for members.
On the other hand, in the cases of LLPRs, main income sources were revenue of machinery
lending and investment from members through selling share (Table 3). In terms of the share system,
3 of 4 case groups sold group's share to members. The shareholders could get dividend dependingon the amount of group’s revenue and the number of possessed shares. All case groups provided
members with a lending service of machinery leased by the government. The price of lending
charge was lower than the charge of private contractors in the area. In case non-members rent themachinery, the charge was higher than the price for members. However, the groups rarely lendmachinery to non-members because they did not possess enough number of machines to provide
service for all members. To prepare enough amount of machinery and equipment, and provide
services without competition, groups need to revolve their initial fund deriving from government
support and to accumulate joint-use fund for capital investment. In contrast to CRSCs, no LLPRs
provided loan service to members. Since LLPRs have operated for a few years, they did not haveenough amount of fund to launch financial business.
Table 3 Accumulation and use of joint-use funds among LLPRs
Group AGroup B

Group CGroup D

200

67

204

52

Free lending 1 trailerof machinery 2 harvesters

1 tractor
1 harvester
1 trailer
1 drill seeder

1 drill seeder
1 harvester

4 drill seeders

Provision of KDML105*1: 15 t
rice seeds RD6*1: 8.6 t(2016~2019)

KDML105: 13 t
RD6: 2 t

KDML105: 2.25 t
RD6: 15 t

KDML105: 30 t
RD6: 150 t

Share sales
Rice sales
Machine use charge

Share sales
Rice sales
Machine use charge

Share sales
Rice sales
Machine use charge

Seed sales
Machine use charge

Running cost*2
Dividend of share
Reward of committee

Running cost
Dividend of share
Reward of committee

Running cost
Dividend of share
Reward of committee
Community welfare

Running cost
Reward of committee
Machinery purchase*3

Number of members

Govt.
supportInput to fundUse of fundSource: Reorganized by author with the results of Ohara et al. (2021) and the survey in 2018 and 2019.
Remarks) *1: KDML105 and RD6 are the name of rice variety. KDML105 is non-glutinous variety, and the variety islabeled “Jasmin rice” in market. RD6 is glutinous variety which is popularly eaten in Northeastern Thailand.
*2: “Running cost” include maintenance of machinery, petrol, wedge for driver and miscellaneous expenses.
*3: Group D purchased 9 drill seeders with their own fund in 2017.

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Simulation of Revolving Joint-Use Fund on Lending Combine Harvesters
We simulated revolving joint-use fund with the experience of lending combine harvester in one
LLPR case (group A) and showed the path to accumulate joint-use resource enough to provide
services for all members. The reasons why we choose LLPR as the case of this simulation include:
LLPRs focus on joint-use of production resources, but CRSCs’ main purpose is self-supply of riceseeds and LLPR program was started later than CRSC, we could collect the detailed information
about initiation of revolving joint-use fund. The information was useful for simulating from thepoint of receiving subsidies. Among four cases of LLPRs, we could get detailed account data justfrom group A; in the cases of group B, C and D, we could not collect it because of missing some
important records of bookkeeping.
Table 4 Simulation of revolving joint-use fund based on the case of group A
Items (Unit from (1) to (8): THB*1)
1st year*2 2nd year
3rd year
4th year
5th year
Number of operated combine harvesters
2
2
3
4
5
Harvested paddy area by group’s combine harvester*3
400
400
600
800
1,000
Unit: rai (% in 1,000 rai*1 = total registered area)
(40%)
(40%)
(60%)
(80%)
(100%)(1) Total income
324,550
284,550
386,825
489,100
611,375
Rice sales*4
60,00040,00020,00000Investment from member
20,0000000Revenue of lending combine harvester*5
244,550
244,550
366,825
489,100
611,375(2) Total cost
96,72896,728
133,516
170,305
207,094
Running cost for lending combine harvester*5
73,57773,577110,365
147,154
183,943
Reward for committee members
15,40015,40015,40015,40015,400Meeting
5,193
5,193
5,193
5,193
5,193
Miscellaneous expenses
2,558
2,558
2,558
2,558
2,558
(3) Dividend for shareholders*6
29,40029,40046,66263,75980,856(4) Benefit: (1) – (2) – (3)198,422
158,422
206,647
255,036
323,425(5) Amount of fund at the beginning of FY
0198,422
106,844
63,491
68,527(6) Amount of fund at the end of operation: (4) + (5)198,422356,844
313,491
318,527
391,952(7) Cost for purchasing combine harvester0
250,000
250,000
250,000
0(8) Balance of fund at the end of FY*7: (6) - (7)198,422
106,844
63,491
68,527391,952
Source: Reorganized by author with the results of the survey in 2018 and 2019.
Remarks) *1: 1 THB = 0.031 US$ (average in 2021). 1 rai = 0.16 ha.
*2: 1st year’s data is based on the actual account information of group A in 2017/18. The cost-benefit datafrom 2nd to 5th year is estimated based on the data of 1st year.
*3: On the simulation, volatility of harvested area caused by disasters or/and crop failures is not considered.
Average area of each registered plot is 5 rai and most of them are a part of each member’s operated paddy. In
case member’s total harvested area is diminished because of disasters or/and crop failures, The area rolled bygroup’s combine harvesters is supposed not to be affected since members can use the harvesters for their
paddy plots other than registered one.
*4: The government provide LLPRs rice seed for 3 years and the amount is gradually decrease. On thesimulation, it is assumed that the group gets rice for sale from members as the return for providing rice seed
provided by the government. Therefore, the amount of “Rice sales” gradually decreases from 1st to 3rd year
and does not account from 4th year.
*5: Regarding “Revenue of lending combine harvester” and “Running cost for lending combine harvester”,
the amount is assumed to change proportionately to “Harvester paddy area by group’s combine harvester”
based on the 1st year’s data. The value rates are as follows; “Revenue of lending combine harvester”: 611
THB/rai, and “Running cost for lending combine harvester”: 183 THB/rai (including petrol cost, wage for
operator, insurance, and maintenance fee). Both of values were actual data of group A in 2017/18.
*6: “Dividend for shareholders” is estimated based on the following calculation. When the group established,
all members purchased 1 share (100 THB / share) and they receive dividend form the group’s revenue equally.
The amount of dividend was 20 % of the balance between “Revenue of lending combine harvester” and “Totalcost” = (2).
*7: “Balance of fund at the end of FY” = (8) is entirely carried forward as “Amount of und at the beginning of
FY” = (5).

As shown in Table 4, group A had 200 members and 1,000 rai registered paddy field (5 rai foreach member). Each combine harvester assumed to roll 200 rai in one fiscal year and the cost ofpurchasing one combine harvester was set 250,000 THB. If the fund accumulated more than
250,000 THB, the group shall purchase an additional combine harvester. The goal of thisⒸ ISERD

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simulation is to prepare the number of combine harvesters which is enough to harvest on all
registered paddies. Based on the above assumptions, the group can independently continue its
function after the withdrawal of government supports. The group purchased combine harvester andexpanded its business from third fiscal year. When the number of combine harvester reach to five,the group achieved to prepare enough number of combine harvesters for providing all memberswith a lending service.
Conceptual model of Joint-Use Fund Management in Rice Farmers-group
Based on the observation of actual cases and the simulation of revolving joint-use fund, we induced
a conceptual model of joint-use fund accumulation by rice farmer-group (Fig. 2).
This model was formed on the precondition which farmer-group receive an initial provision of
goods (e.g., free lease of machinery, rice seed, fertilizer) from the government. Group members
bring in-cash and in-kind inputs as investments (share purchase or membership fee) and charge ofservices (machinery charge or in-kind return for seed provision). Accumulated capital on the fundis used for providing returns to members (lending machinery, joint procurement of rice seed,
dividend for members who hold shares).Through this input-use cycle, the group keeps enlarging
their fund even after finishing the 3 years provision of materials from the government and successto accumulate enough amount of fund (including cash and fixed assets) to provide sufficient returns
for all members.

Fig. 2 Conceptual model of revolving joint-use fund by rice farmer-group
CONCLUSION
The aim of this study is to simulate a model for the joint-use fund management using cases of rice
farmer-groups located in Northeastern Thailand.
We found both of rice farmer-group (CRSCs and LLPRs) managed joint-use fund through thecycle of input/use. The groups provided services to members with the resources provided by thegovernment and investments from members. A revenue generated by the group was accumulated asa joint-use fund and used for dividend to members, running cost, and capital investment. We
simulated this management cycle of joint-use fund with the account information of one LLPR
group in 2017. The result of the simulation showed that the group can increase the amount of jointuse fund and the scale of operation in terms of machinery rental service to members. From the thirdyear, the group became to keep running their operation without government support, and in thefifth year, the group can scale-up their operation enough to provide service for all members.

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From the simulated result, we depicted a conceptual model of joint-use fund management onrice farmer-group. The figure showed that farmer-groups form an initial fund with resources
provide by government. Through revolving the input-use cycle with the initial fund, the groups
keep enlarging the size of join-use fund even after reducing government support and achieve toaccumulate joint-use fund enough to provide sufficient service for all members. This discussion
showed the potential path in which famer-groups could become independent from government
support through voluntary joint resource management.
However, the result should be refered with a limitation in mind. In this study, the sample size
was not enough to represent the whole situation of rice farmers groups. In addition, simulating
revolving joint-use fund was just conducted with regard to lending service of combine harvester.
The simulation also had the limitation related to a reliability of result because the conditions wereassumed based on just one case of LLPRs. From the above, the conceptual model still stands on
many assumptions.Therefore, further studies are required considering more cases of rice farmergroup on top of including other activities contributing for accumulation of joint-use fund.
ACKNOWLEDGEMENT
This research was supported by the Nippon Agricultural Research Institution and JSPS KAKEN
Grant Number JP17H01490.
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