Finding ways to beat farm debt

The farm sector has been a driving engine behind Thailand’s economic growth, but at the same time, debt among farmers has been rising.

The main product of farming is rice.

Last year, the value of rice traded was 174.5 billion baht (US$5.7 billion), entailing 12.89% of all farming products.

Logically, rice farmers should be enjoying wealthy profits.

But the uncertainties of farming – unmerciful weather, droughts and floods, fluctuating prices and rising costs – enslave rice farmers to debts.

“Thai farmers are getting into more and more debt because they can draw on all kinds of financial sources. All governments have a raft of policies to help farmers get finance at low interest rates. But farming is a high risk career with variable returns,”

The government has offered help, but to no avail.

Farming debt, often incurred by rice farmers, rose from 2.4 trillion baht in 2016 to 2.8 trillion baht as of last year, according to the National Statistical Office (NOS).

Among 3.8 million debtors with state-funded loans, 1.1 million of them are farmers, according to the NOS.

In August 2017, hundreds of rice farmers gathering in front of commercial banks and the Bank for Agriculture and Agricultural Cooperatives (BAAC) demanded help.

The government granted them debt relief, with interest cuts.

However the larger question still remains: how can Thailand tackle farmers debt so it disappears for good?


Samree Treesawat, a 54 year-old farmer from Ayutthaya province, was among the farmers who joined the protest at the BAAC.

“I can see no future. The price of rice has gone down every year since the coup. I make no profit from rice plantations. I have been a farmer since I was young. I can’t change to a new job,” Mr Samree told the Bangkok Post.

10 years ago, Seree borrowed one million baht from the BAAC to develop his home and launch a grocery business as a second job apart from growing rice.

During the early years, he was able to make debt repayments, but stopped them over the past four years.

Total interest payments have reached 300,000 baht.

A farmer in Bangkok’s Nong Chok district drives a harvester to collect his crop. Variables such as unmerciful weather, fluctuating prices and rising costs enslave rice farmers to their debts. Source: Patipat Janthong

Mr Samree said he does not own his own land, so the costs are higher, and production costs in general have increased. Like many other rice farmers, Mr Samree rents land to plant rice.

Although, the harvest gave him plenty of rice to sell, he was still unable to make enough money to repay his debt.

First, Mr Samree needed to earmark 150 kilograms of paddy rice per rai (1,600 square metres) to repay his landlord.

His landlord prefers rice to cash. Landlords make easy money selling rice when the price in the world market jumps.

If not, they can still make money from a government subsidy under the rice mortgage scheme.

If droughts hit or the weather is otherwise cruel, Mr Samree could end up owing rent.

Even if he had not harvested enough rice to pay rent to his landlord, he still needed to pay for production costs such as oil for tractors, chemical pesticides, chemical fertilisers and seeds.


Based on a study by the Thailand Development Research Institute (TDRI) in 2016, almost a quarter of all farm debts are owed to state banks.

Kamphol Pantakua, a researcher from the TDRI, said farmers have borrowed money from banks for further investment, which can return benefits of up to 77%.

That makes good sense economically, except farmers do not borrow for farming only.

Around 34% of them borrow for developing or buying a house or residential plot, 15% for education, 14% for improving the farming business, 14% for doing business, 10% on general consumption and 13% for other purposes.

The problem is therefore not about lacking loans or financial help.

“Thai farmers are getting into more and more debt because they can draw on all kinds of financial sources. All governments have a raft of policies to help farmers get finance at low interest rates. But farming is a high risk career with variable returns,” said Kamphol.

He explained that rice is a commodity that is easy to sell, but not much of a money-maker.

The price of rice fluctuates greatly based on the world market, not to mention fierce competition.

“Farmers could reap a 50% profit or suffer a loss just as big at any time,” he said.

The TDRI researcher also found that policies to help farmers are a problem in themselves.

To tackle the debt problem, many governments also implemented debt suspension schemes.

Governments also provided other non-financial sources of support, such as coupons for cheaper fuel and fertiliser.

They also offered special loans with long-term payments and low interest rates to farmers. Interest rates for farmers from state banks are the lowest in Asean – amounting to less than 2%.

Kamphol said that the government should reduce subsidies to the farming sector and cultivate self-sufficiency.

He said the government should play a new role as a “funding agency” to support farmers and raise capacity.

The government, he said, should pull in academics, local NGOS, and state officials to create a new strategy to solve farmer debt.

“But if the government still puts in large volumes of money to farmers with little efficiency, it will burden the country as money is drawn away from developing other fields,” he said.


The president of the BAAC, Apirom Sukprasert, said that non-performing loans at the BAAC are still at an “acceptable” level.

“Most farmers have skills in financial management. They can repay debt on time. But we still have some with problems, and we welcome them to discuss them with us,” Sukprasert said.

About 1.5 million people who are debtors of the bank have registered as poor under the government’s scheme to help those with little money and the value of their debt is about 300,000 baht per person on average.

“I can see no future. The price of rice has gone down every year since the coup. I make no profit from rice plantations. I have been a farmer since I was young. I can’t change to a new job,”

He said the bank has more flexible channels to help farmers improve their quality of life, compared with the past when loans were limited to agricultural purposes only.

“Now, our clients can get financial loans for education or real estate purchases, with different interest rates.”

However, the important thing, he added, is the bank will work with agencies to create “immunity” for those farmers.

Farmers are shown how to cultivate financial discipline and increase personal savings.

The bank has also offered measures to attract more savings from farmers.

Most popular among clients are lucky draw competitions, with winners drawn from those with deposit accounts.

Sukprasert said the BAAC is approving soft loans to 452 cooperative farmers nationwide, which will be allocated to support farmers to help cut production costs and increase income.

This is done under the government’s agricultural reform policy.

The private sector, for its part, will help farmers distribute their products to customers.

“We can no longer be focused on debt suspension or loans alone. We must focus on making farmers more disciplined and more financially independent, as that is the way to become debt free.”

This story by Penchan Charoensuthipan was first published by The Bangkok Post on October 28, 2018.


In August 2017, hundreds of rice farmers converged in front of commercial banks and the BAAC to demand for help after they were unable to pay off farming loans. The significant gathering of these farmers prompted The Bangkok Post to turn its attention to farmer debt in Thailand. It also raised the question of how Thailand could better tackle it. Anucha Charoenpo, the news editor at the Bangkok Post, later discussed the idea with the writer and encouraged her to investigate a number of farmers in debt with state-funded loans, the cause of their debt and what loan assistance packages each farmer received. The story has encouraged all stakeholders involved – especially the Thai government – to pay more attention to the problems of farmer debt while rice farmers who were themselves in debt were alerted to the changes they needed to make. This included practising increasing discipline and making themselves more financially independent.

Strangers in their own town

At the age of 55, Piak feels as if he is a stranger in Bangkok.

He sleeps in Lumpini Park and calls the public park “home”. However, people in his “home” do not want to know him.

Before he lost his job and needed to move out of his rental accommodation, he had been working as a vendor in Bangkok’s central business area.

“I always feel as if people look through me, hardly see me exist at all. Despite the fact we share the same space, we are of different social ranks,” said Mr Piak.

Piak is one of about 90 people whom Lumpini park officials and park-goers mockingly refer to as “Lumpini Park residents”.

The park is well-known to those who love outdoor exercise and enjoy brisk walks and fresh air.

It is located on prime space, the central business area, and is surrounded by a major hospital, universities, schools, shopping complexes and swanky condominiums.

Lumpini Park’s “residents” have become a headache for the Social Development and Welfare Department (SDWD), under the Ministry of Social Development and Human Security.

The government has recently issued an order to clear the homeless from the park.

Napha Setthakon, head of the SDWD, told the Bangkok Post that the department is preparing to relocate the homeless people to a “real home”in a state-run temporary shelter.

“I don’t have enough money to rent a room. It’s all spent on food and travel expenses,”

Opponents, including university scholars, are demanding a better solution than just a change of sleeping venue.

Piak wants the government to review the plan.

“If birds and hia [water monitors] are allowed to live in the park, I should have the same right as a Thai citizen with an ID card,” Mr Piak said.

Mr Piak left his home upcountry and moved to work in Bangkok when he was 14, and claims he spends four or five days a week sleeping at the park because he wants to save money.

He is currently earning some money – 300 baht a day – selling clothes in the Sukhumvit area.

He does not want to rent and send all of his earnings back to his family upcountry. “I have to save some (money) to help support my family,” Piak said.

All of his savings go to his two daughters and their children who are studying.

Other so-called “Lumpini Park residents” also have their own reasons for being there.

Chai, an ex-worker in Bangkok who has moved to Chiang Rai, said he still needs to visit and stay in the city for days at a time because he is a patient at King Chulalongkorn Memorial Hospital, which is just opposite Lumpini Park.

His illness requires frequent appointments with his doctors. Because his medical welfare under the Social Security Fund has not yet been transferred to the hospital of his choice in Chiang Rai, he is taking shelter at the park during treatment.

“I don’t have enough money to rent a room. It’s all spent on food and travel expenses,” Chai said.

A 60-year-old woman who asked not to be named said she regularly comes to the park to take a nap during the day time. She goes along with her family, bringing a nephew to meet a doctor at King Chulalongkorn Memorial Hospital.

“So I do not mean to stay overnight at the park but only wanted to relax and take a nap while waiting for them to finish. But after a short sleep, I was suddenly woken up by officials who said the law prohibits sleeping in the park,” she said.

“I bet if foreigners or some wealthy-looking park-goers rolled out mats and fell asleep, nobody would wake them up,” she said.

Academic experts said the government’s handling of homeless people is prejudiced.

Bunloet Wisetpricha, a researcher with Thammasat University’s Faculty of Sociology and Anthropology, said officials should be trained to deal with people using public space because some of their antics such as waking people napping on benches or asking people with destitute looks to move on displays bias.

“Low-income earners should enjoy the same right to relax and even lie on the lawn for a short sleep after working hard during the day,” he said, warning that officials should “not worsen their problems and close off their opportunities.”

The SDWD insisted it wants to help those 40 homeless people and 55 others who are using Lumpini Park for eating, bathing and taking naps.

“If birds and hia [water monitors] are allowed to live in the park, I should have the same right as a Thai citizen with an ID card,”

This group at Lumpini Park is among 897 people defined as “Wanderers of Bangkok”, according to a department survey this month.

Its latest effort to bring them to the state shelter came after Prime Minister Prayut Chan-o-cha visited the park early this month.

Park-goers gave him an earful of complaints during his visit about homeless people.

“Some view these (homeless) people as a disturbance while other visitors are worried about their safety,” Napha said.

“Over 50% of homeless people suffer from mental illness,”added Naphna. “These people would be sent to a state shelter in the Huay Kwang area of Bangkok”.

“The department will not only give them a place to live, but it also helps them reunite with their families and give medical treatment to those in need,” she said.

Mr Bunloet, known as an expert on the homeless issue, said the measures to return these homeless to their families or provide them shelter and welfare are acceptable.

“The social ministry needs to join forces with civic groups, especially City Hall and district officials and social workers to ensure long-term results,” he said.

Among the challenges is resistance from the targeted group.

“Homeless people usually oppose relocation to places far from areas they are familiar with,” he said.

The government needs to find the “right place” for shelters and make sure they are well-run and habitable.

Mr Bunloet said the first thing the government can do is to change the language it deploys. He warned officials not to use words such as “regulate”.

“It sounds like these people are linked with something untidy… something we need to get rid of, rather than help,” he said.

This story by Penchan Charoensuthipan was first published by The Bangkok Post on October 28, 2018.


In late 2017, the Ministry of Social Development and Human Security issued an order to clear a number of homeless from Lumpini Park who slept at the park and took baths at the park’s toilets. The ministry pledged to relocate them to a new home at a state-run temporary shelter. After the ministry’s order was announced, The Bangkok Post decided to investigate further on the situation of the homeless of Lumpini Park and allow readers to understand their plight in the capital. The paper aimed to examine the ministry’s actions to tackle the problems as well as give a voice to the voiceless. After the story was published, the ministry’s attempts to relocate the homeless to the shelter was monitored closely and a survey of the homeless who remained in the park was taken. Whilst some had decided to stay at the temporary shelters, a majority opted to stay and spend their life at the park despite having to escape the authorities.