New fund 'may leave farmers deeper in debt'

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.