New fund 'may leave farmers deeper in debt'

[Lite Beer]

New fund 'may leave farmers deeper in debt'
KAWINTRA JAISEU
THE NATION

BANGKOK: -- WHILE many were happy to get "vocational promotion" loans via village funds, a scenario at a village in Roi Et's Pathumrat district raises the possibility of villagers finding themselves deeper in debt and being caught in the vicious cycle of endless poverty.

After funds were wired by the Government Savings Bank into the accounts of 78 Ban Samran villagers in Tambon Nong Khaen on September 21, many withdrew the cash almost immediately. This means their debts have risen by another Bt10,000 to Bt25,000, and whether they can pay it back depends on whether they use it on income-boosting investments as intended - or otherwise.

For now though, the villagers are using the money for other reasons, Ban Samran village fund's committee member Sawang Suksaen said. Most villagers appear to be spending the money on their children's schooling in Bangkok or on paying interest for their old debts, he said.

"If people use these loans wrongly, they will find themselves in an even bigger whirlpool of debt," he said. "The villagers have this fund, the savings group and banks as loan sources, yet they are not financially liquid and keep falling behind in interest payments. Some savings groups then convert the interest owed into principle, putting them deeper in debt. Some of these villagers have fled to Bangkok to avoid paying their debts and have never returned," Sawang said. "The new village fund is worrying because it could start a repetitive cycle of debt."

Farmers' incomes are dropping, but their expenses are rising, which is why they have to borrow from legal and illegal sources. A 2013-2014 survey showed that local villagers had combined debts worth Bt293 million from legal sources and another Bt4.3 million from illegal sources, while the per capita income per year is Bt30,000.

Sawang said the new loans were not enough to generate income, and since most people were already in debt, this money would be gone in a few days, adding that similar scenarios had risen when other funds were used to sprinkle money among communities.

Yet, despite the potential problems, Tambon Nong Khaen fund committee still hopes that people will work on finding solutions rather than solely waiting for state agencies' help.

A small start would be for debt-stricken villagers to get together and learn how to be more self-reliant, follow a budget, look for ways to reduce their expenses and boost their incomes. They should also start exchanging ideas for financial freedom and lead self-sufficient lives, he said.

Source: http://www.nationmultimedia.com/national/New-fund-may-leave-farmers-deeper-in-debt-30269592.html

-- The Nation 2015-09-26

[greenchair]

Just sad the way the government and banks keep encouraging the financially illiterate to keep borrowing money. Most countries have a free budget advisory service. They show the poor how to get out of debt. How to save a bit. How not to get back in debt.

Bank managers just went to prison for 19 years, for giving a loan to a company already in debt.

Will they put Prayuth and these bank managers in prison when the farmers cannot pay their debts.

Same same but different.

[Toknarok]

I remember when these loans first were available. Long queues outside the Agricultural bank. Right next door was a furniture and white goods shop. Into the bank with your land chanote or papers, out with your cash then into the furniture store. There were a constant stream of lorries offloading fridges, furniture, T.V's and electrical goods into the store.

This went on for weeks, now every house in the village had a T.V., fridge and new furniture. Problem was when it came to paying back the loan most simply couldn't, they had made no provision for repayment. My wife made money by lending money for a 'bridging' loan so that the loan could be rolled over. They still owed the money but re-payment has been put back a few years.

The level of household debt in rural Thailand is enormous, and for this administration to further compound it IMO is financially reckless. Populist policy in the extreme which the Junta vowed they would never do. I wonder if Somkid is behind this, and what their real purpose is?

[worgeordie]

Pay it back ! you lend money,they think its a gift.

regards Worgeordie

[jonclark]

"per capita income per year is Bt30,000."

That is absolutely shocking - $1000 a year per capita. Whats that roughly 1 months salary to teach English via a lower tier agency?

Maybe investing in and promoting adult education centers would help more, so people have a better range of transferable skills and can find better employment.. Rather than just keep throwing 'interest only soft loans. Its like trying to fix a broken leg with a band aid.

[onni4me]

My mother-in-law was offered a such loan few years back. I didn't want to deny her of anything so I just asked questions and made a calculation how much that loan will cost her in the long run.

After realizing how much she actually would have to pay, she never returned to the subject again. She is old village people and all she could make of it was how much it would cost her monthly. She is not educated enough to count interest on a loan or see the other side of it.

Also, if I have understood correct, one has to deposit some money into this system to be able to borrow money out of it? Or am I mistaken? The more you deposit, the more you can loan. The whole system stinks of Thai style corruption but I must say not really sure how it functions.

Someone above mentioned Agricultural Bank. There is also these village funds that are bot exactly banks as such. Everything I see and witness now seems to point towards people taking more and more short-term loans on credit cards and so on without having second thoughts about how to repay the debt. Just the other day talked about a teacher that drives flashy new car and gets letters from creditors for overdue payments. I would wish to drive a new car like hers but I am too poor...

[RIJoe]

Really sad.

[wow64]

Interesting policy... Dont create jobs and hinder work... Then allow loans..

Who ever thought this up should be jailed and have to pay the unpaid loans back..

Just like previous policy makers are being made to do now.

Sent from my c64

[The Beguiled]

Why doesn't any Thai government establish a "work for this money" scheme in these villages.

Benefits would be villages having better roads and drainage; better work ethic; no new debt to villagers; money would likely be spent by the villager more slowly than just getting a hit of 10,000 to 25,000; lower dislike by the Bangkok tax payers of their country people; just to name a few.

In the village my in-laws live in, almost all the villagers are in debt (only 3 family's have money and they own most of the real businesses) and at the moment with rubber prices so low the lowly educated villagers just keep getting deeper into debt.

Sad but this is why there are "owner and renters" in this world and smart people need workers and in Thailand there are millions.

[trogers]

Why doesn't any Thai government establish a "work for this money" scheme in these villages.

Benefits would be villages having better roads and drainage; better work ethic; no new debt to villagers; money would likely be spent by the villager more slowly than just getting a hit of 10,000 to 25,000; lower dislike by the Bangkok tax payers of their country people; just to name a few.

In the village my in-laws live in, almost all the villagers are in debt (only 3 family's have money and they own most of the real businesses) and at the moment with rubber prices so low the lowly educated villagers just keep getting deeper into debt.

Sad but this is why there are "owner and renters" in this world and smart people need workers and in Thailand there are millions.

I have mentioned before...many major cities in Thailand are in need of extensive landscaping to beautify them. Budget can be set to get actual economic productivity, instead of issuing debts and facing more non-performing loans...

Such a task is suited for these out of work / nil income farmers.

Work for your money.

[stevej519]

Very different

[Srikcir]

Realize that Somkid must work within policies set by Prayut.

Prayut has allowed Somkid to be creative in finding economic solutions but they must be limited to Prayut's economic ideology. Unfortunately, that ideology is essentially "kitchen table economics" influenced by Prayut's personal success to achieve and maintain a positive net worth.

To date Prayut's economic strategy has been directed towards short-term results and avoidance of increases in national debt. Athough he borrowed heavily to pay for Yingluck's rice pledge program, he blames Yingluck for the debt and absolves himself from personal responsibility. He again borrowed heaviliy from the Chinese to finance the dual rail system but may put that into a national security context that outweighs economic concerns.

Somkid needs to implement a national economic strategy that provides a more cohesive multi-societal approach to raising the standard of living for all Thai people. Not only for the low income but for middle income caught in an economic trap of self consumption.

Again unfortunately, that requires a DURABLE government and that won't occur until elections now anticipated for 2017 or later. It also requires a stabilized economy. Prayut's 16-month regime has experienced a collapsed economy (regardless of the excuses or reasons) and little can be done to reverse it through 2016. Even Somkid noted 5 or more years will be required to regain Thailand's economic growth trends to match or exceed its pre-2013 growth rates.

Somkid has the knowledge and experience to devise economic strategies to revive the nation's economy to the benefit of both low and middle income classes. But he is in the wrong place at the wrong time.

[elgordo38]

Just sad the way the government and banks keep encouraging the financially illiterate to keep borrowing money. Most countries have a free budget advisory service. They show the poor how to get out of debt. How to save a bit. How not to get back in debt.

Bank managers just went to prison for 19 years, for giving a loan to a company already in debt.

Will they put Prayuth and these bank managers in prison when the farmers cannot pay their debts.

Same same but different.

Quote Just sad the way the government and banks keep encouraging the financially illiterate to keep borrowing money. unquote. What makes Thailand so different from the rest of the world with zero percent interest rates. Its a world wide disease that artificially pumps up world economies by people borrowing money they cannot afford to rush out and buy things they do not need. Its a never ending process that can only end badly. Politicians keep telling people they have to much debt while at the same time they keep interest rates low to entice them to borrow yet more money. Its the old Pied Piper/Ponzi approach.

[Kasset Tak]

If they would actually use the money to buy a tractor, an etok, water pumps, drill wells or something ells that can actually help them then I can under stand this but as some one already said "last time the money went for fridges and TVs" and then it's just a waist of money!

[FangFerang]

Of course it would lea the farmers deeper in debt--after all, they sell rice at 10 baht per kilo and it hits the market at 30 baht per kilo--stupid farmers.

[trogers]

Of course it would lea the farmers deeper in debt--after all, they sell rice at 10 baht per kilo and it hits the market at 30 baht per kilo--stupid farmers.

You can always buy from the farmers directly at Bt10/kg, and store and mill a year's supply.

[seajae]

farmers need to learn that getting a loan isnt the answer, time and again they are seen getting loans only to blow the money rather than use it to benefit them. Its hard when they are not prepared to listen to good advice and simply stick to their old ways, they simply refuse to move forward. Setting up learning centres wouldnt help as they wouldnt bother attending unless they were giving away free food and drinks, even then they would take or listen to what was being said, they are simply too set in their ways

[MaeJoMTB]

Of course it would lea the farmers deeper in debt--after all, they sell rice at 10 baht per kilo and it hits the market at 30 baht per kilo--stupid farmers.

You can always buy from the farmers directly at Bt10/kg, and store and mill a year's supply.

Owning a rice farm, I can categorically state, you can't do this.

When you grow rice, you sell to the local rice mill at the price they set, the alternative being they burn your farm down with you inside.

Same with tobacco.

Edited September 26, 2015 by MaeJoMTB

[HenryB]

Why doesn't any Thai government establish a "work for this money" scheme in these villages.

Benefits would be villages having better roads and drainage; better work ethic; no new debt to villagers; money would likely be spent by the villager more slowly than just getting a hit of 10,000 to 25,000; lower dislike by the Bangkok tax payers of their country people; just to name a few.

In the village my in-laws live in, almost all the villagers are in debt (only 3 family's have money and they own most of the real businesses) and at the moment with rubber prices so low the lowly educated villagers just keep getting deeper into debt.

Sad but this is why there are "owner and renters" in this world and smart people need workers and in Thailand there are millions.

I have mentioned before...many major cities in Thailand are in need of extensive landscaping to beautify them. Budget can be set to get actual economic productivity, instead of issuing debts and facing more non-performing loans...

Such a task is suited for these out of work / nil income farmers.

Work for your money.

Can they do real work

[Time Traveller]

Well that sucks.

But those farmers shouldn't worry, the government is soon returning happiness to the people.

[duckmandon]

Just sad the way the government and banks keep encouraging the financially illiterate to keep borrowing money. Most countries have a free budget advisory service. They show the poor how to get out of debt. How to save a bit. How not to get back in debt.

Bank managers just went to prison for 19 years, for giving a loan to a company already in debt.

Will they put Prayuth and these bank managers in prison when the farmers cannot pay their debts.

Same same but different.

It is the way of most Governments "keep the masses poor or in high debt then we can control them easier". This happens everywhere but more so in Thailand. Its hard to protest against anything if you are starving or do not have any money. What will happen is the government will spoon feed them & they will do as their told. Very simple manipulation.

[NanLaew]

From the OP...

... For now though, the villagers are using the money for other reasons, Ban Samran village fund's committee member Sawang Suksaen said. Most villagers appear to be spending the money on their children's schooling in Bangkok or on paying interest for their old debts, he said. ...

And from our members...

I remember when these loans first were available. Long queues outside the Agricultural bank. Right next door was a furniture and white goods shop. Into the bank with your land chanote or papers, out with your cash then into the furniture store. There were a constant stream of lorries offloading fridges, furniture, T.V's and electrical goods into the store.
This went on for weeks, now every house in the village had a T.V., fridge and new furniture. ...

I prefer to believe that a majority of rather savvy farming folk are investing in their children's futures or using universally common practices for managing debt. I mean farmers sending their kids to schools in Bangkok? Speaks volumes for the quality of government schooling in the boonies doesn't it? Of course some here may subscribe to the notion that peasants don't need televisions, fridges or furniture either.

[NanLaew]

Just sad the way the government and banks keep encouraging the financially illiterate to keep borrowing money. Most countries have a free budget advisory service. They show the poor how to get out of debt. How to save a bit. How not to get back in debt.

Bank managers just went to prison for 19 years, for giving a loan to a company already in debt.

Will they put Prayuth and these bank managers in prison when the farmers cannot pay their debts.

Same same but different.

It is the way of most Governments "keep the masses poor or in high debt then we can control them easier". This happens everywhere but more so in Thailand. Its hard to protest against anything if you are starving or do not have any money. What will happen is the government will spoon feed them & they will do as their told. Very simple manipulation.

Yes, but it I think it has lost much of its effectiveness in Thailand. Why else would some feel the need for the army to step in?

[bamnutsak]

Best to keep Somchai dumb, down on the farm and in debt. But convince him with religion and propaganda that he is "happy".

[SoilSpoil]

Of course it would lea the farmers deeper in debt--after all, they sell rice at 10 baht per kilo and it hits the market at 30 baht per kilo--stupid farmers.

You can always buy from the farmers directly at Bt10/kg, and store and mill a year's supply.

Owning a rice farm, I can categorically state, you can't do this.

When you grow rice, you sell to the local rice mill at the price they set, the alternative being they burn your farm down with you inside.

Same with tobacco.

We sell to both millers and end consumers.

[englishoak]

But is everyone happy ?

Good now run along and take another loan.

[bangon04]

"New fund 'may leave farmers deeper in debt'

and this is a good thing because......

Sufficiency Economy is already returning Happiness to the People.