Drought, rice farmers and debt in Isan
Many rice farmers in the debt-ridden Northeast are struggling to make ends meet after the government shut down irrigation systems. As a result, they have to miss out on the profit of a second rice crop. But for the military government, the drought could help with its economic strategy.
Sumatra Sodatomic
Rice farmer Sumatra Sodatoom sits in the shade of a longan tree at her home in Khon Kaen. In April she is usually busy selling her second rice crop. But this year, the government shut down irrigation systems very early, preventing many farmers in the arid Northeast from planting a second crop of rice on which they have become dependent.
At the end of last year, the military government announced through the village speakers in Nong Kha that the taps of the irrigation system would be turned off. In February, the Royal Irrigation Department warned that Thailand would be hit by its worst drought in 15 years.
When the main crop is in, many rice farmers with access to irrigation plant a second crop. Like many farmers, Sumatra needs a second harvest to pay off its debts.
Her family owes the Bank for Agriculture and Cooperatives (BAAC) 800.000 baht. Sumatra's personal debt of 280.000 baht arose from loans she took out to pay for her bachelor's degree. 'Next year our debt will increase even more,' says Sumatra, 'because then we have to pay for the lease of our tractor.'
Her family went into debt due to a failed investment in a chicken farming deal. According to the Nong Kha village chief, Bua-ngoen Plamsin, almost all 165 households are indebted to the BAAC or the village fund program.
"Everything would have been much better if the government had given us a price guarantee for our rice instead of talking about cheap loans," says 31-year-old rice farmer Sumatra Sodatoom.
Thonglam Thongnoi
For rice farmer Thonglam Thongnoi and his family of four, the prospects this year are very bleak. "I can't pay my debts this year because I have no income from a second crop," he says. 'I'm devastated. There is no hope for us this year in terms of money.'
In 2013, the Northeast had the worst income-to-debt ratio, according to the National Statistical Institute, with an average of 65 percent of income going towards paying off debt. By way of comparison, in the South the figure was 42 percent.
Khamphon Wongwai
Khamphon Wongwai, a 50-year-old rice farmer and seamstress from Yasothon, says she is in debt to both the BAAC and the village fund. She uses the loans to invest in rice farming, for her daily expenses and for her children's education.
Khamhong mainly has short-term loans with the BAAC which she takes out when planting begins and which she has to pay back with interest after the harvest.
She is caught in a cycle of loans. She has to apply for a new loan every season and is only able to pay the interest.
"I use all the profit from my rice to pay the bank, but my debt never decreases," says Khamhong. 'The price of rice is not good and fertilizer remains expensive.'
Household debt
In recent years, household debt in Thailand increased from 61 percent of GDP in 2009 to 85 percent at the end of 2014, the highest rate in Southeast Asia.
In late March, the BAAC announced a debt relief program for 818.000 farmers, including those suffering from the restrictions of the second crop ban.
Dr. Titipol Phakdeewanich, a political scientist at Ubon Ratchathani University who studies rice policy, suggests the government is missing the point with the debt relief.
“There have been more debt restructuring programs in the past, but I think it's more important to help farmers earn more income in a sustainable way than to forgive their debts,” he says.
Some say the increasing indebtedness of farmers is due to the after-effects of the previous government's controversial rice mortgage program that bought rice at twice its market value.
“Under this program, the farmers invested everything to increase their yield,” notes Kunlapasorn Chuengrungruangphat, a rice mill worker. 'Now that prices are falling, their behavior hasn't changed. They keep investing and their debts grow.'
Rice program popular in Northeast
The previous government's rice program was very popular among rice farmers in the Northeast. It improved incomes and made many debt free, at least temporarily.
“My life improved a lot,” recalls Pai Kaewbunruang, a rice farmer from Khon Kaen. 'I bought nothing but paid my debts to the BAAC and gave money to my children. A heavy burden was lifted from my shoulders.'
The military government that came to power in a coup last year denounced the rice mortgage program as a 'populist' policy and sued former Prime Minister Yingluck Shinawatra over her alleged involvement in program irregularities.
Instead of a subsidy on the rice, the military government paid small-scale farmers 1.000 baht per rai in what the government called 'non-populist'. However, it made farmers more vulnerable to market ups and downs.
'When the government announced that there would not be enough water for irrigation, I had already bought rice seeds for 15 baht per kilo. But I had to sell them at a loss for 7 baht," says Pharat Saphromma, a rice farmer in Nong Rua township near Khon Kaen.
Oversupply of rice
The world market price for rice is at its lowest point since June last year. With the current oversupply of rice, prices will not rise in the short term.
Khampong, who grows jasmine rice (Hom Mali) and glutinous rice on her 12 rai, believes the current government is not supporting farmers. "I don't think they will help us with anything because the price of rice is still low."
During the previous government's rice program, she earned 70.000 to 80.000 baht a year. That has now dropped to 40.000 baht.
While rice farmers struggle with debt, low market prices and lack of state support, the drought and the indirect ban on second crops are helping the military government's economic plan.
As a result of the rice subsidies, Thailand is facing a mountain of 17,8 million tons of rice. Due to the lower production of rice (minus 45 percent for the second harvest according to the Agricultural Economics Institute), the stored stock can be reduced and storage costs go down.
Other crops
Assistant village chief Prasit Thangwon of Nong Kha wonders why the government has banned the use of water for irrigation purposes. "There is water," he says, "the people who work at the dam tell us there is enough water for a second crop."
Without the income of a second crop, many families depend on financial support from their children, many of whom work in the cities. Others were sent to work in the sugar cane industry or in nearby factories.
Pharat says the government advised villagers to switch to other crops such as chilli or maize that use less water. "But how can that make up for my loss this season?" he says. 'And if everyone starts planting maize, the price will also fall.'
Source: isaanrecord.com
Article was previously published on Trefpunt Thailand – April 2015
In my village in Nakhon Ratchasima province, there is never a second harvest. And the last harvest has completely failed. Fortunately, the government did give a small compensation per rai.
It's that I can support my girlfriend and somewhat support the family, otherwise things would look very bleak. Occasional work here and there provides some income.
The people who normally plant and harvest the rice manually have almost no work anyway, as almost all landowners have the rice, if there is any!, harvested by machine.
Terrible for those poor farmers!
A solution must be found.
That solution is hidden somewhere between all the misery that happens to these people.
We must look for a crop that needs less water.
Something that is in short supply worldwide.
If everyone starts growing maize, that is not a solution either.
We have to look for something that requires land, lots of sun and people want to have.
But what?
At the moment I don't know either, but if you assume that the opportunity is hidden somewhere, then you keep looking until you find it.
This belief also makes everything possible in technology.
Sincerely Grandpa Chris.
Ps There are probably language errors in the above.
Sorry, I'm a dyslexia patient. ☺
Well, Grandpa Chris, I don't see any spelling errors. There are always a few spelling errors in my pieces. 🙂
What the farmers in Thailand need is an income subsidy. Thailand is an upper-middle income country and can afford that. It is almost impossible, even with a lot of land and good management, to obtain a reasonable income from agriculture alone.
In the European Union, every farmer receives an average of 10.000 euros in subsidies per year. In Thailand this should be an amount of 50-100.000 baht per year. The daughters no longer have to go to Pattaya to please old (and young) men.
Initially I was somewhat impressed by all those large all-terrain vehicles that I saw on the roads in North-East Thailand. You don't see that in the Netherlands. All Thai bluff. Everything on credit. Meant to impress. Typically Thai. As long as the facade is impressive. In reality, they usually don't make a cent. What I mean: Indeed, the state of agriculture is sad. But the Thais always spend more than they can afford. A disciplinary housekeeping book is missing
Typical Dutch response. Should we tar all Thais with the same brush if necessary? What you write may apply to part of the Thai middle class, but certainly not to the large majority of Thai farmers this story is about. With an average of 35 rai, they earn 7-8.000 baht per month. Often less so.
The debts that many farmers are under are investments, school fees, help for parents, medical expenses, cremations, etc., really necessary things, and certainly not 'off-road vehicles'.
'Don't see you in the Netherlands'. Thai private debt is 80 percent of gross national income, in the Netherlands it is more than 200 percent, two and a half times as much.
You seem to have no empathy for the plight of Thai farmers in these difficult times. Very condescending.
About 40% of the active population derives its income from agricultural activity and the agricultural sector now accounts for only 10% of GDP. Those figures immediately say everything about the basic structural problems in the country.
Without a long-term reconversion policy, the misery will only increase.
The short-term blowtorch policy of former governments is helping farmers get out of the water. Incidentally, this policy primarily served to reinforce the populism of the leading figures.
The Junta actually does nothing else. Old wine in new bags. Many missed opportunities for the country and its people. Continued pressure on the kettle, fuel for further political polarization. Sweet talk, censorship and even repression will be of no avail if better structural policy is not developed.
I would like to add something to Mr.'s responses. Chaste and from Mr. van Kampen.
I understand all too well the two different reactions .
Even I sometimes don't understand it here in Thailand.
That the farmers are having a hard time, also in my direct environment (Chiangmai – Lamphun), that is a clear fact for me, I see it and hear it almost daily.
But the opposite is true , and now it comes .
So where does all that money come from?
The schools have now started again , and they race past me on the very latest types and models from Honda and Yamaha .
Sometimes even on a Honda 250 cc CBR cost a small 135000 bath, along the road I see the latest SUV models from Mitsch de pajero, Toyota the all new Fortuner and Isuzu.
And not just a little, it easily costs a million plus two hundred thousand baht and more.
I myself am still chugging, perhaps as a too frugal Dutchman in my Mitsh Strada, approved again this week, which is now already 16 years old, with power steering and air conditioning as the only accessory.
It seems to a newcomer that half of Thailand is very poor, and the other half is full of money.
Hence also these different reactions of these two blockers .
Jan Beute.
They have to start growing cocoa, in 1 to 2 years there will be a very large shortage. Fruit is also increasingly becoming one of the first necessities of life for people, would also be a solution. It's strange that farmers always start cultivating things that require a lot of brasg, you have to grow something that no one has.