Debt crisis ‘to cause grief for more farmers’

FARMERS’ debt is the major reason for land being lost, a problem that will get worse as farming costs rise, more crops fail, and cash-crop prices remain low, experts say.

Yesterday, Local Action Link (Local Act) hosted an academic seminar on farmers’ non-formal-loan crisis at Chulalongkorn University’s Faculty of Economics. It revealed that more than 1.6 million farmers had a total debt of Bt338.36 billion. 

Moreover, 149,437 of them had borrowed the money from loan sharks, for a total debt of Bt21.59 billion.

Local Act manager Phongthip Samranchit said farmers’ loss of land was a very big problem because the land was their life-blood. There were endless demands on it because land was precious and many rich individuals wanted to collect it as an investment.

“Farmers’ debt, especially non-formal debt, has been the main reason for land slipping from their hands. The debt problem is going to get worse because farming costs are rising and the price of cash crops are unstable,” Phongthip said.

Speaking from the farmers’ perspective, Kim-ang Phongnarai, the coordinator of the Thai Farmer Network Council, said farmers’ debt woes was a long-standing problem. 

However, Kim-ang said that in the past it was not as serious because farmers could borrow from acquaintances in the community and the cost of farming was nearly zero because there was no use of chemical fertilisers and pesticides. 

“The situation now is drastically different, as the farmers have to pay for many things – from seeds, pesticides and fertiliser to petrol for the tractor. This is increasing farming budgets significantly. 

“For example, 15 kilograms of rice can be sold for Bt65, but the budget to produce this amount of rice is Bt81. That is why the farmers are always losing,” Kim-ang explained.

“Many farmers also suffer from health problems due to agricultural chemicals and have to spend a large sum of money for medical care.”

 

Drought also forcing land sales

She said that when farmers could not obtain bank loans, they had to turn to loan sharks to cover their expenses. In the end this would mean they were borrowing more money at illegally high interest rates. This situation caused them to lose their lands under property mortgages or repurchase agreements.

Thammasat University economics professor Pattamawadee Yanatatsaneejit said solving the debt problem at the level of |financial institutions was not the same as problem-solving at the |origin.

“As we can see that high farming budgets are the major reason for the farmers’ debt problems, we have to tackle this point by ensuring that the farmers can produce food with the lowest risk of financial loss – such as promoting organic and polyculture farming,” Pattamawadee said.

“I want to stress that borrowing is not a bad thing, but the farmers have to manage their money |properly.”

Yesterday it was reported from Nakhon Ratchasima that many farmers had put their land up for sale because of the severe drought, which made planting impossible.

Boonsong Wangwatklang, a farmer in Non Sung district, said more than 20 farmers had sold their land at very low prices because of crop failures during the current drought, which is ongoing.