Pheu Thai reneges on 'credit cards for farmers'

The first lot of credit cards had been promised to 5,000 farmers in five provinces, to coincide with the start of the government’s rice mortgage scheme at the end of next week.
Instead, plans are well advanced for lines of credit to be granted to farmers by the Bank of Agriculture and Agricultural Cooperatives, accessible through individually issued atuomated teller machine cards. But this credit will not be available until March or April next year.
Finance Minister Thirachai Phuvanatnaranubala said yesterday the credit-card platform was too complicated for the payment of farmers’ debts. Proceeding with the credit cards would have involved many requirements, such as smart cards with microchips for farmers’ personal data.
He said the government was now considering a means of debt payment that was familiar to farmers, under the Bank for Agriculture and Agricultural Cooperatives (BAAC). The bank’s normal practice is to allow farmers a line of credit through an ATM card.
“Farmers will have their own credit card [in the new form] to ensure their credit lines by March or April next year at least, to encourage their main-crop plantation,” Thirachai said.
Proceeding with credit cards would have cost the government about Bt1 billion. This money should be spent on other assistance measures that will create bigger benefits, he said.
The demise of the credit-card plan has meant that BAAC has cancelled the bidding process by companies wishing to manage the farmers’ credit cards.
There were 13 companies interested in the bidding. Only five firms have submitted bids to date and only three of them are qualified.
Thirachai said his ministry had discussed the changes with Prime Minister Yingluck Shinawatra and Deputy Prime Minister and Com-merce Minister Kittiratt Na-Ranong, explaining the reasons for the decision and assuring the availability of credit for farmers in the long term.
BAAC executive vice president Apirom Sukprasert said the bank was considering a “closed loop” ATM card, which it used for specific purposes and which limited the location for users. This strategy avoids the need to comply with international-card standards. In addition, farm shops have asked to be registered.
On a related issue, the BAAC yesterday considered measures to prevent corruption in the soon-to-be-launched rice-pledging scheme. Both farmers and their rice will be seriously inspected, including an examination of rice quality in terms of contamination and humidity, and to determine that it is purely Thai rice and not mixed with rice from neighbouring countries.
These inspections will take place at warehouses of both the Public Warehouse Organisation and the Market Organisation for Farmers.
The bank will work as the government’s arm, as a credit provider to farmers. It is estimated that Bt410 billion will be required to support the project. Of this, Bt90 billion will come from the BAAC and the remaining Bt320 billion will have to be borrowed from whichever commercial banks offer the most attractive interest rates.
The Finance Ministry will have to allocate Bt16 billion to subsidise interest payments under the whole rice-pledging scheme.
Thirachai said yesterday that the government might not need to spend as much as Bt410 billion, as it planned to continue exporting the rice. This strategy will allow the government some working capital, he said.
The government is also planning to extend a debt moratorium to farmers who own less than Bt500,000, for three years. This will begin tomorrow and end on September 30, 2014. About 639,589 farmers will qualify for the programme, with total principal of Bt77.75 billion. Good debtors will enjoy a special offer from the |bank of life-insurance coverage of Bt100,000. However, they will be forbidden to borrow new funds during the period of the moratorium.