Farm Land . What Will Happen To The Farmers If They Are Not Financed By The Govt

[SICHONSTEVE]

While the critics here attack the government’s policy of buying rice at higher than market values, just take a look at what happens in the USA that keeps the farmers on the land.

Subsidized crop insurance. This enables farmers to receive the same amount of money each year even if they produce less if say a drought

hits like last year.

The drought hit the Corn Belt hard last year, but farmers still did well because they were able to sell their reduced crop at higher prices. In

addition, the insurance payments they received for their losses were often based on drought-inflated prices.

Richard Gates, who farms about 1,000 acres in Carmi, Ill., lost 80 percent of his corn crop. Still, he says he earned as much profit as he would have if the drought had never happened.

http://www.alaskadispatch.com/article/20130610/senates-new-farm-bill-will-waste-billions-subsidies-critics-say

And while direct payments to farmers will end, there still will be continual government subsidies.

http://online.wsj.com/article/SB10001424127887324904004578537850230355808.html

Thai agriculture can not compete with the above and countries like my own, New Zealand, also can not. But what we in NZ can get, is easy bank credit. Farmers can go into overdraft, receive working capital and pay it back when the crops are sold, the sheep shorn or the animals sold.

And I don’t even want to discuss what happens in Europe. There many governments want to keep the countryside looking good for urban people to holiday and drive through.

I would like to think that Thailand would be the "food bowl" of Southeast Asia. Plenty of land. But, alas, I fear that one day Thailand will become a food importer. There is just no long term agricultural planning here at all.

Excellent summary of the global agricultural situation!!!

The USA is not so different to Thailand in many ways (although Thailand has cocked it up completely with this pledging scheme). All they are doing in Thailand is enacting populism policies in order to garner the votes through duping the people into thinking that they are helping them - when they are not when it comes to the small farmers and it is wasting 100's of billions of tax payers Baht in the process.

In America it is pretty much based on protectionism to keep their farmers happy and is therefore, in part, designed to attract their votes. However, the farmers are naturally Republicans so this will only have a limited effect. Another way you could rightly argue the reasoning behind doing this (protectionism) is in food insurance for the American people. Having said that, the politicians (in cahoot) with Monsanto seem determined to put this at risk!!

The Thai Democrats policy was far less costly and wasteful and DID help the farmers importantly!!! Whats more,they even admitted the fact (grudgingly of course) just before the election that they HAD benefitted from the Democrats agriculture policies.

If they continue to listen to and believe Thaksin's stupid thinking on this disastrous and utterly wasteful scheme (scam as some people have anointed it) then that is their perogative, but they cannot come back bleating and crying that they are bankrupt and desparately in debt when it is their fault in the first place by voting for and then relying on this truly awful rabble that couldn't run a tombola if it was explained to them 20 times how to do it!!!! This has been my major beef all along and until they learn to trust educated people to truly help them they will be stuck in poverty, and until they come to their senses and see what the Shinawatra family is really all about then their lives can only get worse!!

Corruption is rife right down the line and only the politicians and their family and friends seem to be profitting from it, which is unethical and totally immoral, especially when it is done in the name of helping the farmers, whereby they have been so badly let down and left to struggle in trying to eak a living from the land!!!.

[Jotham79]

I don't doubt that most Thai politicians are so crooked you have to screw them in the gound when they die, but what I have seen (over the last 20 years) is under Taksin and now Yingluck, the rural people are better off. Under Taksin there were tons of roads and lakes (for irrigation) made. It died out when Thaksin left and has picked up again since Yingluck has gotten elected. No doubt that corruption is rife, but people will vote what is in their best interest. And in my area things go alot better under Taksin and Yingluck.

This place reminds be of Louisiana under Huey P. Long. People there used to boast that they had the best poiticians money could buy.

[somo]

Whatever your views about Taksin the fact is he recognised that Isaan was an untapped
political force and like all politicians used that to help himself to power. The democrats had had plenty of time to help the poorer members of society but thought they were politically irrelevant. Now they are very relevant and can swing elections there is big money going their way.
For that Taksin can take the credit even if his motives were dubious.
For all the criticism of Thai politics and it's vote buying it is really no different to the USA as above posts point out re agriculture policies.
If you have enough money to throw at it most US political posts are there for the taking.
Thailand is just cheaper.
It is a shame though that as is normal all over the world a high percentage of the money directed at the poor is gobbled up by intermediaries. Who amongst us would turn away easy money if we knew we could get away with pocketing some.

[IsaanAussie]

GREAT PAGE GUYS. There is some seriously experienced knowledge behind these opinions.

So just to rock the boat, I offer my opinion of the objective behind the rice pledging scheme. Thailand has slipped down the ladder from being the largest exporter but it has an internationally acclaimed "brand" in Hom Mali 105. There have been some threats to it being a unique Thai strain but defended to the large part. I believe this pledging scheme is really all about ensuring the continuance of the rice strain and maintaining its unique market position and hence premium price.

Thai people has rice to eat and the government has control of sufficient export stock to control the market. Yes the scheme is flawed internally, less of all by totally inadequate and unsuitable storage provisions. But to me, as a national resource the end game does justify the means.

At least it isn't potentially a cause for WW3 with the Russians!!

[SICHONSTEVE]

GREAT PAGE GUYS. There is some seriously experienced knowledge behind these opinions.

So just to rock the boat, I offer my opinion of the objective behind the rice pledging scheme. Thailand has slipped down the ladder from being the largest exporter but it has an internationally acclaimed "brand" in Hom Mali 105. There have been some threats to it being a unique Thai strain but defended to the large part. I believe this pledging scheme is really all about ensuring the continuance of the rice strain and maintaining its unique market position and hence premium price.

Thai people has rice to eat and the government has control of sufficient export stock to control the market. Yes the scheme is flawed internally, less of all by totally inadequate and unsuitable storage provisions. But to me, as a national resource the end game does justify the means.

At least it isn't potentially a cause for WW3 with the Russians!!

Have to disagree with you on this I'm afraid. The opposite is true as they have been incentivised to grow us much rice as possible and have chosen (unsurprisingly) to grow poor quality rice which grows faster and that these premium varieties that you romanticise about are'nt amongst them and it could actually be the death nell for them unless they do the sensible thing and cancel this crazy scheme.

This will lead to (has already in effect) Thailand massively over-producing rubbish rice to get 2/3 crops in, in a year as the government has pledged to buy every grain of rice at wildly inflated prices compared to the free market irrelevant of quality, condition or variety. Please tel me, where can the sense be in that??

[alexander69]

Apart from the government assistance, most people around here rely on family living away to fund the yearly rice crop. Here there are several instances of people who are skipping steps in preparation and planting that they have always done before, because that money is not available this year. This will lead to weed infested rice harvest,reduced yields and reduced income. When pushed for why, the answer is the same, family has a new "first time buy" car. That in itself is another story that should get interesting around Christmas when the freebie packages and rebates run out and the monthly costs skyrocket.

Another issue is a change made to the law which passes the debt non-repayments of the children on to the parents.

To quote from the movie "Snatch" as the cockneys drove into the gypsy camp, "This will get messy!"

Very good quote from you, they are my exact thoughts fro my experience here in Isaan

[Michael Hare]

I agree and disagree with the above recent posts by IsaanAussie and Steve. From what I have observed and read is that a lot of non-Hom Mali rice from other regions and from Cambodia has been purchased by rice traders and entered into the rice purchasing scheme. Thus, Hom Mali is losing its fragrance and quality. It is high time that DNA testing is used to test for genuine Thai Hom Mali rice. Easy test to do. However, given the interests involved of influencial people it probably will never happen.

I hated Thaksin when he was PM. But nearly all my contract farmers love him and love his sister. He really did indeed improve their lives in many ways. And I have been in villages with his local MPs. THey do get stuck in among the locals. Eat, drink, sing, and then provide projects that are easy to see and implement like concrete roads. They seem to be able to fit in well. Whereas the Democrats, do not seem to fit in and are a spent force among the farming Isarn villagers unless they come down and work hard together with these farming folk.

Just my opinon and observations.

[somo]

I think the thai gov had an inflated sense of power regarding the world rice market and thought they could emulate Saudi Arabia and OPEC. It would seem they have got it wrong and international financial watchdogs are sounding warnings as to its cost. I have no problem with subsidising farmers as everyone is at it but Thailand is a small economy compared to the USA and EC who can toss billions at their farmers. Copying that could be a disaster here as they simply do not have the money. Add to that the inability to get the money to the famers that grow the stuff (middle men seem to benefit the most) and it looks bleak.

The turn around in the strength of the Baht may be an indication that international investors are begining to put their money elsewhere. A gradual depreciation would probably be a good thing long term but short term it is an unwelcome sign of loss of confidence.

[IsaanAussie]

GREAT PAGE GUYS. There is some seriously experienced knowledge behind these opinions.

So just to rock the boat, I offer my opinion of the objective behind the rice pledging scheme. Thailand has slipped down the ladder from being the largest exporter but it has an internationally acclaimed "brand" in Hom Mali 105. There have been some threats to it being a unique Thai strain but defended to the large part. I believe this pledging scheme is really all about ensuring the continuance of the rice strain and maintaining its unique market position and hence premium price.

Thai people has rice to eat and the government has control of sufficient export stock to control the market. Yes the scheme is flawed internally, less of all by totally inadequate and unsuitable storage provisions. But to me, as a national resource the end game does justify the means.

At least it isn't potentially a cause for WW3 with the Russians!!

Have to disagree with you on this I'm afraid. The opposite is true as they have been incentivised to grow us much rice as possible and have chosen (unsurprisingly) to grow poor quality rice which grows faster and that these premium varieties that you romanticise about are'nt amongst them and it could actually be the death nell for them unless they do the sensible thing and cancel this crazy scheme.

This will lead to (has already in effect) Thailand massively over-producing rubbish rice to get 2/3 crops in, in a year as the government has pledged to buy every grain of rice at wildly inflated prices compared to the free market irrelevant of quality, condition or variety. Please tel me, where can the sense be in that??

I live in Isaan. We can only grow one crop per year as it is totally dependant of rainfall. I grew HM105 for nine years and changed to another Mali strain which doesn't lodge as badly as 105 under our conditions. I lived in Central Thailand for a number of years and watched the shorter season rice under irrigation be grown 3 or 4 times per year, but other than eating the stuff I have no first hand knowledge of multicrop strains. So sorry I cannot venture an opinion. I do know that as a consumer I much prefer Mali to all other Thai rices.

[SICHONSTEVE]

GREAT PAGE GUYS. There is some seriously experienced knowledge behind these opinions.

So just to rock the boat, I offer my opinion of the objective behind the rice pledging scheme. Thailand has slipped down the ladder from being the largest exporter but it has an internationally acclaimed "brand" in Hom Mali 105. There have been some threats to it being a unique Thai strain but defended to the large part. I believe this pledging scheme is really all about ensuring the continuance of the rice strain and maintaining its unique market position and hence premium price.

Thai people has rice to eat and the government has control of sufficient export stock to control the market. Yes the scheme is flawed internally, less of all by totally inadequate and unsuitable storage provisions. But to me, as a national resource the end game does justify the means.

At least it isn't potentially a cause for WW3 with the Russians!!

Have to disagree with you on this I'm afraid. The opposite is true as they have been incentivised to grow us much rice as possible and have chosen (unsurprisingly) to grow poor quality rice which grows faster and that these premium varieties that you romanticise about are'nt amongst them and it could actually be the death nell for them unless they do the sensible thing and cancel this crazy scheme.

This will lead to (has already in effect) Thailand massively over-producing rubbish rice to get 2/3 crops in, in a year as the government has pledged to buy every grain of rice at wildly inflated prices compared to the free market irrelevant of quality, condition or variety. Please tel me, where can the sense be in that??

I live in Isaan. We can only grow one crop per year as it is totally dependant of rainfall. I grew HM105 for nine years and changed to another Mali strain which doesn't lodge as badly as 105 under our conditions. I lived in Central Thailand for a number of years and watched the shorter season rice under irrigation be grown 3 or 4 times per year, but other than eating the stuff I have no first hand knowledge of multicrop strains. So sorry I cannot venture an opinion. I do know that as a consumer I much prefer Mali to all other Thai rices.

You have just added credence to my argument - it is a well known fact that many Thai rice farmers have taken advantage of this foolhardy scheme (you can hardly blame them for it after all) and have changed, where they can grow these productive strains, to inferior grains that net them more money.

If this government had put restrictions on what rice can be grown and stated that they will only buy good quality rice that is saleable rather than a brazen promise to purchase every single grain then it wouldn't have been half as bad as it is!!

"when Thaksin thinks" all of Thailand suffers the consequences, full stop!!!

[Bluetongue]

I don't doubt that most Thai politicians are so crooked you have to screw them in the gound when they die, but what I have seen (over the last 20 years) is under Taksin and now Yingluck, the rural people are better off. Under Taksin there were tons of roads and lakes (for irrigation) made. It died out when Thaksin left and has picked up again since Yingluck has gotten elected. No doubt that corruption is rife, but people will vote what is in their best interest. And in my area things go alot better under Taksin and Yingluck.

This place reminds be of Louisiana under Huey P. Long. People there used to boast that they had the best poiticians money could buy.

Yes the Dems seem to be disconnected to me, the other side is by no means perfect or even anywhere close but in the politics game out in the sticks they are miles ahead. I don't live in a rice growing area.

Having said that I haven't seen (locally) any tangible improvements under Yingluck for three or so years. The local roads have gotten steadily worse as each half hearted fix falls apart. The army did build a new road which hardly anyone uses. I tend to think that the local politicians in my area are not the pick of the bunch, I suspect some other areas where there is more drive and commitment things are better. I have seen a new regime come in to the Thesabahn and the only money tangibly spent is digging irrigation for cronies or self and propping up the reticulated water to the village and town by using water trucks to deliver water to people. Up the road I see proper repairs being made to roads, garbage collection and other public works that make me think "aah someone cares here". So if you have a good local government half your luck. Me I just drive the car into the potholes now, there's no route through the maze anymore.

But during each election our farm (where 6 families live) gets several cartons of beer from each side, my BIL always manages to get them to substitute a bottle for Lao Khao. The beer is targeting me, I'm the only one that drinks it, don't vote, go figure.

[Cashboy]

Back to the topic:

Farm Land . What Will Happen To The Farmers If They Are Not Financed By The Govt

Thai government claim that unemployment is only 0.3 % so in the West that would be full employment.

I understand that the Thai government are using imported labour from Cambodia and Laos because there is a shortage of workers.

I am told that it is very difficult to find anyone to work on the farms and actually do a proper days work anymore.

I understand that many family members have left their farms to work in construction in Bangkok and they send money back to the family.

On the basis of the above, you would expect farm land to actually fall in value based on supply and demand.

But the price of farmland actually keeps going up and people on this forum talk about 100,000 bt per rai for farm land. At that price the profit from growing on a rai would not even cover the bank interest. I am reading that people are taking bank loans to buy this land at this uneconomical price. How can they even afford to pay the bank interest, let alone the capital back on these loans?

Farm land at these prices is the same as the UK !

It is also evident that rent seems to be 500 bt per rai that equates to 0.5% return on the 100,000 bt per rai cost of land; again not making logical sense.

On top of this, I am reading that farmers are getting into debt buying chemicals and seeds because they are not getting the income they expect from the crop.

I am reading that they are buying farm equipment from Kubota etc and are struggling to pay the loans back.

I would be expecting people to be breaking the terms of their loans and the banks foreclosing/repossessing their assets (land).

However, this does not seem to be occurring.

I try to understand the economics in Thailand and it just does not make sense to me.

I walk the streets of Bangkok and there is construction going on everywhere but who (if any) are buying these condos?

Are the bank loans so easy to get (remember the 125% loans available in the UK in 2007) for Thais?

I would have expected Farm land in Issan to have actually fallen in price not kept rising; but this is not the case.

I am interested in this topic because I am sitting waiting to buy farm land at what I believe to be the correct price (say 50,000 bt per rai within 1km of a proper road).

[somo]

Back to the topic:

Farm Land . What Will Happen To The Farmers If They Are Not Financed By The Govt

Thai government claim that unemployment is only 0.3 % so in the West that would be full employment.

I understand that the Thai government are using imported labour from Cambodia and Laos because there is a shortage of workers.

I am told that it is very difficult to find anyone to work on the farms and actually do a proper days work anymore.

I understand that many family members have left their farms to work in construction in Bangkok and they send money back to the family.

On the basis of the above, you would expect farm land to actually fall in value based on supply and demand.

But the price of farmland actually keeps going up and people on this forum talk about 100,000 bt per rai for farm land. At that price the profit from growing on a rai would not even cover the bank interest. I am reading that people are taking bank loans to buy this land at this uneconomical price. How can they even afford to pay the bank interest, let alone the capital back on these loans?

Farm land at these prices is the same as the UK !

It is also evident that rent seems to be 500 bt per rai that equates to 0.5% return on the 100,000 bt per rai cost of land; again not making logical sense.

On top of this, I am reading that farmers are getting into debt buying chemicals and seeds because they are not getting the income they expect from the crop.

I am reading that they are buying farm equipment from Kubota etc and are struggling to pay the loans back.

I would be expecting people to be breaking the terms of their loans and the banks foreclosing/repossessing their assets (land).

However, this does not seem to be occurring.

I try to understand the economics in Thailand and it just does not make sense to me.

I walk the streets of Bangkok and there is construction going on everywhere but who (if any) are buying these condos?

Are the bank loans so easy to get (remember the 125% loans available in the UK in 2007) for Thais?

I would have expected Farm land in Issan to have actually fallen in price not kept rising; but this is not the case.

I am interested in this topic because I am sitting waiting to buy farm land at what I believe to be the correct price (say 50,000 bt per rai within 1km of a proper road).

Your analysis is pretty much spot on.

Couple of points though.

I wouldn't want to pay much more than 30k/rai as at that price it would still take me 5 or 6 years to get my money back.

Farmers taking loans from their bank think of it as free money and never think of repaying it or the interest.

It would be poitical suicide if the Gov allowed the bank to start repossesing land and what would they do with it anyway.

Worst case scenario would be that after about 10 years the bank does reposses but the farmer pays nothing and has had 10 years use for free.

In addition the land was probably purchased from a relative so the money stays in the family anyway.

The bank would probably allow the farmer to carry on using the land although technically no longer owning it.

Farmland rent in my area is now about 1000/rai/yr up from the 500 of a few years ago. It is however almost impossible to find simply because it is still a good deal.

[swissie]

No matter if farming with or without "subsidies" from governments, in the future there will be only 2 ways of farming left. Small scale farming to support the needs of the family OR big time farming with lots of land.

Getting caught somewhere in the middle resembles an economic death-sentence. This is a global issue and not limited to Thailand.

Cheers.

[Wat dee]

20%? Wish I didn't believe people could be that uninformed. 10% is as high as I have heard of before. Still at those rates it doesnt matter,the outcome will be the same.

There are several houses in our village that have been rebuilt by sons and daughters living and working in the big smoke. A couple have had a lot of money spent on them. The actual occupants, older people, now cook on charcoal outside so they dont get their own houses dirty. The funders state that they plan to live in the house when they get "old" and "don't need to work any more".

About as prepared for the future as my own country is to deal with the aging Baby Boomer generation. So I suppose we only have to look at the fate of farmers in the westerner world over the last forty years to get an idea what will happen here.

20% is standard.I put little bit in thru family member.All loans are backed with goods,land,house etc.

My cut is 12% per month.Works well ,already gained back investment.

[Issangeorge]

I don't know how most farm loans work, but I know my SIL borrowed ฿100,000 from government bank using her mother's roce farm as collateral. She had the loan for ten years and never paid off any capital, and I don't think she even paid any interest. After 10 years of this non performing loan the bank wanted to clean up their books. They excepted ฿50,000 to clear up the loan. Why would anybody pay their loan off when if they wait 10 years they pay half back and no interest?

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[Dakling]

Sichonsteve

You seem to be arguing that the Democrats would be a better party for the local Issan farmers to vote for. From the point of view of the locals out our way I think that will never happen. Thai politics is polarized regionally and both of the major parties take care of their base. Issan was always neglected prior to Taksin and while he wasn't any saint by any standard at least he did a few things for the locals. The biggest gripe the locals out my way have against the Democrats is that they don't want to give chanote land titles to the farmers. The Yinluck crowd have promised to get the land title mess sorted and they seem to be making some baby steps in that direction. The locals are well aware that both sets of politicians are of questionable quality but they figure better to get a little bit of representation rather than nothing.

[apetley]

Back to the topic: Farm Land . What Will Happen To The Farmers If They Are Not Financed By The Govt

 

 

Thai government claim that unemployment is only 0.3 % so in the West that would be full employment.

I understand that the Thai government are using imported labour from Cambodia and Laos because there is a shortage of workers.

I am told that it is very difficult to find anyone to work on the farms and actually do a proper days work anymore.

I understand that many family members have left their farms to work in construction in Bangkok and they send money back to the family.

 

On the basis of the above, you would expect farm land to actually fall in value based on supply and demand.

But the price of farmland actually keeps going up and people on this forum talk about 100,000 bt per rai for farm land. At that price the profit from growing on a rai would not even cover the bank interest.  I am reading that people are taking bank loans to buy this land at this uneconomical price. How can they even afford to pay the bank interest, let alone the capital back on these loans?

Farm land at these prices is the same as the UK !

 

It is also evident that rent seems to be 500 bt per rai that equates to 0.5% return on the 100,000 bt per rai cost of land; again not making logical sense.

On top of this, I am reading that farmers are getting into debt buying chemicals and seeds because they are not getting the income they expect from the crop.

I am reading that they are buying farm equipment from Kubota etc and are struggling to pay the loans back.

 

I would be expecting people to be breaking the terms of their loans and the banks foreclosing/repossessing their assets (land).

However, this does not seem to be occurring.

 

I try to understand the economics in Thailand and it just does not make sense to me.

I walk the streets of Bangkok and there is construction going on everywhere but who (if any) are buying these condos?

Are the bank loans so easy to get (remember the 125% loans available in the UK in 2007) for Thais?

 

I would have expected Farm land in Issan to have actually fallen in price not kept rising; but this is not the case.

 

I am interested in this topic because I am sitting waiting to buy farm land at what I believe to be the correct price (say 50,000 bt per rai within 1km of a proper road).

We bought our paddy at just over 60k a rai about 7 years ago.

Now people are buying at 200k up!

Rent is between 1500 and 2000 bht per crop.

Unsustainable imo but who knows.

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