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Part of the reason the thatch are still being used as fertilizers in Iya is because local farmers are not thinking of marketing the agricultural products. Agriculture in Iya was, and is, done on steep slopes unfit for making rice paddies, and the so called "regional specialty" are the buckwheats, which usually indicates that the soil is poor. The idea of selling the agricultural products are rather foreign to people in Iya.
But these thatches are actually very good as a fertilizers. Compared to the fertilizers sold in markets, these thatches will create larger particles in the soil, making more empty spaces in the soil that would hold water and let air pass through. On top of that, covering the ground with chopped thatch has an effect of mulching the ground, absorbing the raindrops and prevents the erosion. In places like Iya, where the fields are on the steep slopes, erosion preventions perhaps matter more than adding the nutrition to the ground.
But harvesting the thatch is quite a labor. It certainly is easier to just simply buy fertilizers. So, as someone who's objective is to preserve the thatch field/grassland, it may be a good idea to try to sell the thatch to the farmers. Organic farming would add the values of the agricultural products. If it is done well enough, perhaps the thatch may even revive the local agriculture.
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