BAAC to assist 818,000 small-scale farmers

[Thaivisa News]

Bangkok: –Bank for Agriculture and Agricultural Cooperatives has earmarked 116 billion baht for loaning to 818,000 small-scale farmers.

The small-scale farmers can access the concessionary loans to refinance their existing debts, to cope with natural calamities and to cushion impacts from lowering commodity price and other economic woes.

BAAC president Luck Wajanawat said the bank board approved the loans in line with the government’s policy to provide financial assistance for farmers.

Under the scheme, each small-scale farmer can apply for loan up to 500,000 baht between April 1, 2015 and March 31, 2016.

The loans will cover three categories:

• To relieve liabilities for 28,000 farmers and borrowers who are unable to service debts due to death, physical disabilities and unemployment caused by illnesses. The loans are expected to amount to 4 billion baht.

• To refinance existing loans for 340,000 farmers who have difficulty for debt servicing caused by changing circumstances. The loans are projected at 48 billion baht. The repayment instalment will be rescheduled for 10 to 15 years.

• To extend the repayment schedule for 450,000 farmers. The loans will amount to 64 billion baht. The accumulated fine for late payment would be forfeited. The new schedule for repayment would be based on the farmer’s financial capability.

In addition to concessionary loans, BAAC will allow farmers to borrow 100,000 baht each for planting substitute crop or to change career due to the price drop for the existing crop.

Farmers with good repayment records will be entitled to borrow 50,000 emergency cash at 7 per cent minimum retail rate.

To refinance non-bank loans, farmers can borrow 100,000 baht each at 1 per cent monthly interest rate.

[ExpatOilWorker]

Yesterdays news?

It was in the local news paper yesterday.

[Costas2008]

Yesterdays news?

It was in the local news paper yesterday.

Has it occurred to you that some of us haven't read yesterday's newspapers but we rely on TVF to read the news?

But instead of being critical about the delay, you should concentrate more on this government's intentions to help their people.

[carstenp]

He will do anything to help the farmers. My problem is i cant see the logic. If your are in debt now, have is this going to help a farmer already in big debt. Okay we can help you with your problem., We change the length of you payment, and then you can borrow more money.

Raise the length of the mortgage is not a solution, cause maybe he has to pay a small amount of money every month, but 10-20 years every month, and who knows the future. Maybe in 3 year everything's goes wrong again and has to borrow money for something. This is not going to stop

Edited March 27, 2015 by carstenp

[Fat Haggis]

So throwing more money at debt ridden farmers is the solution then?

Farmer A who's in debt of 300,000 baht can now get a loan of 100,000 to plant again, thus making his debt bigger?

I keep reading about this diversifying as well, but for a rice farmer who makes his money from RICE sale, is it really viable to change crops, unless he's doing it permamnent?

I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?

If they switched to Cassava, he's not going to get the same turnover per annum, and will he be making enough money, after switching to cover the costs of redoing the land, the labour and control of weeds etc, that switching crop is going to be financially beneficial to him ?

Farmers all over the world are their own worst enemies as they strive to produce more to make more money, their greed is not helping their overall predicament.

But this scheme here of throwing more money at them whilst in debt is a bad move, and can only lead to more debt, morew stress, more worry, and more deaths in the long run... it's a very nasty and vicious circle it seems.

[ldiablo]

Costas. I will believe the governments so called intentions to help their people the day that Greece can afford to repay their debt and become a contributor to the world stage which by the looks of it is NEVER.

[umbanda]

The biggest farmer's problem in Thailand is water and weather. This may be VERY GOOD for small farmers to finance water well drilling, costing about 100,000 thb. Personal loans interest rates are over 6%, specially if it is not warranted with any property. If this will be a long term personal loan, at 1%, interest rate, may be a solution to many, but the bank have to put in place a good control system to verified it proper use.

Edited March 27, 2015 by umbanda

[ExpatOilWorker]

Yesterdays news?

It was in the local news paper yesterday.

Has it occurred to you that some of us haven't read yesterday's newspapers but we rely on TVF to read the news?

But instead of being critical about the delay, you should concentrate more on this government's intentions to help their people.

You could also read it online yesterday if you have paper allergy or the more common sticker price allergy, but yes it is greet that the government have gone all Greek. Borrow now - Repay never!

Edited March 27, 2015 by ExpatOilWorker

[billd766]

He will do anything to help the farmers. My problem is i cant see the logic. If your are in debt now, have is this going to help a farmer already in big debt. Okay we can help you with your problem., We change the length of you payment, and then you can borrow more money.

Raise the length of the mortgage is not a solution, cause maybe he has to pay a small amount of money every month, but 10-20 years every month, and who knows the future. Maybe in 3 year everything's goes wrong again and has to borrow money for something. This is not going to stop

So what would be your suggestion then.

Anybody can knock suggestions back without coming up with an answer.

[billd766]

So throwing more money at debt ridden farmers is the solution then?

Farmer A who's in debt of 300,000 baht can now get a loan of 100,000 to plant again, thus making his debt bigger?

I keep reading about this diversifying as well, but for a rice farmer who makes his money from RICE sale, is it really viable to change crops, unless he's doing it permamnent?

I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?

If they switched to Cassava, he's not going to get the same turnover per annum, and will he be making enough money, after switching to cover the costs of redoing the land, the labour and control of weeds etc, that switching crop is going to be financially beneficial to him ?

Farmers all over the world are their own worst enemies as they strive to produce more to make more money, their greed is not helping their overall predicament.

But this scheme here of throwing more money at them whilst in debt is a bad move, and can only lead to more debt, morew stress, more worry, and more deaths in the long run... it's a very nasty and vicious circle it seems.

Quote "I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?"

This is only true in some parts of the country and not all and it is totally dependent on the water supplies available. To get the same yield from a paddy year on year farmers generally have to use a bit more fertiliser each time. When the price of rice was very high under the PTP governments scheme the cost of land rental and fertiliser shot sky high. Do you think that the price will have dropped to the pre rice scheme level yet?

The other part of the equation is that nobdy knows the price of rice during a given period 4 or 5 months ahead.

[Fat Haggis]

So throwing more money at debt ridden farmers is the solution then?

Farmer A who's in debt of 300,000 baht can now get a loan of 100,000 to plant again, thus making his debt bigger?

I keep reading about this diversifying as well, but for a rice farmer who makes his money from RICE sale, is it really viable to change crops, unless he's doing it permamnent?

I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?

If they switched to Cassava, he's not going to get the same turnover per annum, and will he be making enough money, after switching to cover the costs of redoing the land, the labour and control of weeds etc, that switching crop is going to be financially beneficial to him ?

Farmers all over the world are their own worst enemies as they strive to produce more to make more money, their greed is not helping their overall predicament.

But this scheme here of throwing more money at them whilst in debt is a bad move, and can only lead to more debt, morew stress, more worry, and more deaths in the long run... it's a very nasty and vicious circle it seems.

Quote "I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?"

This is only true in some parts of the country and not all and it is totally dependent on the water supplies available. To get the same yield from a paddy year on year farmers generally have to use a bit more fertiliser each time. When the price of rice was very high under the PTP governments scheme the cost of land rental and fertiliser shot sky high. Do you think that the price will have dropped to the pre rice scheme level yet?

The other part of the equation is that nobdy knows the price of rice during a given period 4 or 5 months ahead.

Thanks for the info sir, I really don't know much about the growing of rice, and market values, I'm guessing even that, as in market values is never really a concern for the farmers if they go through local millers?

My own belief is that Thailand's rice growing scheme has taken a massive knock, I'm not concerned about the future crops, I'm concerned for the farmers about present, and past crops, If the Junta reported that what they took over from the PTP farce was rotting at a seemingly very fast rate, what are they doing about stopping the rot, thus accumulating so much rice in storage that it's beyond getting a decent value for it? ( PTP era rice)

If they know that rice is going South fast, surely they are the ones now that have a duty of care to fix this? Much along the lines of taking over a repossessed home, it's no longer the previous tenants responsibilities for repairs and maintenance?

How much of that rice has been sold, what is the current balance, and what are they doing about storage facilities for the current, and future batches of rice?

[jdinasia]

He will do anything to help the farmers. My problem is i cant see the logic. If your are in debt now, have is this going to help a farmer already in big debt. Okay we can help you with your problem., We change the length of you payment, and then you can borrow more money.

Raise the length of the mortgage is not a solution, cause maybe he has to pay a small amount of money every month, but 10-20 years every month, and who knows the future. Maybe in 3 year everything's goes wrong again and has to borrow money for something. This is not going to stop

If you are in debt, and are relying on PTP policies to keep extending the due date on the debt they helped you accrue, you no longer need to vote for them to keep the banks at bay.

[Srikcir]

The Junta has no SUSTAINABLE economic policy to save small-scale farmers.

This round of loans, bailouts, and outright forgiveness for farmers is the third round of similar actions taken by the Junta since the coup. It needs to look at the root causes for high farmer debt to find sustainable solutions. For example, it may be that Thailand has progressed beyond an agricultural industry where small-scale farmers can no longer provide any significant contribution to the nation's economic growth. The industry may need to be consolidated and modernized, and continued support to small-scale farmers only continues to exerbate their financial problems.

Unfortunately some of the solutions may be populist in nature and the Junta outright rejects any such approach for almost political correctness rather than for any economic flaw. All the Junta is doing is "kicking the can down the road" in order to avoid near-term public conflicts that might reflect badly on the Junta's reputation.

[carstenp]

He will do anything to help the farmers. My problem is i cant see the logic. If your are in debt now, have is this going to help a farmer already in big debt. Okay we can help you with your problem., We change the length of you payment, and then you can borrow more money.

Raise the length of the mortgage is not a solution, cause maybe he has to pay a small amount of money every month, but 10-20 years every month, and who knows the future. Maybe in 3 year everything's goes wrong again and has to borrow money for something. This is not going to stop

So what would be your suggestion then.

Anybody can knock suggestions back without coming up with an answer.

This is a very good questing. I not trying to knock it down as you say, but looking at it from a logic perspective.

I don't think i'm clever enough to find the solution for this, cause this will be a change from the bottom and maybe a different view on how this has to work. I can try to point some different things out, but will properly never happen.

They way it work today with a simple farmer selling rice to miller and get payed right away.

What they should do is they need to have a union, where the farmer control the flow, income, sale price and so on. Every farmer invest in this union as a investment. After the sale to the markedsprice the union will share the money and pay back on the an part. This way every farmer get the max out of the rice.

More farmers should work together and share machines instead of paying rich people every time for use.

[retsdon]

Other than the 28,000 loans for farmers hit by Acts of God, the rest of the funds are being made available simply to roll over existing debt - presumably for the purpose of warding off large scale insolvencies and defaults by farmers who dug themselves into a hole during the heady days the P T administration. Whether this is to assist the farmers themselves or to throw a lifeline to the banks and other financial institutions who would be left holding the baby if large scale defaults were to occur is moot. No doubt there is a political consideration too.

What this scheme doesn't do is resolve any of this debt. It'seems to be a case of just kicking the can down the road in the hope of better times to come..... Pretty much par for the course for the present 'interim' government.

[billd766]

So throwing more money at debt ridden farmers is the solution then?

Farmer A who's in debt of 300,000 baht can now get a loan of 100,000 to plant again, thus making his debt bigger?

I keep reading about this diversifying as well, but for a rice farmer who makes his money from RICE sale, is it really viable to change crops, unless he's doing it permamnent?

I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?

If they switched to Cassava, he's not going to get the same turnover per annum, and will he be making enough money, after switching to cover the costs of redoing the land, the labour and control of weeds etc, that switching crop is going to be financially beneficial to him ?

Farmers all over the world are their own worst enemies as they strive to produce more to make more money, their greed is not helping their overall predicament.

But this scheme here of throwing more money at them whilst in debt is a bad move, and can only lead to more debt, morew stress, more worry, and more deaths in the long run... it's a very nasty and vicious circle it seems.

Quote "I believe the rice farmers get 2-3 crops a year, so they must know in advance how much tonnage they will yield for each crop, based on past crops yes?"

This is only true in some parts of the country and not all and it is totally dependent on the water supplies available. To get the same yield from a paddy year on year farmers generally have to use a bit more fertiliser each time. When the price of rice was very high under the PTP governments scheme the cost of land rental and fertiliser shot sky high. Do you think that the price will have dropped to the pre rice scheme level yet?

The other part of the equation is that nobdy knows the price of rice during a given period 4 or 5 months ahead.

Thanks for the info sir, I really don't know much about the growing of rice, and market values, I'm guessing even that, as in market values is never really a concern for the farmers if they go through local millers?

My own belief is that Thailand's rice growing scheme has taken a massive knock, I'm not concerned about the future crops, I'm concerned for the farmers about present, and past crops, If the Junta reported that what they took over from the PTP farce was rotting at a seemingly very fast rate, what are they doing about stopping the rot, thus accumulating so much rice in storage that it's beyond getting a decent value for it? ( PTP era rice)

If they know that rice is going South fast, surely they are the ones now that have a duty of care to fix this? Much along the lines of taking over a repossessed home, it's no longer the previous tenants responsibilities for repairs and maintenance?

How much of that rice has been sold, what is the current balance, and what are they doing about storage facilities for the current, and future batches of rice?

I would assume that the local millers keep a record of what they paid for rice in previous years and how much they have in stock. They will then quote a price to the farmers based on that data, remembering that they have to sell it on when it is milled. They will then quote a price to the farmer and knock a percentage off for rice that is "too wet or something else" and pay in cash. At this point the farmers have to decide what to do, take the money or go elsewhere knowing that the price will be pretty much the same everywhere.

Under the PTP rice scheme the price was 15,000 baht/ton for ordinary rice and 20k/ton for Hom Mali. By the time they knocked the % off the farmers were down to say 12.5k baht/ton and perhaps 17k for Hom Mali. These figures are guesswork but fairly close I think from farming friends I have talked to.

The millers do their bit and send it off for storage in mostly poor conditions so the transport and storage get their cut along the way, less than the farmers but they handle more rice.

How much rice was bought during the PTP reign I cannot remember but I am sure somebody knows but having paid 40% more than the market price at the time, then storage costs are added it was the PTP governments duty as the sole buyer of rice during that period to ensure that it is sold at a profit.

However on the international markets Thai rice of any kind had to price itself out of the markets unlees it was sold at a loss and the more rice in stock means greater storage costs to be reclaimed. Also the type of storage is vital to preserve the quality of the rice.

AFAIK nothing has changed, the last 2 or 3 years rice harvest is of poor quality which translates to a lower market price.

The problem with the current government having a "duty of care" as you put it is that they inherited the whole mess from the previous PTP government and had no input into it until May last year> They HAD to do an inventory of the warehouses and found some losses and missing rice stocks ( I will let the bean counters argue the amounts) and tnow this governemnt has to seel the current stock in a depressed market and perhaps they need to shift 20 or more million tons of poor quality rice whilst still paying for storage of old rice before there will be enough storage room for the current crops which will fetch a better price for a while until they strart to rot.

The current government COULD have a rock bottom price sale to clear the stocks but that would be classed by the world markets as dumping which is illegal and if they did you can bet that ALL the ex politicians in Thailand would be screaming about that. At the end of the day it is my thoughts that the responsibility for the whole sorry mess belongs to the previous government and whoever thought the scheme up. They are the ones that caused it and it caused the reputation of Thai rice to drop considerably and it will take a long time to get it back if ever.

PTP caused the problem, failed to take the responsibility for it and should therefore have to foot the bill for it.

Whether this will happen has the same chance as me winning the lottery. Possible but long odds against and unlikely.

I did find an interesting report here from the Asia Devolpment bank about rice production in Thailand from 2000 to 2009 but it is dated 2012 but it will guve an idea over the first decade. Should you wish to read it, first make a large coffee, lay in some biscuits and headache pill as it is very boring but factual, all 29 pages of it.

http://www.adb.org/sites/default/files/project-document/73082/43430-012-reg-tacr-03.pdf

[rickudon]

The problem with many of these small farmers is a demographic one. In the past, the family turned out at planting and harvesting time and helped; if the crop failed they didn't have many bills to pay so just starved a bit, picked more weeds, bugs and small animals from the wild until next season.

Now, woman only have 1.5 kids each and younger people don't want to work the fields for a handful of rice. So the farmer has to pay someone to help weed, plant, plough and harvest the rice crop (if he can find anyone, who now expect at least 300 baht a day). So by harvest time owes quite a bit. The farmer is getting older and just cannot do quite so much himself any more. If he is lucky, he gets enough rice to feed the family and enough to sell to pay his debts; if not lucky .....

My father-in-law plants up to 3 areas each year with rice - one crop only, no irrigation. In 5 years he has only had crops off all 3 once - too much water, too little, too many snails, whatever. This year a 9 rai plot produced just 3 bags of rice....

The value of the rice harvested barely exceeds the debts he incurs. Labour is often unavailable when he needs it, so work is not always done at the optimum time or is incomplete.

Most small farmers are over 50, and when they die or stop working the land will probably not be farmed. No one is going to give up a job in a factory in Bangkok to take over a 15 rai rice farm. These older farmers only keep going because they don't have a pension sufficient to live on and family members in the village probably cannot really afford another mouth to feed.

The government is dragging there feet on this issue. In reality, these small farms must be sold off, amalgamated, and money invested in them. And the old farmers pensioned off with a pension sufficient to at least feed them. Alternative crops are generally only viable on much larger scale farms (In Isaan, Cassava and oil palms pay a few baht a kilo (and i mean a few baht, i.e. can e as little as 1-3 baht commercially)). Rubber requires a large investment and 7 years before you get a harvest; anyway rubber is in surplus and likely to remain so for years to come. Pig prices collapsed a few months ago, and eggs are the latest to hit the floor. I don't see much likelihood for small farmers getting richer soon.

[BSJ]

It's months ago now but a lot of farmers around here were offered 6000baht a ton for paddie....and had to take it as there was no alternative. Some are just about done with rice. My BIL for example is going mangoes on one block. Putting in 1200 trees. My wife is going lime trees (100) on a small block this year and 300 on a 3 rai block next year. She may not plant rice this year. Without forward buying contracts it's to risky. But she has 40 rai laying idle. Time to grow an alternative crop and 500k from the bank will come in very handy I think!

[473geo]

Any of you guys checked out the selling price of land with reasonable access?

[473geo]

The problem with many of these small farmers is a demographic one. In the past, the family turned out at planting and harvesting time and helped; if the crop failed they didn't have many bills to pay so just starved a bit, picked more weeds, bugs and small animals from the wild until next season.

Now, woman only have 1.5 kids each and younger people don't want to work the fields for a handful of rice. So the farmer has to pay someone to help weed, plant, plough and harvest the rice crop (if he can find anyone, who now expect at least 300 baht a day). So by harvest time owes quite a bit. The farmer is getting older and just cannot do quite so much himself any more. If he is lucky, he gets enough rice to feed the family and enough to sell to pay his debts; if not lucky .....

My father-in-law plants up to 3 areas each year with rice - one crop only, no irrigation. In 5 years he has only had crops off all 3 once - too much water, too little, too many snails, whatever. This year a 9 rai plot produced just 3 bags of rice....

The value of the rice harvested barely exceeds the debts he incurs. Labour is often unavailable when he needs it, so work is not always done at the optimum time or is incomplete.

Most small farmers are over 50, and when they die or stop working the land will probably not be farmed. No one is going to give up a job in a factory in Bangkok to take over a 15 rai rice farm. These older farmers only keep going because they don't have a pension sufficient to live on and family members in the village probably cannot really afford another mouth to feed.

The government is dragging there feet on this issue. In reality, these small farms must be sold off, amalgamated, and money invested in them. And the old farmers pensioned off with a pension sufficient to at least feed them. Alternative crops are generally only viable on much larger scale farms (In Isaan, Cassava and oil palms pay a few baht a kilo (and i mean a few baht, i.e. can e as little as 1-3 baht commercially)). Rubber requires a large investment and 7 years before you get a harvest; anyway rubber is in surplus and likely to remain so for years to come. Pig prices collapsed a few months ago, and eggs are the latest to hit the floor. I don't see much likelihood for small farmers getting richer soon.

The government message appears to support small farms for sufficiency farming

There is of course the added complication many poor farmers will have land used as collateral for inter family loans

My experience, village fund loans cover planting, bank loans against crop for harvest, both repaid annually, in order to repeat, is one currently functioning process

I am sure any additional support for smallholders, provided the BAAC does not end up as the biggest landlord in Thailand, will be well received

[Fat Haggis]

It's months ago now but a lot of farmers around here were offered 6000baht a ton for paddie....and had to take it as there was no alternative. Some are just about done with rice. My BIL for example is going mangoes on one block. Putting in 1200 trees. My wife is going lime trees (100) on a small block this year and 300 on a 3 rai block next year. She may not plant rice this year. Without forward buying contracts it's to risky. But she has 40 rai laying idle. Time to grow an alternative crop and 500k from the bank will come in very handy I think!

How long will it take for these trees, both the mangoes, and the limes to be able to produce fruits at a size and quantity that will allow them to make a living sir?