IMPOVERISHED BY DEBT

IMPOVERISHED BY DEBT.

Many farmers are losing their land, victims of an unfair cycle of high costs and low returns.

PIYAPORN WONGRUANG, CHAI NAT.

Phayoon Chuea-aphai can hardly hold back her tears when she thinks about her lost farm. Nor can she decide whether to walk past it as she is not sure whether she can stand seeing someone else working on the five-rai plot.

The land is not hers any more. It now belongs to a farm cooperative in Chai Nat province from which Mrs Phayoon borrowed money. But she could not repay the debt, which now amounts to more than 100,000 baht.

''My parents gave it to me to make a living off it, but I just can't keep it. I'm so sorry for that,'' said Mrs Phayoon, crying.

Mrs Phayoon lost the land she inherited after borrowing money about eight years ago. She had tried to grow as much rice as she could on the five-rai, putting more and more pesticides and fertilisers on the land.

But still she could not produce as much as she needed. And in some years her crops were ravaged by pests and diseases, causing her to lose money and forcing her to seek more loans.

Mrs Phayoon could not find the money to pay off her debt and eventually her land was seized.

''Pesticides and fertilisers are very expensive, while my rice is so cheap. Everything seems out of balance,'' said Mrs Phayoon, now in her forties.

Mrs Phayoon is not the only farmer who is in debt and has lost farmland.

According to the Office of the Farmers Rehabilitation and Development Fund, at least 5,000 farmers lost or had their assets seized last year.

In total, about 300,000 farmers are heavily in debt. Over 50,000 of them are in dire need of help or they will have their assets seized soon if they cannot pay off their loans, which have accumulated to over 50 billion baht.

This figure, however, does not include the debt shouldered by farmers who are not members of the fund.

The Thailand Development Research Institute (TDRI) says 3.1 million farming households were in debt in 2004, or about 81% of all farming households.

In a recent study on poverty, the National Economic and Social Development Board found that half of the country's poor were in the farm sector, most of them landless farmers.

Prapat Panyachatraksa, a former deputy agriculture and cooperatives minister and former acting chairman of the fund, said the farmers' poverty and debt problems were the result of improper farm policies.

Since the country adopted capitalism-led production over 40 years ago, farmers have been pushed to mass produce crops without being ready for it.

The most critical problems of farm crop production stem from the farmers' inability to control production costs and market forces, he said.

''By nature, our farmers are on the opposite side to capitalism. They can never compete under its rules,'' said Mr Prapat. ''However, our farm policies remain unchanged, and this is a tragedy for our farmers, who have no choice but are forced to compete without being ready for it.''

Mr Prapat said mass production has brought failure to many farmers. Their situation is worsened by financial institutions' debt management, he said.

Most institutions call for debt repayment according to calendar schedules which are not in line with farming cycles.

As a result, indebted farmers have to sell their produce prematurely at a low price in order to earn cash to return to the institutions, Mr Prapat said.

''Financial institutions for farmers are supposed to assist farmers, similar to rural development banks which do not concentrate on profit returns.

''However, most financial institutions in our country operate commercially and focus on making profit. That's why their repayment terms are not suitable for farmers,'' said Mr Prapat.

''In order to better assist our farmers, a major reform in farm debt management is urgently needed,'' he said.

So far, no particular farm policies have been put in place to fix these problems, say several farm experts.

A senior agricultural official working on farm debts said the Agriculture and Cooperatives Ministry has no specific agencies responsible for farm debt problems.

Although there is a fund providing loans to farmers under the ministry's permanent-secretary office, this fund only helps farmers who have debts outside financial institutions.

So far, the fund can help about 19,000 farmers with loans totalling about 2.4 billion baht.

The official said the ministry has come up with agricultural projects to help farmers earn more income, but it has no clear policies to take care of farmers' high production costs and market uncertainty.

As a result, farmers often find themselves facing the problem of high production costs and unable to bargain for good farm prices, the official said.

So far, the Farmers Rehabilitation and Development Fund is the most effective mechanism helping indebted farmers as the fund's operation was based on promoting farmers' groups operations to strengthen their power to bargain for benefits, he said.

The fund has helped to relieve farmers' debt problems by buying back their debts, adjusting debt payment periods to suit farming cycles, and lowering interest rates to a level that farmers can afford.

However, the fund itself is facing challenges with internal conflicts of interests among executives which might cause its dissolution.

The government is now paying particular attention to the fund's reform, first with amendments of its law to fix its management problems.

Somchai Jitsuchon, research director of the TDRI's Macroeconomic Policy Programme, said farm debt problems have not yet reached a critical point, considering the current rate of debt among farmers in the country.

However, there was a worrying trend of an increasing amount of debt among farmers, which the government should pay more attention to.

Mr Somchai's recent study showed a farm household's average debt had increased from 35,000 baht in 1994 to 85,900 baht in 2004.

Mr Somchai said farmers who have only a small amount of farmland, or no land at all, are the most vulnerable and deserve most attention.

Once indebted, these land-scarce farmers find it hard to repay debts as they have little income.

Mr Somchai said mass farm production has inbuilt flaws, including monopolies over raw farm materials and farm produce markets, that lead to farm debt problems and poverty among farmers.

The country's farming sector was ''at a crossroads'' and it was necessary to decide whether to continue with mass production or switch to alternative farming practices.

In the long run, said the academic, mass production would pose some environmental risks which in turn would undermine farming capabilities in the country.

He was optimistic that the new generation of farmers, who are well-educated, would use their knowledge and skills in modern farming technology to improve the agricultural sector and protect farmers' benefits.

The government should, therefore, come up with proper measures now to support the younger generation's participation in agricultural development.

Mrs Phayoon, meanwhile, has no idea what to do with her life now.

She has asked the farmers' fund to help her get her land back from the cooperative, which is about to sell the land to a third party.

The cooperative argues that the fund does not exist, and therefore it does not need to wait for its negotiation, Mrs Phayoon claimed.

''I have tried every way, even joining my fellows in rallies in front of the Agriculture and Cooperatives Ministry in the hope that it will ask farm cooperatives under its supervision to suspend the sales of our assets.

''The only thing I can do now is to pray that we will somehow get some sympathy,'' said Mrs Phayoon, who this year has had to become a labourer working on her neighbours' farm.

Bangkok Post
Thursday January 04, 2007