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Thai Farmers Drowning in Debt

By Minh Ly, Baria-Vungtau Newspaper, Vietnam

Thailand is proud of being the world’s leading rice exporter, but that does not mean agriculture in Thailand is thriving. Most farmers are heavily in debt and cannot find a way out.

Many Thai farmers borrow from banks to buy fertilisers and pesticides to increase production. Because crop prices remain low, the farmers cannot repay their loans. They become debtors.

"I cannot stop using chemicals, although I want to do it", said Boonsong, a worried farmer in the San Patong area of northern Thailand. “They increase productivity and bring more income for us when crops prices are high. But they also create a disaster-debt. I have to keep spending more money on chemicals."

This farmer, who plants rice and onions for export, said he tried to stop using chemicals for a short time, but his productivity dropped, and consumers did not like his produce.
He held his sore back as he talked. Strain showed on his face.

" How can I earn a lot of money to repay 100,000 baht for fertilisers and pesticides? Boonsong said.

Despite working hard, he added, he still can’t earn enough to repay his debts. His income depends on what his produce fetches on the market, but the prices remain low. Meanwhile, chemicals become more and more expensive.

Boonsong explained how he must rotate debts, borrowing from local lenders to pay off outstanding interest to the bank. " I had to use my house and my land as a deposit to borrow money ", he said sorrowfully.

Now his only hope is for crop prices to rise. How long must he wait?

Boonsong’s story symbolises agriculture in Thailand. At present, 88 percent of Thailand’s 25 million farmers may be in debt.

Solving rural debt isn’t easy. Organic farming and self-sufficiency have been touted as one way to liberate farmers. But such methods do little for Thailand’s food trade.
Most organic fruits and vegetables do not meet export standards, and exports are vitally important for Thailand.

" We face a big difficulty with marketing,"  said Ban Doeun, president of an organic farming group in Ban Baa Nord village in Chiang Mai province. " Organic farming is good for human health, but the appearance of the food is not attractive. As a result, many consumers dislike our product. Organic food is also dearer."

Instead of switching to organic crops, Thai farmers may find themselves forced to grow GM (genetically modified) crops.

A growing global population will require the world’s farmers to produce more food from the same amount of land. GM crop production, which uses seed technology to make crops more efficient, is seen as one way to do that. But some scientists say GM crops would harm the environment by contributing to a lack of bio-diversity.

Trade liberalisation brought about by the World Trade Organization also may add pressure to grow GM crops. But farmers may be forced to buy expensive seeds from big companies every year to grow GM crops, falling further into debt.

A leading rice trader said farmers created their own problems.

"If farmers could not pay the bank, whey did they borrow so much?" said Vichai Sriprasert, president of Riceland International Ltd., and a board member of Thailand Rice Exporters Association. "They must find a way themselves to pay their debts."

Vichai acknowledged that farmers had borrowed heavily, but saw no benefit from the money. They invested vast sums but had to sell their crops at low prices.

Some critics blame government policy for Thailand’s rural debt problem.
Vichai said the government should not interfere in the open market by setting " unrealistic"  minimum prices that food processors could not pay.

The rice exporter also would prefer that no pesticides be used, but said he feels most farmers will need them. Using chemicals, however, continues to sink farmers more deeply into debt. And once they are in debt, the banks are reluctant to lend them more money to invest.
Thai farmers cannot find a way out.

Copyright 2009 IMMF.