Debt fills Thailand's rice bowl

[rooster59]

Debt fills Thailand's rice bowl

BAAN PLABOO, Thailand -- Phayu Longklan, a rice farmer in Thailand's poor northeast, recently sold a fifth of her land for 600,000 baht ($17,247) to pay off debt. But she still needs to repay 200,000 baht in loans, mostly owed to the Bank for Agriculture and Agriculture Cooperatives, a leading government lender to rural communities.

The bank loans were used to buy farming equipment, help pay for her three children's education and acquire three motorcycles.

The 51-year-old is in a financial predicament, but, she said, "I am not the only one."

Full story: http://asia.nikkei.com/Politics-Economy/Economy/Debt-fills-Thailand-s-rice-bowl

-- Asia Nikkei 2016-03-20

[Searat7]

Banks here are guilty of extending too much credit....this is especially true for farmers but the government often pushed banks in this direction when farmers were in trouble.

[Nigeone]

Everything loaned has to be payed back. Even if you get at preferential rates one day reality kicks in. It's a hard lesson to learn and I learnt it many years ago with a out of control credit card. Then bad times came and unable to pay back.. Tough times but we have the ability and opportunities to go out and work hard and earn big money hourly and weekly. Thais don't have same option due to workplace, minimum wage and lack of education.. I feel for them but the last poster is right as the banks have just loaned and not addressed the ability to pay back.

[robblok]

Banks here are guilty of extending too much credit....this is especially true for farmers but the government often pushed banks in this direction when farmers were in trouble.

Yes previous governments made banks loan out to farmers, quite a smart scam. And yes banks should never have given farmers this much credit.. but then they would get angry with banks for not getting the money.

Sad fact many farmers are just not smart and never think about the repayment. But better they loan from banks then loansharks.

Not to mention that in the good times.. they go for consumer products.. not repayment of loans. Many shiny new cars.

Anyway this goes for many people the world around.

Edited March 20, 2016 by robblok

[djjamie]

I do feel for the struggling farmers. They deserve so much more than what the govt have done for them. Or in this case what they haven't done for them. Offer sustainable policy empowering them to succeed without any financial support from govt.

All this article tells me are the farmers are ripe for voting for who ever offers the biggest carrot again thus ensuring the cycle repeats over and over.

So sad.

[SpokaneAl]

She borrowed to buy three motorcycles? That would not be my first priority.

[robblok]

I do feel for the struggling farmers. They deserve so much more than what the govt have done for them. Or in this case what they haven't done for them. Offer sustainable policy empowering them to succeed without any financial support from govt.

All this article tells me are the farmers are ripe for voting for who ever offers the biggest carrot again thus ensuring the cycle repeats over and over.

So sad.

Correct they are ready to vote for whoever offers them salvation (and guess what it will not help again).

Your right only sustainable policy helps them, in a way its good the junta is outlawing popular policies otherwise this will go on forever and nobody will ever try try to really help them.... just bribe them and use them.

[trogers]

Why blame the banks? Politicians were using banks to issue such debts in their election platforms to buy votes. And this is the consequence of the stupidity of those who sold their votes.

[HOAX]

She may be struggling to get the ends to meet, but her kids and grandkids (the next generations of Thais, especially in N.E.) are the ones who really will struggle when they "grow up" realizing the government screwed them over with all these fancy government loans, the lack of restrictions on banks lending them money way to easily, and the car companies selling cars with terrible deals to low incomers.

Mark my words. Their brand new pickups, Iphones and gold watches on a 15,000 baht salary is going to hurt when the government, the banks and car companies suddenly starts nagging about their money when times get rougher. It happens, and it will happen again. Thailand don't have any backup like most western countries. In Thailand, the people, especially the poor people with much debt, are the ones who will take the bill for the country to get through rough times, leaving them even poorer. And even if times weren't ever to get bad for Thailand in the next 3 generations, very many of these debt strucken youngsters in Thailand won't do anything else than just paying off their loans for decades, if not for the rest of their lives.

Thailand has never had such a "booming" economy in modern history. It's just sad that the Thais don't understand it's booming economy is a "borrowed" one, not a strong and sustainable one.

Sent from my iPhone using Tapatalk

Edited March 20, 2016 by HOAX

[worgeordie]

It would seem the Rich and the Banks are in a conspiracy, keep the farmers

in debt .offering them more and more loans they cannot repay,then have

their land repossessed,which is sold off to the large landowners and influential

people,the biggest mystery is where did all that money go, the Government

handed farmers,paying twice the World price for Rice,its a right mess that will

go on for years and years.

regards Worgeordie

[Lampang2]

It would seem the Rich and the Banks are in a conspiracy, keep the farmers

in debt .offering them more and more loans they cannot repay,then have

their land repossessed,which is sold off to the large landowners and influential

people,the biggest mystery is where did all that money go, the Government

handed farmers,paying twice the World price for Rice,its a right mess that will

go on for years and years.

regards Worgeordie

Conspiracy or not.

Reality nonetheless.

But a change from farming to other workplaces was overdue.

A change that took place in the western world after second world War.

This change was delayed and made more painful with the rice support schemes, as it turned people back to farming instead of away from.

The loans are "good" in the sense that people will have to stop living on air and go out and get a "proper" job.

Hard to go on farming on tiny tiny plots.

Besides, the amount of farmers has increased with population increase as all where farmers.

Land areal farmed in 1930 was way less compared to today.

Leading to deforestation etc.

In the future with bigger but fewer farms it will become easier to regulate farming behavior once farmers no longer represents huge amount of votes.

Bright future ahead.

Thailand should be thankful for the extremely low oil price and take the opportunity to use this break in a clever why.

Once oil prices go up again, slack is gone and the situation gets worse.

[Lampang2]

Who are the big land owners in your own home country?

Lords?

Companies?

Huge family owned farms?

In that sense Thailand is different beacuse most people had / have land, in a western land it would have been snatched ages ago.

[phoenixdoglover]

She may be struggling to get the ends to meet, but her kids and grandkids (the next generations of Thais, especially in N.E.) are the ones who really will struggle when they "grow up" realizing the government screwed them over with all these fancy government loans, the lack of restrictions on banks lending them money way to easily, and the car companies selling cars with terrible deals to low incomers.

Mark my words. Their brand new pickups, Iphones and gold watches on a 15,000 baht salary is going to hurt when the government, the banks and car companies suddenly starts nagging about their money when times get rougher. It happens, and it will happen again. Thailand don't have any backup like most western countries. In Thailand, the people, especially the poor people with much debt, are the ones who will take the bill for the country to get through rough times, leaving them even poorer. And even if times weren't ever to get bad for Thailand in the next 3 generations, very many of these debt strucken youngsters in Thailand won't do anything else than just paying off their loans for decades, if not for the rest of their lives.

Thailand has never had such a "booming" economy in modern history. It's just sad that the Thais don't understand it's booming economy is a "borrowed" one, not a strong and sustainable one.

Sent from my iPhone using Tapatalk

I would not be so harsh. She used loans to buy farm equipment, education for her kids, and 3 motorcycles. These seem like sound moves.

Farm equipment to improve her farming.

Education for her kids (perhaps so they can lead a better life than her)

Three motorcycle so the family has basic transportation (probably at a fraction of the cost of one small car)

Although her farm may be fallow due to the drought, her other expenditures may yet yield dividends.

If this drought continues, given the severity and the inadequate government response, there could be a reshaping of rural Thailand. I would expect the cities to grow as people give up farming, sell out and move. We can debate whether this is a good thing; but it is certainly the common pattern throughout modern history.

[cmsally]

Fewer farms will just mean the farms are owned by or tied into the large conglomerates.

[chainarong]

Unfortunately this repeats itself world wide , more so in countries like Thailand where there is little or no support, back up or incentives they need support, incentives in the area of reduced power, water, vehicle licence, gas ,fertilizer and fuel costs , what the majority try to do is mix the old ways with modern and it doesn't work , most of the younger brigade have left them to it as they try to introduce modern farming and the oldies overrule them , the banks are criticized if they make it hard for farmers to obtain loans , there is no easy fix except if you cannot afford it U don't need it , however when it comes to fertilizer and mainstream requirements what do you do walk off the land and end up on the street, not many options for the Thai farmer, the government is useless, to busy taking about the water shortage, grandstanding and chasing students.............................................................

Edited March 20, 2016 by chainarong

[Bob12345]

While I agree with you in general, it seems you try to put some "hidden" political messages in your comments. So let me help you:

Yes previous governments made banks loan out to farmers, quite a smart scam. And yes banks should never have given farmers this much credit.. but then they would get angry with banks for not getting the money.

Previous, as in both "red, yellow, and green" governments. And don't forget the current government.

And of course the next government that will act as a puppet government, they probably do the exact same (if you don't agree, I am willing to take bets on that).

Correct they are ready to vote for whoever offers them salvation (and guess what it will not help again).

Your right only sustainable policy helps them, in a way its good the junta is outlawing popular policies otherwise this will go on forever and nobody will ever try try to really help them.... just bribe them and use them.

"Outlawing popular policies", who are you trying to fool?

This government is worse than the previous one regarding populist policies. They both commit the same sins only the previous one didn't explicitly say it was outlawing them while doing it.

Edited March 20, 2016 by Bob12345

[HOAX]

She may be struggling to get the ends to meet, but her kids and grandkids (the next generations of Thais, especially in N.E.) are the ones who really will struggle when they "grow up" realizing the government screwed them over with all these fancy government loans, the lack of restrictions on banks lending them money way to easily, and the car companies selling cars with terrible deals to low incomers.

Mark my words. Their brand new pickups, Iphones and gold watches on a 15,000 baht salary is going to hurt when the government, the banks and car companies suddenly starts nagging about their money when times get rougher. It happens, and it will happen again. Thailand don't have any backup like most western countries. In Thailand, the people, especially the poor people with much debt, are the ones who will take the bill for the country to get through rough times, leaving them even poorer. And even if times weren't ever to get bad for Thailand in the next 3 generations, very many of these debt strucken youngsters in Thailand won't do anything else than just paying off their loans for decades, if not for the rest of their lives.

Thailand has never had such a "booming" economy in modern history. It's just sad that the Thais don't understand it's booming economy is a "borrowed" one, not a strong and sustainable one.

Sent from my iPhone using Tapatalk

I would not be so harsh. She used loans to buy farm equipment, education for her kids, and 3 motorcycles. These seem like sound moves.

Farm equipment to improve her farming.

Education for her kids (perhaps so they can lead a better life than her)

Three motorcycle so the family has basic transportation (probably at a fraction of the cost of one small car)

Although her farm may be fallow due to the drought, her other expenditures may yet yield dividends.

If this drought continues, given the severity and the inadequate government response, there could be a reshaping of rural Thailand. I would expect the cities to grow as people give up farming, sell out and move. We can debate whether this is a good thing; but it is certainly the common pattern throughout modern history.

I wasn't talking about her, but the younger generations. She invested in something that may very well pay off. The younger generation invests very little but spends a lot. Even she struggles, so it is likely the younger generation will be worse off. Few parents in N.E. have money enough to pay for a good education. It's usually paid by the students themselves by working after school hours are over. When they're done with the university, most of them finds themself a random job, buys a pickup, get kids, buys expensive phones, gold and clothes.

I agree that Thais are turning more from farming to city jobs, but with all the debt they're collecting, it won't be many decades before they're back on the farms.

Sent from my iPhone using Tapatalk

Edited March 20, 2016 by HOAX

[Srikcir]

Banks here are guilty of extending too much credit....this is especially true for farmers but the government often pushed banks in this direction when farmers were in trouble.

Yes previous governments made banks loan out to farmers, quite a smart scam. And yes banks should never have given farmers this much credit.. but then they would get angry with banks for not getting the money.

Sad fact many farmers are just not smart and never think about the repayment. But better they loan from banks then loansharks.

Not to mention that in the good times.. they go for consumer products.. not repayment of loans. Many shiny new cars.

Anyway this goes for many people the world around.

Yes previous governments made banks loan out to farmers, quite a smart scam.

As you are aware, the Prayut government has budgeted tens of billions of baht soft loans through BAAC for the last 21 months to rubber and rice farmers who otherwise wouldn't qualify for more debt. No doubt the government has also guaranteed loan principal payback so BAAC has no financial risk with high-risk borrowers that it would otherwise reject. Prayut has in fact forgiven unpaid loans by farmers taken from previous governments.

You must then agree that the current government is no more better than previous governments with the same kind of bank scams.

Or Prayut knows such loans are just another kind of subsidy to help farmers as did previous governments.

[robblok]

Most previous governments were red yes or not Bob12345 ? were they not the longest in power ?

Can you tell me what popular policies the current goverment is doing ? Nothing even close to the rice program of YL in how much it cost ?

And yes my post was a bit political, but even I understand that while the reds were the worst of them the others did not do much to really help either.

[robblok]

Banks here are guilty of extending too much credit....this is especially true for farmers but the government often pushed banks in this direction when farmers were in trouble.

Yes previous governments made banks loan out to farmers, quite a smart scam. And yes banks should never have given farmers this much credit.. but then they would get angry with banks for not getting the money.

Sad fact many farmers are just not smart and never think about the repayment. But better they loan from banks then loansharks.

Not to mention that in the good times.. they go for consumer products.. not repayment of loans. Many shiny new cars.

Anyway this goes for many people the world around.

Yes previous governments made banks loan out to farmers, quite a smart scam.

As you are aware, the Prayut government has budgeted tens of billions of baht soft loans through BAAC for the last 21 months to rubber and rice farmers who otherwise wouldn't qualify for more debt. No doubt the government has also guaranteed loan principal payback so BAAC has no financial risk with high-risk borrowers that it would otherwise reject. Prayut has in fact forgiven unpaid loans by farmers taken from previous governments.

You must then agree that the current government is no more better than previous governments with the same kind of bank scams.

Or Prayut knows such loans are just another kind of subsidy to help farmers as did previous governments.

I agree about the bank scams, if your data is right (might well be but after your latest state telephone company lie stating DTAC was government owned implying Thai government owned) I have a hard time believing what you post. Now if you are right and you might well be I agree 100% because I think loans should be vetted well and not given out easy because it will lead to what is described in this article.

Edited March 20, 2016 by robblok

[lostinisaan]

<snip>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. <snip>

http://www.thaivisa.com/forum/topic/858469-new-fund-may-leave-farmers-deeper-in-debt/

[SoilSpoil]

It would seem the Rich and the Banks are in a conspiracy, keep the farmers

in debt .offering them more and more loans they cannot repay,then have

their land repossessed,which is sold off to the large landowners and influential

people,the biggest mystery is where did all that money go, the Government

handed farmers,paying twice the World price for Rice,its a right mess that will

go on for years and years.

regards Worgeordie

A certain former Prime Minister was known to encourage people to take out loans and buy whatever to stimulate the economy.

Reading the article referred to in the OP confirms this. Who's to blame? I always believe you're responsible for your own actions. The 'poor' farmers choices made them poor.

The future of farming is right here, we will see bigger agro corporations continue buying up cheap lands and consequently we will see a full blown migration to the cities. I predict that Bangkok's population will double in the next 20 years.

[SOUTHERNSTAR]

Its is not only farmers thats got major problems. Many rural businesses rely on farmers for business. Our company deal in land and it is sad to see how many rural poor are on the verge of losing their land. Many owe a small percentage of the value of the land to banks but they cant repay it and will lose everything. This is not only about the effect of the defunct rice scheme, as most palm oil, rubber and shrimp farmers are struggeling. Farm commodity prices are depressed across the board and thecdrought are the reasons for the Thai farmers financial problems. The bad shape of the economy is also spreading to the urban lower income families. Neighbors of ours that have a business that depends on farang tourists had to take out a loan on their house to survive.

[CGW]

She borrowed to buy three motorcycles? That would not be my first priority.

Then they had to buy 3 x new exhaust systems so they could make as much noise as humanely possible!

[DrTuner]

600k, that's the price of a new Vigo, innit?

[NeverSure]

Show me a developed country where people didn't leave the farms and go to the cities.

Show me a developed country were the farms aren't now big to justify mechanization.

Show me a developed country which doesn't now have far fewer people living on and working bigger farms.

While the US and Canada have amazing amounts of high quality farmland, I don't know anyone who could make a living with it if having only a small farm the size of most Thai farms.

Big, consolidated, and mechanized.

Edited March 20, 2016 by NeverSure

[MaeJoMTB]

Don't buy new motorcycles if you can' afford them.

3 new m/cs must be nearly the 200,000bht she still owes.

No sympathy for the foolish, living beyond their means.

[Rancid]

Show me a developed country where people didn't leave the farms and go to the cities.

Show me a developed country were the farms aren't now big to justify mechanization.

Show me a developed country which doesn't now have far fewer people living on and working bigger farms.

While the US and Canada have amazing amounts of high quality farmland, I don't know anyone who could make a living with it if having only a small farm the size of most Thai farms.

Big, consolidated, and mechanized.

534ff2a6a135758aa942fe6e31531775.jpg

JD-harvest-Wheat.jpg

Corbis-42-26932822.jpg

Would agree for the most part, except can probably add nasty GMO into the western mix.

The industrial revolution came and went in the west, seems the next step will be more automation with more jobs disappearing, so what does countries like Thailand do.

Essentially what is going on is debt slavery, those who can afford to lend get richer and those who overextended lose it all. Worldwide there is a huge transfer of wealth underway, hopefully a return to Feudalism won't be the eventual outcome.

Like farmers here many in the west are also way overleveraged, there is a lot of get out of debt companies flourishing here at home. Even entire countries get enticed with easy loans and then lose all their public assets trying to repay.

Have no magic answers to the problem. To be free of debt is very difficult for many.

[Bob12345]

Most previous governments were red yes or not Bob12345 ? were they not the longest in power ?

Can you tell me what popular policies the current goverment is doing ? Nothing even close to the rice program of YL in how much it cost ?

And yes my post was a bit political, but even I understand that while the reds were the worst of them the others did not do much to really help either.

For some reason you still want every discussion on this forum to go back to the yellow-red division in Thailand?

These discussions always go the exact same way, so I have little interest in that (you point out how much the rice scam costed, others point out that at least that government was democratic, you point out that there was vote buying, they point out that vote buying had little influence, you point out ... etc). And what is the conclusion? There is none, so its a useless discussion to repeat over and over and over and over and over again.

I don't feel inclined to discuss if the current government has popular policies because it is clear to see for anybody who follows the news.

It is not even worth mentioning or discussing.

By asking about the policies you do yourself a huge disservice as most of your posts are actually well-thought out and make sense. So instead of trying to score some political points, you can better use the amount of objectivity and common sense you show in tons of your other posts which are often highly appreciated by me as I regularly agree with you 100% (and you are able to bring your points in a nice and clear way).

[NeverSure]

Show me a developed country where people didn't leave the farms and go to the cities.

Show me a developed country were the farms aren't now big to justify mechanization.

Show me a developed country which doesn't now have far fewer people living on and working bigger farms.

While the US and Canada have amazing amounts of high quality farmland, I don't know anyone who could make a living with it if having only a small farm the size of most Thai farms.

Big, consolidated, and mechanized.

534ff2a6a135758aa942fe6e31531775.jpg

JD-harvest-Wheat.jpg

Corbis-42-26932822.jpg

Would agree for the most part, except can probably add nasty GMO into the western mix.

The industrial revolution came and went in the west, seems the next step will be more automation with more jobs disappearing, so what does countries like Thailand do.

Essentially what is going on is debt slavery, those who can afford to lend get richer and those who overextended lose it all. Worldwide there is a huge transfer of wealth underway, hopefully a return to Feudalism won't be the eventual outcome.

Like farmers here many in the west are also way overleveraged, there is a lot of get out of debt companies flourishing here at home. Even entire countries get enticed with easy loans and then lose all their public assets trying to repay.

Have no magic answers to the problem. To be free of debt is very difficult for many.

I grew up on a debt-free wheat and cattle ranch and most of the neighbors were debt free. There is a ton of money going into those combines and another ton made from cattle which graze where the land can't be mechanized. Can't be as in steep, rocky, etc.

Being in debt is all about a belief system. Few ever actually have to get there.

I see about 8 million dollars worth of combines in that picture and I'll bet that none of them belong to the wheat ranch. I'll bet they all belong to someone who does nothing but harvest wheat. I'll bet he starts in the S. of the country where it's warm and the wheat matures first, and then works his way North until the job is done. Then he can start over with the next crop. You can get two crops of wheat per year. I'll bet he works on a price per ton of wheat which will be calculated as the dump trucks take the wheat to the elevator and it's weighed and purchased.

Look at just how big those combines really are and imagine how much they can harvest. Look at them dwarf the big semi truck as they load it. Think of the money.

Edited March 20, 2016 by NeverSure