Credit Cards For Thai Farmers To Be Launched By Nov 1

[hammered]

When various economists, academics and media sources were railing against every PTP policy the one they thought was a good idea and should be enacted was this one.

[rametindallas]

The Government are not better than the loan sharks.

Load em up with debt, own their souls.

The Abhisit govt had a very good program to refinance the high interest debt caused by the previous Sinawatra program of "easy credit" for farmers. Now here comes another Shinawatra plan to put farmers back into debt. A very good way to pick up farms for a song, making it another sad day for Thai farmers, once again.

At least it will get rid or the poor farmer problem when they lose their farms. /sarcasm

[rametindallas]

The Government are not better than the loan sharks.

Load em up with debt, own their souls.

There are a couple of reasons why this is a really bad idea: 1) It is just a little more sophisticated approach to vote-buying than has been the traditional norm; 2) Thais generally do not know how to calculate interest/debt and, what is worse, are not interested in learning how to do the math; 3) Obviously, this will make it easier for Thai farmers to lose farmland and homes to lenders.

Thus nicely defending the rural/Bangkok-elites' right, to screw-over the rural poor, and ensure a steady-supply of cheap-labour, and continuing support & funds for the major political-parties too.

Bring-on a Land-Tax to raise a little cash off the major landowners, it's clearly long-overdue, the Dems were at-least discussing one so when will the defenders-of-the-poor pass the legislation & introduce it ? Sadly my guess is not for a long time yet.

A tax on fallow or unused land shoud be implemented immediately. It would put more land on the market making land more affordable to the middle class, it would bring in tax money directly and through land transfer fees. More land then being productive means more people prospering and paying taxes. Yes, you are so right about this tax.

[rametindallas]

Loan Sharks maybe, indentured servitude yes.

Just look at what Republicans did to America, corporate greed is an animal hard to kill.

Excuse me but the big ripoff of the world was done by Wall Street banks, not corporations, and the banks are notorious for supporting the dimorats. Think Chris Dodd and Barney Frank et. al. Get your fact right before you spread propaganda. Besides, you are off topic.

[rubl]

When various economists, academics and media sources were railing against every PTP policy the one they thought was a good idea and should be enacted was this one.

A matter of education it seems:

"CREDIT CARDS FOR FARMERS MAY WORK [bUT THE DEVIL IS IN THE DETAILS}"

The central bank has strict rules governing the credit card business to prevent runaway consumer debt that could threaten financial stability. Under the rules, cardholders must show income of at least Bt15,000 a month or Bt180,000 a year. Commercial banks can charge only up to 20 per cent in annual interest - including penalties for overdue payments.

Most of the 6.9 million farm households will not meet the central bank's criterion since average family income was Bt58,632 in the 2009-10 crop year.

However, state banks could lower the bar in order to accommodate farmers with business cards. The specialised financial institutions supervised by the Finance Ministry use different accounting practices from commercial banks.

Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said the credit card project could be implemented. Many people would agree with Pheu Thai that the cards could be used to store data on farm production. It could also be used for other purposes in the future, such as for records on cash handouts in time of economic crisis.

However, the crucial point is that Pheu Thai said the cardholders need not pay interest when they use the card. It is absurd and means the government will fully subsidise interest payments. The BAAC is unlikely to shoulder such a cost. Currently the bank charges about 7-per-cent interest on farm loans.

Easy credit could create a moral hazard, as farmers may not spend their credit carefully. The government will also need to allocate a budget to support this scheme besides the budget needed to support its price subsidy scheme for farm products.

Many developing and advanced economies have paid a high price in terms of economic and social crises stemming from easy credit policies. The government should proceed carefully.

[hammered]

When various economists, academics and media sources were railing against every PTP policy the one they thought was a good idea and should be enacted was this one.

A matter of education it seems:

"CREDIT CARDS FOR FARMERS MAY WORK [bUT THE DEVIL IS IN THE DETAILS}"

The central bank has strict rules governing the credit card business to prevent runaway consumer debt that could threaten financial stability. Under the rules, cardholders must show income of at least Bt15,000 a month or Bt180,000 a year. Commercial banks can charge only up to 20 per cent in annual interest - including penalties for overdue payments.

Most of the 6.9 million farm households will not meet the central bank's criterion since average family income was Bt58,632 in the 2009-10 crop year.

However, state banks could lower the bar in order to accommodate farmers with business cards. The specialised financial institutions supervised by the Finance Ministry use different accounting practices from commercial banks.

Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said the credit card project could be implemented. Many people would agree with Pheu Thai that the cards could be used to store data on farm production. It could also be used for other purposes in the future, such as for records on cash handouts in time of economic crisis.

However, the crucial point is that Pheu Thai said the cardholders need not pay interest when they use the card. It is absurd and means the government will fully subsidise interest payments. The BAAC is unlikely to shoulder such a cost. Currently the bank charges about 7-per-cent interest on farm loans.

Easy credit could create a moral hazard, as farmers may not spend their credit carefully. The government will also need to allocate a budget to support this scheme besides the budget needed to support its price subsidy scheme for farm products.

Many developing and advanced economies have paid a high price in terms of economic and social crises stemming from easy credit policies. The government should proceed carefully.

Microcredit/credit schemes to enable the poor to invest their way to something better are all the rage with free marketeers although they have a bit of a mixed success rate in reality. However, more social democratic governmental interventionist approaches a little out of vogue these days since the success of the free market was proven a few years ago when the state had to come running save the free market corporations from collapse;)

[phanangpete]

THIS in theory is a good idea, one, if it is managed properly by the farmers themselves, and they are educated in the repayment system, i remember a couple of years ago that the then Govt, froze the interest rates and extended the repayment period on bank loans to the same people! I presume a credit check will be done prior to issue of cards. Not really a good idea to pile debt on already existing debts, no doubt they will have a safety net in place to avoid this potential problem.

[NanaFoods]

since the success of the free market was proven a few years ago when the state had to come running save the free market corporations from collapse;)

Wrong. You are confusing crony-capitalism with a free market.

[slapout]

Hammered to compare free market investors to a credit card scam for a farmer who is trying to feed a family, acknowledged to be at a bare substance level, would seem somewhat inappropriate, in today's, social/economic endeavors. If you are serious about trying to help the farmer with his seed, fertilizer cost, etc bring in the required material, line the farmers up and disperse the required freebies dependent upon the size of the plot to be farmed. Everyone has the same thing, thus less chance to tweak/take advantage of the system.

Some of us have observed the effect the handing of advertised free/subsidized modern material things, has accomplished throughout the world. The recipients have a well founded reputation for having abused them, sold them, or just trashed/walked away from them, time and again. The groups who propose and handle the distribution and the purchase of the needed commodities/supplies and end products, have shown time and again that they are less honest than those abusers on the receiving end. Sadly it seems to be the former group who come out with an inflated bank account without any labor or a reduced life style.

[Ricardo]

Bring-on a Land-Tax to raise a little cash off the major landowners, it's clearly long-overdue, the Dems were at-least discussing one so when will the defenders-of-the-poor pass the legislation & introduce it ? Sadly my guess is not for a long time yet.

I'm sorry, but how is paying rent on one's own property going to help the poor?

The result is no true land ownership, and the rich will certainly survive such a measure.

Are you being sarcastic?

Where did I mention "rent" ?

What I'm suggesting is that, since the farmers may well be forced to sell their land to the already-rich landowners, in order to clear their credit-card debts, a land-tax on the large land-owners would be a good thing.

The Dems' proposal for a land-tax was, I believe, aimed at large (not small) landowners.

[NanaFoods]

Where did I mention "rent" ?

When you proposed a land tax.

Is there really much difference?

If you don't pay the tax.... you lose your land. Same as renting.

It means diminished ownership rights.

What I'm suggesting is that, since the farmers may well be forced to sell their land to the already-rich landowners, in order to clear their credit-card debts,

It seems you've assumed many farmers will go apesh*t over credit cards. I'm quite pessimistic about that. My impression from the farmers I know around here is that they prefer cash transactions and seem to shun credit, other than perhaps the necessity of a bank loan to buy farmland. From my talks with them, they hate to pay interest, and even with the low rate at the Thai Farmers bank, they race to pay it off early, if they can. Credit cards?? Just doesn''t seem like their style to me.

a land-tax on the large land-owners would be a good thing. The Dems' proposal for a land-tax was, I believe, aimed at large (not small) landowners.

Land-tax a good thing, eh? You really haven't thought this through.

Who draws the line on who is "Large" landowners? Large in size (which could include some not-so-rich farmers with low-value but sizable farms) or large in monetary value (like a relatively small plot in Bangkok in a high-value area)? Where is the cut-off?

And how difficult would it be to modify the legislation later to include smaller and smaller land-owners?

Let's assume, for argument's sake, that the Dems intention is just as you say and is all well-meaning. What happens when the administration changes, or even if the current admin finds itself strapped for cash? The foundation would already be in place to tax land (for the "Rich", supposedly) -- perhaps they don't even need to pass another bill to include the small guy as well ... just a few strokes of the pen and....voila. Be careful what you wish for.

[Emptyset]

The Government are not better than the loan sharks.

Load em up with debt, own their souls.

There are a couple of reasons why this is a really bad idea: 1) It is just a little more sophisticated approach to vote-buying than has been the traditional norm; 2) Thais generally do not know how to calculate interest/debt and, what is worse, are not interested in learning how to do the math; 3) Obviously, this will make it easier for Thai farmers to lose farmland and homes to lenders.

Thus nicely defending the rural/Bangkok-elites' right, to screw-over the rural poor, and ensure a steady-supply of cheap-labour, and continuing support & funds for the major political-parties too.

-

Bring-on a Land-Tax to raise a little cash off the major landowners, it's clearly long-overdue, the Dems were at-least discussing one so when will the defenders-of-the-poor pass the legislation & introduce it ? Sadly my guess is not for a long time yet.

As long as the card is just for essentials, I can't see how it's not a positive move considering many farmers have to borrow from elsewhere (probably at higher rates) to afford these things. Like Hammered, I'm not a huge fan of micro-credit (I prefer more socialist solutions), but it has its uses and this seems to me to be a better use of it than the village fund etc. Are farmers really going to be losing farm land over money borrowed to buy essential goods? Seems like you're jumping way too far ahead to me. Has anyone lost their land after not being able to pay back the Village Fund, for instance? I don't know, but I haven't heard about that - I'd much rather owe money to the government than local loan sharks, though. Sounds a bit patronising to me, calling it 'vote buying'. It's not like it's free money to spend on what you like. I don't see how it's any more 'vote buying' than offering unemployed people welfare is, or free healthcare or subsidized school uniforms... etc.

I really don't see how the card 'defends' the 'right' to screw over the poor and provide a cheap supply of labour. Of course it's not going to fix these things, but it's hardly going to make them any worse than they are already. Eventually people need to be moved into more productive industries and away from 'peasant' life. That's the only longterm solution to inequality, although I share your wish for a land tax (and greater taxes on the wealthy in general). I don't think the Dems were the only ones to discuss such a bill, PPP also had one: http://www.nationmul...l-30081380.html - although the Dems one may have gone further than that. Irrelevant if it doesn't get passed, I suppose.

It's also a bit patronising to assume rural people are stupid and they're going to quickly run themselves into massive debts, losing their land, isn't it? Right now it's restricted to essentials anyway, but even if it wasn't - some people may be irresponsible, but the majority should be trusted to use it wisely. See studies of the village fund: http://asiancorrespo...-mobile-phones/

Edited September 10, 2011 by Emptyset

[aripengu]

More Debt is always better... Go Thailand! Credit, Credit, Credit! It's the way to go. Yeah!!

[Ricardo]

It's also a bit patronising to assume rural people are stupid and they're going to quickly run themselves into massive debts, losing their land, isn't it? Right now it's restricted to essentials anyway, but even if it wasn't - some people may be irresponsible, but the majority should be trusted to use it wisely. See studies of the village fund: http://asiancorrespo...-mobile-phones/

I don't assume or say that rural people are stupid, but I do suspect that they're going to be tempted by credit-cards, especially if they permit spending on "emergency cash loans" as the OP says. I also suggested that they should get basic financial guidance, along with the cards, to help them avoid running into trouble. Am I wrong ?

[kotsak]

One card to rule them all, One card to find them,

One card to bring them all and in the darkness bind them

Edited September 10, 2011 by metisdead
Font reset to default forum font.

[Ricardo]

Where did I mention "rent" ?

When you proposed a land tax.

Is there really much difference?

If you don't pay the tax.... you lose your land. Same as renting.

It means diminished ownership rights.

What I'm suggesting is that, since the farmers may well be forced to sell their land to the already-rich landowners, in order to clear their credit-card debts,

It seems you've assumed many farmers will go apesh*t over credit cards. I'm quite pessimistic about that. My impression from the farmers I know around here is that they prefer cash transactions and seem to shun credit, other than perhaps the necessity of a bank loan to buy farmland. From my talks with them, they hate to pay interest, and even with the low rate at the Thai Farmers bank, they race to pay it off early, if they can. Credit cards?? Just doesn''t seem like their style to me.

a land-tax on the large land-owners would be a good thing. The Dems' proposal for a land-tax was, I believe, aimed at large (not small) landowners.

Land-tax a good thing, eh? You really haven't thought this through.

Who draws the line on who is "Large" landowners? Large in size (which could include some not-so-rich farmers with low-value but sizable farms) or large in monetary value (like a relatively small plot in Bangkok in a high-value area)? Where is the cut-off?

And how difficult would it be to modify the legislation later to include smaller and smaller land-owners?

Let's assume, for argument's sake, that the Dems intention is just as you say and is all well-meaning. What happens when the administration changes, or even if the current admin finds itself strapped for cash? The foundation would already be in place to tax land (for the "Rich", supposedly) -- perhaps they don't even need to pass another bill to include the small guy as well ... just a few strokes of the pen and....voila. Be careful what you wish for.

I hope that you're right, and that the lure of easy-credit will be resisted, by these canny financially-aware poor-farmers. I happen to share (must be my Scottish ancestry) the extreme-aversion to credit, which you believe they have, but with food-prices rising I think it may be hard to avoid borrowing, even if they're not tempted by motorbikes or mobile-phones or alcohol or karaoke-temptresses ! They're only human after all !

A land-tax ought to be aimed at large land-owners, or those who fail to farm their land, and putting in a suitable minimum-size of land-holding ought not to be beyond the wit of the legislators. Could it be corrupted by a future administration, well of course, but the law of diminishing-returns operates with Income-Tax & VAT, so should also apply here.

What I don't wish for is a new credit-scheme, which tempts people into debt, and results in their losing their land or livelihoods. But a scheme which avoids any risk of this, and finances tools or seed or fertiliser to boost production and increase rural-incomes IMO "is laudable", as I said back in my original post.

We shall see how it all pans out, hopefully for-the-better, and that potential-downsides are not realised.

[legendarysurfer]

One card to rule them all, One card to find them,

One card to bring them all and in the darkness bind them

Oh, this is priceless. Thanks for the laugh, kotsak!

[MAJIC]

The Government are not better than the loan sharks.

Load em up with debt, own their souls.

Couldn't have said it better, might be a "democratic" government, but keeping the indentured servitude,, or economic slavery, is just as alive. Funny how the can give them credit cards in a few weeks, but the minimum wage is too difficult. Well guys, be prepared to pay for gf's family credit card soon! I think they're relying on the fact that so many working girls, or girls who are looking for farang are from rural areas!

It was also the same case in the West four or five decades ago? sadly it shows how much catching up with western working class enlightenment,Thailand needs to do.

[elgato]

One card to rule them all, One card to find them,

One card to bring them all and in the darkness bind them

[janverbeem]

My impression from the farmers I know around here is that they prefer cash transactions and seem to shun credit, other than perhaps the necessity of a bank loan to buy farmland. From my talks with them, they hate to pay interest, and even with the low rate at the Thai Farmers bank, they race to pay it off early, if they can. Credit cards?? Just doesn''t seem like their style to me.

You must live in a different Thailand I guess,as most of the farmers borrow money on their future harvest.

[NanaFoods]

My impression from the farmers I know around here is that they prefer cash transactions and seem to shun credit, other than perhaps the necessity of a bank loan to buy farmland. From my talks with them, they hate to pay interest, and even with the low rate at the Thai Farmers bank, they race to pay it off early, if they can. Credit cards?? Just doesn''t seem like their style to me.

You must live in a different Thailand I guess,as most of the farmers borrow money on their future harvest.

I guess Chainat is a "different" Thailand, according to you. Yes, farmers here are a bit more prosperous than other farming provinces, but I made no sweeping statements as you seem to imply. Actually, I made it quite clear I was talking about my area and the farmers I know. Sorry, I haven't had the chance to interview farmers all over Thailand.

Aside from that, borrowing on your future crop to pay for the fertilizer to produce it hardly equates to a propensity towards a credit card scheme. To repeat, I said "it doesnt seem like their style to me". That is not a sweeping statement.

[Emptyset]

I don't assume or say that rural people are stupid, but I do suspect that they're going to be tempted by credit-cards, especially if they permit spending on "emergency cash loans" as the OP says. I also suggested that they should get basic financial guidance, along with the cards, to help them avoid running into trouble. Am I wrong ?

No.

[ToffeEFCpower]

Maybe this card is not compulsory and the farmers have the right to refuse one. In which case they cannot incur an extra debt.

[longtimepassed]

The whole scam is nothing more than an elaborate extension by Thaksin , his family and their brown nosing acolytes to lure farmers into debt so as the local loan sharks can snatch more ground as their reward for supporting the P.T.P. ( Personal Thaskin Property) administration.

Yet again the innocents are funding their own debt bondage and enslavement to the new elite who profess sympathy for the ordinary people.

No small wonder that education is feared.,

Im in TOTAL agreement - who said "Countries get the Governments they deserve"?

[rubl]

Maybe this card is not compulsory and the farmers have the right to refuse one. In which case they cannot incur an extra debt.

Farmers can apply for some a special credit card and depending on some circumstances / checks may qualify.

[Buchholz]

Farmer Credit Card Registration to Open on Oct 7

The Bank for Agriculture and Agricultural Cooperatives will open registration for the farmer credit card and rice pledging schemes on October 7.

Executive Vice-President of the Bank for Agriculture and Agricultural Cooperatives Arun Lertwilai said registration for the credit card scheme for farmers will open on October 7.

Registration for the rice pledging scheme will open on the same day in five pilot provinces – Chiang Mai, Ayutthaya, Saraburi, Nakhon Ratchasrima and Udon Thani.

A total of 5,000 credit cards will be issued to farmers, starting from November.

Arun elaborated on the farmer credit card scheme that the loan amount will be equivalent to 70 percent of the farmerss revenue from the sale of their crops.

For instance, if a farmer sells 20 tons of rice at 20,000 baht a ton, he will be entitled to a loan of 140,000 baht.

The amount of 100,000 baht will be transferred directly to the farmer's bank account for use in reconditioning the field.

The remaining 40,000 will be a credit card allowance which can be spent on seeds, fertilizer and pesticide.

The senior banker went on to explain that the bank will charge an interest rate of seven percent per year for the 100,000-baht cash loan.

As for the credit card loan, the bank will waive the interest for the first month and charge an interest rate of seven percent for the remainder of the term.

However, the government will absorb interest payment for farmers until they harvest and sell their crops.

Farmers are obliged to pay the interest at the rate of ten percent and a three-percent penalty a year should they fail to repay their credit card debts once they sell their crops.

The Bank for Agriculture and Agricultural Cooperatives will call a meeting of 3,000 stores participating in the farmer credit card scheme on October 15 to discuss preparations before the launch.

Participating stores are not required to pay any installation fees for the credit card swipe machines.

The bank is also looking to propose assistance measures for clients affected by the ongoing flooding for the Cabinet's consideration after damage is summarized.

Initially, the bank is considering deferring debt repayments for three years for farmers whose plantations were destroyed by at least half.

All debts will be written off in the case that a farmer dies in the flooding.

-- Tan Network 2011-09-23

Edited September 23, 2011 by Buchholz