Possibility of arbitration processes in the contract farming system

Although agriculture serves as the major occupation in Thailand, a considerable number of Thai farmers have suffered a shortage of funds and technology to run their agricultural operations. To resolve these problems, the Thai Contract Farming Promotion and Development Act B.E. 2560 (2017) (Thai Contract Farming Act) has been enacted to facilitate and enhance opportunities for farmers by establishing a safeguard system of the contractual arrangement between farmers and agricultural business operators, namely a ‘contract farming system’. The farming contract under the contract farming system is a bilateral agreement with the terms and conditions that farmers are committed to selling their agricultural products in advance to agricultural business operators with predefined specifications concerning quantity, quality, and price, while agricultural business operators will provide financial resources and commit to buying back those products. Such a contract facilitates various advantages and positive relationships for farmers and agricultural operators. However, most agricultural business operators have employed pre-designed contracts to favor their interests, leaving the majority of Thai farmers still at a disadvantaged status due to their lack of knowledge and vulnerability to beneficial exploitation in the form of power imbalance. When disputes arise, moreover, traditional and alternative dispute resolution methods in Thailand are unable to provide equitable solutions for the parties in the contract farming system. This thesis aims to analyze the possibility of creating and balancing bargaining power between farmers and agricultural business operators in dispute resolution methods. The author has examined the legal frameworks of India, Vietnam, the United States, and China, as well as other soft law frameworks from UNIDROIT, FAO, and the World Bank, and found that arbitration is applied to resolve disputes of contract farming for rectifying existing power imbalances and promoting fairness among the parties. As a result, the research reveals that the existing alternative dispute resolution proceedings under the Thai Contract Farming Act need improvement to better address the complexity and enforceability of the existing dispute resolutions The author’s recommendations are then proposed to ensure a fair and efficient resolution process for agribusiness, benefiting both agricultural business operators and farmers.