Credit cards fail to win over Thai farmers

[webfact]

FARMERS' CREDIT CARD
Credit cards fail to win over farmers
Hataikarn Treesuwan
The Nation


Prime Minister Yingluck Shinawatra poses with farmers in Buri Ram. The second phase of the farmers

PM announces extra benefits, aims for 4 million members; farmers say merchants lack flexibility

BANGKOK: -- Launched two years ago, the farmers' credit-card scheme has proved to be anything but a success. As of June, only about Bt10 billion of credit was outstanding in the first phase from the total budget of Bt57 billion, according to the Bank for Agriculture and Agricultural Cooperatives (BAAC).

Armean Thaupmungkung, a consultant to farmers' associations, preferred the government rice-pledging scheme's guarantee of Bt15,000 per tonne. Besides increasing the debt burden on farmers, the card scheme failed because not many merchants joined, and they usually offer a limited choice of products, he said.

For example, 15-20-0 formula fertiliser at a participating shop in Ayutthaya is quoted at Bt15,500-Bt16,000 per tonne, against Bt15,000 at other shops.

"If the government continues this project, it should give farmers cash credit. If farmers have to go into debt, they should have the right to buy any brand they want at any shop," he said.

The scheme would also be better if it was extended to cover all 13.5 million farmers instead of just 2.4 million now, he said. The government plans to boost it to 4 million with extra benefits.

Apirom Sukprasert, executive vice president of BAAC, still insists that the project is worthwhile. Of the 4.5 million eligible farmers - those enrolled in the bank's debt-restructuring scheme - the bank planned to issue cards to 2 million in the first phase.

Yet, the bank's records show that out of approved credit lines of Bt56.89 billion, the farmers have used only Bt9.96 billion as of June, while participating shops numbered only 4,986 versus the 10,000 target. This month, approved credit lines exceeded Bt10 billion.

Farmers were first reluctant to use the cards, not fully understanding the payment terms. Though each farmer could borrow up to Bt50,000, the average usage was only Bt10,000. Merchants were reluctant to join the scheme because they could not stomach the five-month grace period for interest.

Some farmers complained about high prices, but other shops might have lowered their prices to compete with the project, he said.

"It's not a scheme to boost farmers' debt, but to boost their purchasing power as well as transfer non-organised debts into the controllable system," he said.

The farmers' credit-card scheme was one of the election campaign planks of the Pheu Thai government. From February-March of last year, the scheme was launched in five provinces - Chiang Mai, Udon Thani, Ayutthaya, Lop Buri and Saraburi. It was extended to all 77 provinces in June 2012.

In the first phase, farmers could charge four goods on their cards - seeds, fertilisers, pesticides and fuel. Interest was waived for the first five months and then they were charged at the minimum retail rate of 7 per cent. The project is one of several designed for farmers, besides those to shore up the prices of rice, tapioca and rubber.

A BAAC source said outstanding credit under the scheme as of June was Bt8.3 billion, of which only Bt322 million could turn bad.

A survey by the bank's research centre from September 7-27 of last year, covering 733 farmers, showed that 47.3 per cent were satisfied with the scheme thanks to its convenience, while 24.7 per cent were pleased with the new distribution channel and 16.4 per cent with the lower cost.

However, at least 15,000 cardholders exited the programme, of whom 26.6 per cent cited the credit limit as not correlating with material costs and 25.9 per cent the lack of enough merchants.

Prime Minister Yingluck Shinawatra yesterday announced extra benefits in the hope that they would help drive cardholders to 4 million by September. Annual health check-ups, accident insurance and the purchase of groceries would be added under the second phase of the project.

In front of a crowd of over 15,000 in Buri Ram, Deputy Prime Minister Kittiratt Na-Ranong said the second phase will extend coverage to rubber, sugarcane, tapioca, fisheries and livestock farmers, while the retail network will be expanded to at least one shop per village - or at least per 10,000 people. PTT and Bangchak Petroleum fuel stations will also be roped in.

"The cards offer more than credit. They offer production and financial security," Yingluck said. Heavily attacked for the rice-pledging scheme due to its massive losses, the government aims to lower the pledging price for the next harvest season. According to the most recent Suan Dusit Poll, the pledging scheme drew huge public support but was also the biggest factor that tainted the government's popularity.

To avert attacks by farmers angered by the reduced pledging price, the government would provide other forms of assistance. The focus has now turned to the credit card scheme and agricultural zoning.


-- The Nation 2013-07-15

[ChrisY1]

Speechless at this inane scheme......obviously designed to enable the wealthy to aquire more poor farmers lands....

[NongKhaiKid]

What an excited looking bunch, exactly what's need for a photo op.

[jaidam]

"For example, 15-20-0 formula fertiliser..."

I don't mean to nitpick at the details of Yingluck's brilliant scheme, but it is well know that the fertiliser value of bullshit is more like 10-7-10.

[ramrod711]

"If the government continues this project, it should give farmers cash credit. If farmers have to go into debt, they should have the right to buy any brand they want at any shop," he said.

I agree, if you are going to buy votes, you should always pay in cash.

[SABloke]

So it's a failure, because they failed to max out their cards?? I think it's nice to see the farmers act a bit more responsibly/wisely - not wanting to have more debt.

[Chao Lao Beach]

Besides increasing the debt burden on farmers, the card scheme failed because not many merchants joined, and they usually offer a limited choice of products, he said.
For example, 15-20-0 formula fertiliser at a participating shop in Ayutthaya is quoted at Bt15,500-Bt16,000 per tonne, against Bt15,000 at other shops.

​Cute eh, can only use it at "connected" shops with inflated prices.

[boomerangutang]

You get rich elitist people in Bangkok who want to keep things groovy with farmers, so what do they do? They offer easy debt. After all, that's how rich stay rich, is via borrowing other peoples' money (maybe or maybe no paying it back), so they figure, why doesn't everyone else do the same? It's such an easy way to pay for stuff.

P.S. ever wonder why Thais don't use checking accounts? Go figure: you give a Thai a fistful of pieces of paper and tell them they can buy anything just by writing an amount and signing their name ,.,,,,,,wow, let's go spend!

[Payboy]

Look on the bright side, farmers can convert their reward points to air miles.

[A Member]

Look on the bright side, farmers can convert their reward points to air miles.

Do they have to agree if they don't use them they are signed over to a certain lady ?

[up-country_sinclair]

"For example, 15-20-0 formula fertiliser..."

I don't mean to nitpick at the details of Yingluck's brilliant scheme, but it is well know that the fertiliser value of bullshit is more like 10-7-10.

In this case 24-7-365 would be more accurate.

[OzMick]

"Merchants were reluctant to join the scheme because they could not stomach the five-month grace period for interest."

Strange - vendors in oz are being offered instant payment from their banks, and any interest free period is between purchaser and banks. Is this saying merchants have to wait 5 months for payment without interest (which would explain a lack of interest).

[soi41]

"The Elite Card" for farmers, and they can't give it away!

Deemed a failure, because so far "only" 10 billion baht of the taxpayers money has been transferred to fellow party/family members!

[jbrain]

Launched two years ago, the farmers' credit-card scheme has proved to be anything but a success. As of June, only about Bt10 billion of credit was outstanding

Damn those pesky farmers, how we ever gonne get hold of their last piece of land if we can't get them deep enough in debt.

[baboon]

What an excited looking bunch, exactly what's need for a photo op.

Quite. Was the photo taken at gunpoint?

[ballpoint]

Launched two years ago, the farmers' credit-card scheme has proved to be anything but a success. As of June, only about Bt10 billion of credit was outstanding

dam_n those pesky farmers, how we ever gonne get hold of their last piece of land if we can't get them deep enough in debt.

Their thinking may be more along the lines of "how can we buy their votes, by promising to write off all credit card debt at the next general election, when so few are actually using them?"

[arthurwait]

I am astonished at the 'news' that they prefer the money for nothing rice scheme than something they have to pay back.

Edited July 15, 2013 by arthurwait

[ETatBKK]

OTPC One-Tablet-Per-Child, then radical rice scheme, then credit card for farmers . . . completely rationalise the Thai farmers with techy consumerism ! what next ?

[chooka]

The costs of cultivating the rice has gone up because of the rice scheme and the farmers are actually getting less. Now the government want to give them credit on top of it which would force many to the wall. What happens then, do the big agricultural companies like C.P then move in and buy all their land at a drastically reduced price? The industry is already down and there is no need to lay the boots in.

[chooka]

OTPC One-Tablet-Per-Child, then radical rice scheme, then credit card for farmers . . . completely rationalise the Thai farmers with techy consumerism ! what next ?

They start collecting all the 1st born children.

[arthurwait]

The costs of cultivating the rice has gone up because of the rice scheme and the farmers are actually getting less. Now the government want to give them credit on top of it which would force many to the wall. What happens then, do the big agricultural companies like C.P then move in and buy all their land at a drastically reduced price? The industry is already down and there is no need to lay the boots in.

No I imagine the people who lent them the money get it.

[Thai at Heart]

How does one prove absolutely one is a farmer?

Check under their toe nails?

[slapout]

The 4 million participation out of the 14 million farmer in Thailand are the new suckers who do not remember the

shin influence, corruption, and the farm income loss from the first go around. (whip around)

Not wishing any bad luck on the present self proclaimed saviors, but , the supporters seem to be dwindling, the new potential recruits are saying 'no thank you' they are out of fuel, coasting downhill, in their run to inmortality and do not have sense god gave a goose, to get out of the way of the traffic.jam, they created.

[monkey4u]

Look on the bright side, farmers can convert their reward points to air miles.

What airline Yinglucks NO LUCK AIRLINE flies direct to big brudda

Using the new Airbus she wants to get for the politicians to use.

[OzMick]

Look on the bright side, farmers can convert their reward points to air miles.

What airline Yinglucks NO LUCK AIRLINE flies direct to big brudda

Using the new Airbus she wants to get for the politicians to use.

Looks just like a target.

[tonneke breda]

If farmers have to go into debt, they should have the right to buy any brand they want at any shop,

Yeah you right, but then how can the government corruption scheme work if you could by it cheaper from a non-particepating corruptor??

[hellodolly]

So it's a failure, because they failed to max out their cards?? I think it's nice to see the farmers act a bit more responsibly/wisely - not wanting to have more debt.

No it is a failure because all it does is make it easier to buy the same things they would have at in many cases a higher price. and then after a period of time add 7% to the cost.

Coming from the west people are well aware that a credit card leads tio a higher debt load. Yet they use them any how, The Thais are not buying into it. Good for them.

I think the Government needs new spin doctors. This lot didn't have the sense to get a happy looking lot to back her up.

[billd766]

Apologies

Double post

Edited July 15, 2013 by billd766

[billd766]

With apologies to Tennessee Ernie Ford

You harvest sixteen tons, what do you get
Another day older and deeper in debt
Lord Buddha don't you call me 'cause I can't go
I owe my soul to the Shinawatra store

Edited July 15, 2013 by billd766

[hellodolly]

"Merchants were reluctant to join the scheme because they could not stomach the five-month grace period for interest."

Strange - vendors in oz are being offered instant payment from their banks, and any interest free period is between purchaser and banks. Is this saying merchants have to wait 5 months for payment without interest (which would explain a lack of interest).

Yes that confused me also. I was under the impression that when a seller took a credit card they had to pay a percentage of the price to the credit card company. Could it be that the Government does not pay the bill until 5 months have passed?

A friend of mine says every credit card purchase cost him some thing like 2 and 1/2%.