Costs and Benefits of Farming and Mining in U-Moong Community

IntroductionU-Moong is a small agricultural community located in Loei province in the Isaan region of Thailand. The village is peaceful and picturesque, with several staggering mountains always in view.  The local residents have sustained themselves through farming and community cooperation for many years and very few seem to have any desire to change their way of life.  Life in U-Moong is simple but villagers are happy. However, with the rise of the mining industry in Thailand, life in U-Moong is starting to become more complicated. In 2006 the company P.T.K. mining limited constructed an open pit iron mine on a mountain in the vicinity of the community. Some locals oppose the mine and worry that the potential construction of three new open pit mines in the area by Palin Ltd., Sumthong Ltd., and Pornratchan Ltd, and the general expansion of industry could threaten their agricultural way of life. 

This report seeks to analyze the economic costs and benefits of mining versus farming. The report considers potential income of the village’s agricultural resources, community food consumption, the price of selling land to the mining company, and royalties paid by the company to the village. Findings from the data are projected over several years to determine whether mining or agricultural practices are more beneficial for the community long term. Data was collected by surveying 48 households, in addition to using reports previously produced by the mining company and local NGOs. It should also be acknowledged that mines have social impacts that cannot be expressed quantitatively. To address this, the report includes several case studies in which villagers voice their views on the mine through more in depth interviews. The goal is to create a full and holistic picture of which practices are best suited specifically for U-Moong. 

Community HistoryIn the mid 1870’s, a group of villagers originally from Laos and Thailand migrated to the land that is currently U-Moong village. The allure of this land was its fertile soil, ideal for growing crops. Yet, they found something unexpected; ancient pagodas covered in vines were scattered throughout the land.  By 1877, villagers had begun to permanently reside in the valley area surrounded by the mountains of Loei Province.  By 1882, the villagers named their village after what they initially found.  The name “U-Moong” comes from “Oob Mong,” referring to the vines that covered the entrance to the ancient pagodas and the fact that the village itself is situated in a valley.  In 1997, U-Moong was separated into 2 zones, village number 5 and number 10. Today, approximately 360 families, most of whom make their living through farming, live in U-Moong, located 11 kilometers from the popular tourist destination Chiang Khan and 69 kilometers from Loei City.

Community Resources

Located in a valley in between the mountains of Loei, the village of U-Moong is blessed with extremely fertile soil, as well as rich flora and fauna. Since the arrival of the first settlers of the region in the late 1800s, quasi self-sufficient agriculture has been the main use of the land, providing the area with a large variety of produce. Today, the actual farming practices have changed, but agriculture remains the primary industry of the region. Of the 48 surveys conducted in U-Moong, over 90% of responses reported farmer as occupation. The average income of an U-Moong villager, mostly from selling crops, is approximately 198,125 baht per year and the average annual expenses, including food, water, gas and electricity, are around 82,500 baht. Most villagers practice forms of both mono-cropping and integrated agriculture. The water they use for agriculture is mostly from nearby rivers, streams and man-made ponds. Their croplands are mainly situated in the areas surrounding the village in the mountains, approximately 5 to 45 minutes away by tractor.

U-Moong farmers primarily grow three main cash crops: corn, mango and banana. Based on the survey data, an U-Moong household will have an average of 35 rai of corn, 11 rai of mango, and 21 rai of banana. Taking into consideration the 360 households that make up U-Moong, the villagers collectively own a total of 12,750 rai of corn, 4,085 rai of mango and 7,685 rai of banana. Figure 1 and 2 below illustrate these findings.

Figure 1 Figure 2

Rubber is another important cash crop that contributes to U-Moong’s total income. In addition to the three main crops, around 30% of the villagers also farm rubber. On a day-to-day basis, U-Moong farmers usually spend most of their morning and early evening

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cultivating mangoes, corn, bananas as well as other fruits and vegetables. Villagers who also farm rubber return to the fields at night to harvest the rubber. Through integrated agriculture techniques many farmers grow other crops, including rice, tamarind, tomato, chili pepper, papaya, and pomelo. A smaller number of farmers also raise cattle and chickens, either to sell or for village consumption. Villagers depend on the forest for naturally growing herbs and vegetables, such as lemongrass, bamboo shoots and wild mushrooms. Furthermore, the natural water sources around the region provide the local residents with a variety of aquatic life for consumption, such as crabs, frogs and fish.

Voices: Wisat Aatthong

One street in U-Moong is occupied by multiple generations of like-minded people.   Collectively, this group is called “The People Who Love Their Hometown,” or PWLH.   The group consists of people who are strongly against both the current mine as well as the three potential mines near the U-Moong community.  After working in their farms all day, they sit outside of their homes along their street, eating together, relaxing, and joking with each other.  However, it is not all fun and games for the members of PWLH.  There is a constant worry about the future of their children and their community.  The concern stems from the feared effects of the current mine, and the possible effects of the three potential mines. 

One member of PWLH, Wisat Aatthong, a 50 year-old farmer, is passionate about sharing his feelings on the mining industry in his home

and his love for his community.  “The only weakness throughout our village is the mine,” he claims, “it [P.T.K. mining company] is trying to change our community.” Wisat manages to carry out his daily activities despite the fear of mining activities altering his community.

Wisat is a hard-worker who spends a majority of his time on his farm. He and his family have 50 rai of integrated farming land containing corn and rubber trees, as well as 5 rai of rice.  His farm is the only form of income that supports himself, his wife, his wife’s mother, and their 29 year-old son.  Their farm generates about 200,000 baht per year.

Wisat Aatthong, 50, embodies the views of “The People Who Love Their Hometown” group.

Some villagers have sold parts of their land to the mining company, but Wisat’s land was not in the vicinity of the mines. Even if his land was within the mining area, he states that, “No I would not have sold it. If I had sold my land I wouldn’t have anything to eat now.” Wisat cites the strongest points of his community as agriculture and food both of which, according to him, are directly affected by the mine. Before the mine came in Wisat and his family would find some of their food in nature, but the mine has made this no longer possible. Wisat’s family spends 90 baht per day on food.  This cost has risen since mining activities began in the area, due to the fact that local residents can no longer find fish or other animals in the environment surrounding U-Moong.  “Before we could eat anything here,” Wisat asserts. Villagers are also afraid to continue to drink rainwater while at home and working on the farm, causing an additional expense of about 150 baht a month on potable water.  This change in livelihood is a direct result of Wisat’s concern about how the dusts the mines affect the community’s water sources. Wisat believes they cannot find fish or drink rainwater because the water is now contaminated from mining operations. In 5-10 years Wisat strongly believes his community “will turn into a sea of dust if this mine continues and the others begin.”  The biggest concern is for the children of the village, as he points to two toddlers playing in the streets, he says, “the kids that age are the ones who will have to face the worst of the effects.”  Yet even with this daunting future ahead, there are positive things occurring in the community.  The PWLH has become a growing movement throughout U-Moong as Wisat testifies, “we now have a lot more people who have joined us.  If we are unified we will win.”

Community Sustainability

Although the mining industry is said to bring economic growth to the Isaan region, U-Moong community is able to economically sustain itself through its abundance of agricultural resources without the help of mines. On average, villagers surveyed grow 29.1% of their food themselves. Additionally, 94.4% of villagers surveyed obtain more than 60% of their food from within the community while 47.2% of villagers consume food entirely produced within the community.

By growing cash crops, practicing integrated agriculture, and gathering food from nature, U-Moong farmers are able to maintain a sustainable way of life. Many of villagers surveyed commented that they love the calm and simple atmosphere in the village and appreciate the community’s plentiful and diverse resources. The U-Moong villagers are self-reliant enough that they can maintain food security without the presence of outside entities.

Figure 3

Crop (one rai) Income per yearCorn 2000 baht

Banana 3000 baht

Mango 7500 baht

Furthermore agriculture provides greater long-term economic benefit for villagers than selling land to mining companies. On average, villagers receive 20,000 baht per rai of land that they sell to the company. However, some villagers have reported that they did not receive the full amount of money promised. In addition, after that initial gain, the only benefit a villager sees is in royalties paid by the mine. Royalties are not divided proportionately and are spread very thin. Villagers who both sell their land and experience the negative effects of the mine receive the same amount in royalties as villagers in other places who don’t experience the mine’s effects. When the amount of royalties allotted to U-Moong are divided among each household, they only total 56.55 baht per household per year, based on 2012 data. At first, selling land to the mine is profitable but this profitability decreases over time.

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In contrast, agriculture provides consistent income over time. The following chart shows the average income generated by one rai of each of U-Moong’s three major cash crops per year.

Figure 4Although farming never yields a burst in income like selling does, villagers make more from farming cash crops in the long run. Figure 5 depicts cumulative income generated by one rai of each of the three cash crops alongside the income generated by selling one rai of land plus royalties received by one household. Producing a variation of crops locally is also more environmentally sustainable than buying food transported from other regions. Eating food produced locally both eliminates transportation costs and fuel emissions. Additionally, growing a variety of crops increases a community’s resilience to famine. Large-scale monoculture farming generally uses a single strain of seed, meaning that an entire crop could be destroyed if induced to a disease that it is not resistant to. Most farmers in U-Moong grow multiple crops on their land, which provides them with higher economic and food security, while employing a food system with a smaller fossil fuel emissions than that of more industrialized societies that need to transport food. If the expansion of industry decreases villagers’ ability to farm, the region will see a decrease in environmental sustainability.

Our research show that after 10.3 years corn generates more income than selling land, bananas after 6.8 years, and mango after only 2.7 years. Thus, it can be concluded that in the long term agriculture provides more economic and environmental stability for villagers than does selling land to the mining companies. Figure 5

Voices: Boontob

Boontob Chaisee, 47, a man of few words sits quietly, perched on a tractor looking contemplative in the village heat. He’s a modest farmer, with about 4 to 5 rai of land up the nearby mountain. Some villagers are avid mine protesters while others are quietly supportive. Boontob, however, takes a mild stance of indifference, “If the three mines want to open, I’m fine with that. I’m in the middle.”

Boontob has lived in U-Moong his whole life, and his parents were born here as well. He has a number of brothers and sisters in the village and has a good relationship with fellow villagers. In keeping with his casual attitude, Boontob’s

reasoning for loving his village is simple; “Because I was born here.”

Boontob Chaisee, 47, doesn’t feel particularly threatened by the potential mines, but also doesn’t have a strong desire for their construction.

The brevity of responses such as this adds a hint of mysteriousness to Boontob’s character. He speaks of family in U-Moong and a good relationship with fellow community members, but these ties don’t impact his feelings about the potential mines. Although it won’t affect his farmland, Boontob knows what these mines would mean for his neighbors, “It will definitely impact them. This is going to destroy a lot of things. Since the mine will be open in the higher ground it will definitely have an impact on lower ground. It will destroy a lot of farmland.” Boontob understands the potential implications of the mines and feels ready to accept them if the company gets permission to build.

Although his feelings towards the mine are different from some other villagers, both those pro and against, Boontob shares similar feelings about development in U-Moong; “I want it to be more developed; more civilized.” Boontob feels that the mines will, in many ways, bring development into the community, which is one reason he doesn’t oppose them. On the flip side, his love for his community as it currently is keeps him neutral about the potential mines. They would be good, but there aren’t really any problems currently so if the mines aren’t built it’s not a problem.

Mining overview in U-Moong The mountains surrounding the community contain an abundance of natural resources and in many places one can even see iron jutting out of the ground.  U-Moong is an ideal mining location and the mining industry is projected to expand heavily over the next few years.   P.T.K. Mining Co., Ltd owns a mine that has been in operation since 2006, and three more potential mines have already begun construction or secured land near U-Moong. The high concentration of minerals close to the surface makes for an ideal mining location because miners do not have to dig very deep to get the desired minerals, which saves time and money because there is no need to waste time looking for the mineral reserves for mining companies.

The P.T.K. mining company employs 80 people, 50% of whom are residents of U-Moong.  The company pays royalties to the local government, has built roads and has given 15 million baht to be put towards the construction of a new temple in the area. While it is easy to see the assets which the mines bring to the community, the ethics of the company’s licensing process are less clear.  As a part of the liscensing process, a public hearing was to be held in U-Moong, but according to some villagers, when P.T.K. mining company heard that the there would be a large opposition present, the hearing was moved to a nearby village that is unaffected by the mine and far away from U-Moong. U-Moong villagers insist they were never notified of the new location for the public hearing.

Recently, the National Human Rights Committee, or NHRC conducted an investigation on the Thai government’s failure to address villager concerns, a violation of the Thai constitution. At a hearing in Loei City on November 26th, 2013, the NHRC questioned some of the governmental bodies on their actions throughout the mining licensening process. Some representatives claimed they had lost the documents or that another department was in charge of having certain files. The NHRC gave warnings to certain bodies that they had to come up with the files or else further action will be taken. The investigation is ongoing, but it is not likely that it will stop the construction of the three new mines

Voices: Kanya Kamngor As Kanya Kamngor, 64, puts on his boots every morning before he goes to work, he reflects on the fact that he may not agree with the activities of the company he works for. However, he understands what he must do to support his family.  Kanya has been a farmer since he left school after the 4th grade. Born and raised in U-Moong, he had grown corn all his life until four years ago when he was unable to continue, lacking the funds needed for the initial investment at the beginning of the season.  As of 2009, he has been working at the local iron mine near his home to support his wife and young grandchild. 

He works six days a week, all year-round.  Since the implementation of Thailand’s new minimum wage laws he makes 300 baht per day, compared to the 150 baht daily he was

64 year-old mine worker Kanya Kamngor, is the sole provider in his household.

making prior to the new law.  His job consists of unblocking bits of iron that get stuck on a conveyor belt while heading to the collection site.  He makes anywhere from 9,000-10,000 baht per month depending on how much overtime he works, or about 108,000-

120,000 baht per year.  

Since working for the mine, one major change is his new inability to self-sufficiently meet his family’s food needs. Where before he would grow every crop they needed and raise chicken and pigs, he now spends 50-100 baht per day on food.  This is an added cost that was non-existent when he was a farmer. He states that the only positive of working at the mine is that “The money is constant; we get money at the end of every month.”  For him, a major negative of working at the mine is that he “can’t farm; the mine is better for income because you need money to start farming.” 

Kanya’s views about working for the mine differ from his overall attitude towards the mine’s effects on the community. He states that, “the mine destroys the environment and the health of people living around the mine.” As for the people in U-Moong that do support the mine, Kanya claims, “Those are the people who want more development in the community, they don’t think about the

negative impacts.” When asked what he thinks about the three potential mines near U-Moong, Kanya says with a stern face: “The new mines will be very dangerous because they are higher up and cause more destruction down below.” With the future in mind, Kanya says his family will stand their ground. He asserts that, “No matter what happens we have to stay here; there is nothing we can do.” 

Even though he states he wouldn’t want the mine in his village if it were not there already, he acknowledges, “I will continue working at the mine until I can’t anymore, because I can no longer work in the fields.” Kanya asserts that many people that work there may not support the mine, but because it is close to the village already they can work there and make more income.  In the morning, when the mine workers are getting ready to go to work, Kanya is not alone in his decision to focus on supporting his family, even though it comes at the cost of working for a company whose practices he disagrees with.

A main road in U-Moong where many villagers, like these two women, spend their afternoons.

Effects of the Current Mine

While the mine is intended to bring industry and economic gain to the region, it has also been the source of much concern for villagers in U-Moong. Whereas it has not been proven that the existing iron mine has harmed the villagers physically, the fear that it has caused has disrupted the community. Chemicals from the mines have the potential to contaminate villagers’ water sources. Water from the river is used to irrigate their crops. Contamination of these water sources would ruin their crops and cause health effects for the villagers. In the past, the villagers used to drink rainwater but now fear of air pollution makes this unsafe. During mining operations large amounts of dust are thrown up into the air, and when it rains this dust is brought down to ground-level. Since 2006, 80% of villagers have been buying drinking water, costing each household an extra 300 baht per month. “Before [the mine], no one had to buy water but now everyone has to buy drinking water because they are afraid of the [possible] contamination of river water and rain water,” says 45 year-old U-Moong farmer Wiraya Seeilai. Villagers have also noted that since the mine’s construction, there have been certain problems. 44 year-old Kumteun Kumeug asserts, “Since the mine, the water in the river looks murkier, with less fish and the fruits grown around the mine don’t look as good.”

Voices: Two Women Two women relax in hammocks on the side of the road, swaying and chatting in the shade, which provides relief from the afternoon heat. Woman 1 has lived in the village her whole life, just like her mother, and has a home with her husband and two children. Friendliness and comfort show clearly in her smile and chatty demeanor; life is good for Woman 1. She owns over 100 rai of land in the mountain, land that has been undisturbed by the iron mine.

About 5 or 6 years ago Woman 1 sold 40 rai of her land to P.T.K. for 10,000 baht per rai “Everyone else around me already sold their land. They didn’t actually say what they were buying the land for,” she explains. Woman 1

doesn’t seem hurt by the tactics the company used to get land, although she wouldn’t have sold it if she’d know it was for a mine. “Maybe if they paid 20 million,” she jokes. Despite the potential for anger and not having known where her land was going, Woman 1 laughs with her friend, clearly not feeling tricked or betrayed by the company.

With a casual shrug, Woman 1 states, “If you ask me if I wanted the mine to be open, no. But then I didn’t go to that side of the mountain very much so I don’t know the landscape there.” Similarly, she says she does not want the three new mines to come but admits that she does not participate in any movements to protest them and actually sees many positives of the mines. She feels that there is “both good and bad. The effects were noise, I mean, we hear noises but according to their regulations they try to keep it under 80 decibels. There are good things to the mine as well because it provides jobs for people.” For Woman 1, the occasional low noises from the mine seem to be a negligible con compared to the jobs provided for villagers.

Woman 2 rocks slowly in her hammock, listing the other pros of the mine: “Not sure about the other 3 mines, but on P.T.K. side they help with lots of things. …If we go up to them and said we want soil, they bring soil out for us, and also they help with a lot of religious festival that happen in the village. I think they do take good care of the communities.” Woman 2 was eager to speak and had no trouble coming up with what she thinks of U-Moong; “we live like brothers and sisters,” she reflects. “We can ask each other for anything.  People aren’t selfish like people in the city.  We have culture and traditions”. She holds her community close to her heart, and P.T.K. provides things for the family and neighbors that she cares for.

A large hope for the future is more development. Woman 2’s love for her community leads to desire to change, or prevent, a reputation of being underdeveloped. The light ease of conversation becomes a little more serious as Woman 2 speaks about her hopes for the future. She wants the government to step in and help with development efforts. Now that they’re joining the AEC, Woman 2 believes the villagers should learn English. She names other development ideas, stopping the lazy sway of her hammock with intention. She voices, “A lot of people in the rural areas are uneducated. What we’re afraid of is being tricked by someone.” “If we have more chance for communities to be developed that would be good because if we only stay within our own communities, we do not know anything about the outside then we can be tricked into doing lots of things.”

Woman 1 and Woman 2 laugh and talk on a typical U-Moong afternoon; their lives seem almost ideal. These women certainly love their community and don’t consider the mine, or potential mines, as entities that would be harmful to the people they love.

Cost Benefit Analysis

The collected data on community resources, sustainability and effects of the mine will be used to measure the potential successes or damages the mine will bring to the area through an analytical study of its cost and benefits projected on a 20 year period.

Figures 6 and 7 below compare the costs and benefits of the mine to the costs and benefits of farming in order to decide which practice is more financially beneficial for the region. The first graph (Figure 6) takes into consideration the opportunity cost of the mined land. The opportunity cost curve will consider the potential losses of land if used for mining, such as the income from farming the land, and compare it to its potential benefits, such as royalties. If the opportunity cost curve has a negative slope, it shows that the losses of the mined land outweigh its benefits for the community.

Currently, the P.T.K. mine utilizes 80 rai of land for its mining procedures. Based on our research, 80 rai of land sold to the mining company would sell for a total of 1,600,000 baht, on average. However, if that same land were to be used for agriculture, the 80 rai of corn would, on average, generate 160,000 baht per year with expenses of approximately 50,000 baht per year. The operating mine would pay royalties to the TAO of Bu-Hom sub-district, which would subsequently be distributed to 11 villages. In 2012, the TAO received 224,000 baht from P.T.K. for the villages. Thus, on average, a village in Bu-Hom would receive 20,360 baht annually. By subtracting the losses from the benefits of the mined land mentioned above, its opportunity cost can be calculated. Figure 6 below, illustrates that over a 15-year projection period, the losses of the mine for the community are higher than its benefit to the community, creating a downward sloping curve.

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Figure 6 – Graph illustrates the opportunity cost of mined land considering the annual income including expenses of 80 rai of land if it were to be used for mining instead of farming.

Below, Figure 7 compares the incomes of farmers who have and have not sold farmland to the mining company. Based on our research, on average, a farmer who sold land to the mining company would only sell 30% of his land. Using 100 rai of corn as an example, 30% of land sold would consist of 30 rai, leaving the farmer with 70 rai of corn. For 30 rai of land sold to the company, the farmer would receive 600,000 baht1. The farmer’s remaining 70 rai of corn would provide him with an annual 140,000 baht2. On the other hand, the farmer who kept his 100 rai would make 200,000 baht per year. The final factor to consider is the average yearly expenses of an U-Moong household, which our studies have calculated to be at 82,500 baht. Figure 7 shows the income of both a farmer who has and hasn’t sold 30% of his land projected on a 20-year period. Figure 7 reveals that for the first 10 years, it is more profitable to sell 30% of your land; however, at the 20 year mark, the income of the farmer who didn’t sell his land is higher, thus, proving it to be more advantageous and economically beneficial to keep your land in the long run.

Figure 7

Conclusion

1 Calculation based on average selling price of 20,000 baht per rai.2 Calculation based on the average annual productivity of corn at 2,000 baht per rai.

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There are a variety of opinions about mines and agriculture amongst villagers in U-Moong, exemplified by our four in-depth interviews included in our report. Despite differences in opinions, there are certain measurable ways to determine which is more sustainable and beneficial for the community. Our research is primarily considering monetary costs and gains. For the community as a whole, considering average income, royalties, and expenses we found that for a plot of 80 rai, it costs more to mine on land than it would to use the same land for agriculture.

Our study also looked at costs and benefits on and individual level. When comparing a farmer who sold 30% of his land to a farmer who farmed all of his land, we found that while selling land initially causes a spike in income, after around 10 years the farmer and seller will have made the same profit, and after 20 years the farmer will be making more than the villager who sold land.

This research is limited, and doesn’t take into account potential health costs due to mining contamination or cleanup and repairs needed once the mine is finished.

In conclusion, agricultural practices are more beneficial in the long run than selling land to the mining companies, even if the immediate pay-out for land would be higher than the profit from a farmer’s yield in one year. Ideally the information in this report will provide all villagers with the same information on which to base future decisions about their community.