The Nation, Thursday, April 28, 2016
Opinion & Analysis
Dr. D. Michael Shafer
SPECIAL TO THE NATION
With flights diverted from Chiang Mai International Airport, tourism revenues collapsing and healthcare costs soaring, the haze crisis in the North is on everyone’s mind. Here in the North, everybody loves to blame CP for the problem. And why not? Charoen Pokphand is a big, easy target. It is, after all, the corn contractor par excellence and for years has denied culpability for haze, despite evidence that the immense growth in corn production has led to an equally immense growth in the amount of corn stalk to be burned.
But this misses the point.
CP is the only player in the game that has done anything positive in this whole business and is the only player with the capacity to make a real difference. Several weeks ago, at a high-level symposium in Bangkok CP agreed to carry the initial costs of reducing haze in the North – that is, provide a huge public good – by itself. CP, which actually sources just 15 per cent of its corn from mountain farmers, agreed to provide agricultural extension assistance to farmers willing to try alternative crops on some of their land and to pay double for corn harvested from the rest. The agreement, to be audited by a foreign NGO, will give farmers a bridge from corn dependence to an understanding of alternative crops, at which point they can proceed on their own. Its public purpose is to reduce corn production and so haze produced from burning corn stalk.
This is the first, serious plan ever put for- ward to reduce haze and the first with any prospect of success. It is backed by the expertise of a capable company, accounts for the interests of more than one constituency, will not be subject to the usual corrupt practices and will be outcomes oriented with an outside party evaluating those results. But although much better than anything seen before, the current plan, too, falls short.
So what should CP do?
Let’s start by asking: What are we trying to protect here?
1. The livelihoods of tens of thousands of poor mountain farmers who depend on corn contracts.
2. The public health of the entire popula- tion of the North, which is endangered by the haze.
3. The economy of the North, in which the circulation of corn monies is critical.
4. The economy of Thailand, which benefits from corn feed-based exports such as chicken, and which will suffer if producers pull up stakes and move, only to import meat
5. The global climate, into which field burning pours black carbon (second only to CO2 as a factor in global warming) and greenhouses gases. Past proposals – eliminate
corn production, reforest the mountains, ensure moun- tain people secure land tenure, etc – failed in two regards. First, they failed to recognise that corn has been
the only source of broad-based growth that has benefited the poor.
Prices are low – but compared to what? No one has invested in any other crop with potential for poor farmers. Poor farmers have expanded corn acreage because it is the best thing they have had since opium, and the billions of baht that CP and other feed companies have paid for corn has gone straight into their pockets. No one else has supported them; they survived because CP and other feed companies brought seeds, fertiliser and easy market access. And climate change is making tough, adaptable corn the crop of Thailand’s future when rice production is already threatened by rising temperature and is projected to fall dramatically by 2050.
Second, past proposals failed because their success meant failing to protect one or more of the five values listed above. Kill contract corn and you stop much of the haze and the damage done to the environment; you also impoverish the mountain farmers, damage the economy of the North and turn Thailand into a large-scale importer of feed or meat. If you switched farmers to alternative crops (never seriously attempted before because of the lack of capacity), some mountain villagers went to coffee, for example, but most remained corn growers. And any real success would have damaged the economy of the North, because there was no real hope for alternatives and the loss of feed corn would have turned Thailand into a large-scale importer of feed or meat.
So can CP’s new offer save the day?
It can certainly do more than any other programme proposed by anyone else.
The new CP offer saves the livelihoods of participating poor farmers and provides them the assurances and financial support necessary to make the transition to new crops. The resulting reduction in corn production will reduce haze somewhat and so, too, the associated environmental and public health problems. CP’s participation ensures that the farmers will receive the extension they need and that markets will be established for the new crops. Successful new crops will soften any economic blow to the economy of the North.
But this leaves a lot uncovered.
CP sources just 15 per cent of its corn from mountain farmers and CP is alone in this programme. Who will transition the growers of the remaining mountain corn? Put very differently, if CP succeeds in switching its farmers from corn, where will chicken and pig farms, dairies and cattle feed lots get corn to replace the lost supply? And if other contract corn companies follow suit, what of the still sharper reductions in feed supplies? What will happen to meat and dairy prices? Will chicken, pig and cattle production remain in Thailand? If it does not, what will compensate for the thousands of jobs lost, the billions of baht in economic activity lost, the increased food dependence and added pressure on foreign exchange earnings?
Finally, but most important, how is CP to pay for all of this? Where is the return on investment from providing extension services to thousands of small farmers? From paying double for corn grown while farmers are experimenting with new crops?
This entire proposal – CP’s entire “offer” – raises two fundamental questions: 1) what is the responsibility of private companies to provide public goods that public authorities cannot or will not provide? And 2) how much sense does it make to build the “solution” to critical public problems on such obviously unsustainable programmes that require the continued loss-making support of private, for-profit companies?
What might CP do to produce a sustainable solution that meets all five needs – and its own?
To take a bad situation and turn it into a business opportunity with human and environmental benefits. CP must provide its own solution, not simply respond to the pressure of interest groups, not one of which has a comprehensive plan or the capacity to implement anything. CP needs a plan fully integrated with all aspects of its own business operations so that CP can implement it entirely on its own with existing company resources. Such a solution would be sustainable because it is in line with the company’s business interests.
Properly conceived, such a solution could also be environmentally sustainable and nationally optimal. These features would be incidental, however, not because they do not matter, but because unless such solutions make business sense to the company, they will not last – and any public benefit will die with them.
What might such a solution look like?
The problem is hundreds of thousands of tonnes of waste corn stalk that farmers have no option but to burn in order to clear their fields for the next crop. CP can teach
farmers how to turn their corn stalk into a valuable product: biochar. Biochar, a pure form of charcoal, is made using a process called “pyrolysis” that produces no smoke, no black carbon, and virtually no greenhouse gases. The production of biochar is also carbon-negative, meaning that it removes CO2 from the atmosphere, reversing global warming.
To encourage farmers to make biochar, CP can include the purchase of the biochar made from contract corn stalks in the same contracts as for the purchase of corn kernel.
CP also owns large pig farms where it has manure management problems.
Biochar is an excellent absorbent, capable of absorbing huge quantities of pig urine. It also dramatically reduces smells by adsorbing the ammonia and other noxious gases produced by pig urine and manure that make it smell so foul. Conveniently, mixing biochar with pig urine and manure creates a very effective organic fertiliser.
At the start of a growing season CP can distribute the biochar fertiliser to farmers in lieu of distributing synthetic fertiliser as it often does now. The reduction in synthetic fertiliser costs will fund biochar purchases, while the biochar fertiliser will improve farmers’ soils and yields because it provides many more benefits than synthetics, including the capacity to retain water. Biochar fertilisers have the added benefit that biochar “locks up” pesticides in the soil. This reduces the risk of toxins entering the food chain and reduces the amount of toxic run- off from fields.
Taking such a “life-cycle” approach – from field waste and manure to fertiliser and feed – CP joins the ranks of a corporate elite, companies that make environmental sustainability part of the way they do business, and distinguishes itself from the majority of companies that talk about the environment without making it part of business operations. Such public relations is literally priceless, because it cannot be bought, but will serve CP well as it deals with consumer pressure groups in Europe.
If CP offers such a solution to the “corn crisis”, it secures all five of the values we seek to protect. Farmers continue to get corn contracts and now get contracts for biochar made from their corn waste. Public health improves because every tonne of corn waste that is “pyrolysed” keeps six kilograms of smoke from being released into the air.
The economy of the North gets a boost because the poor have more money in their pockets which, being poor, they spend immediately. The Thai economy can continue to grow as consumers do not face higher meat prices, chicken exports do not fall, and thousands of jobs and billions of baht of economic activity do not move to Myanmar. Thailand sharply reduces its national carbon footprint as the reduction in field burning cuts black carbon releases and the rise in biochar production cuts GHG emissions and sequesters three tonnes of CO2 for every tonne of biochar produced.
Is this solution perfect?
Will all farmers accept the new biochar contracts?
Does it address all of the critical issues that confront the North?
Of course not.
Insecure land rights, the lack of meaningful agricultural extension, and extreme income inequality are long-standing and not going to be solved anytime soon.
But if CP takes this approach, these problems do not have to be solved. Because this CP solution is profitable for farmers and CP, other feed companies less progressive than CP can imitate it. It is ideal for government, too, as it requires no government action or budget commitment, only promotion. And because it expands through imitation, it avoids the common problems of foreign NGO interventions that never grow beyond their initial blast zone.
Which brings me back to my starting point. CP is the one actor in the drama that can make a difference and that has proved itself willing to try. Let’s quit bashing CP and instead ask CP, out of its own interest, to do what it can to improve conditions in the North.