The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is seeking to enlarge the ratio of farming loans to small and medium-sized enterprises (SMEs) to 40% of outstanding loans by 2020.
The move will comply with the government's policy to move farmers upstream in the production process into value-added agricultural product manufacturers.
To achieve the target, the bank's farming SME loans must reach 400 billion baht in the next three years from 48 billion recorded in the banks' last financial year ending March 2017, newly-appointed president Apirom Sukprasert said.
Agricultural SME loans accounted for a mere 3% of the BAAC's total loans at the end of the last financial year. The loans were secured by 2,400 farming SME operators and the number grows to 32,000 when farmers under SME supply chains are taken into account.
The state-backed farm bank plans to provide 72 billion baht in loans through the One Tambon One Farming SME scheme.
Agricultural SME operators, small farmers (those who are poor) and smart farmers (those with the potential to be upgraded) are the three main segments the BAAC is focused on.
The government aims to create farming SME operators in each of the 7,305 tambons across the country to drive the domestic economy's recovery and sustain the country's economic growth. Farmers have been the most vulnerable over the past few years due to a recent decline in farm prices, swelling household debt and the uneven economic rebound.
Somsak Kangteerawat, senior executive vice-president of BAAC, said that the BAAC will become the country's largest farming SME lender if the goal to increase outstanding loans to 400 billion hits the target, and the country's farming sector is upgraded to a value-added one.
The bank aims to give out 89.3 billion baht in new loans, a 7% growth for this financial year, up from 6.03% growth in the last financial year.
Rice farmers are the bank's main target for new loans this financial year, with 20% of the new loans -- a similar portion to the previous financial year.
The BAAC also set a cap for its non-performing loan (NPL) ratio at 4% this financial year, down slightly from 4.03% at the end of the last financial year.
The bank had net profit of 9.49 billion baht in the previous financial year, while its assets surged by 7.3% to 1.62 trillion.
There is around 6-8 million rai of farmland that is not suitable for growing rice and should be switched to plant other crop varieties, he said.
The bank has been the government's instrument to provide assistance to farmers and those who are at the bottom rung of the economic ladder and lent a combined 341 billion baht through aid measures to farmers in the last financial year.
For crop insurance, 1.52 million farmers covering a combined 27.18 million rai of farmland were insured in the BAAC's last financial year.
There are 60 million rai of rice fields in Thailand.
Under the scheme, BAAC subsidises 40% for the crop insurance premium and the government absorbs the remaining costs.
The BAAC subsidised 1 billion baht worth of crop insurance in the last financial year.