AGRICULTURE The debt-suspension plan has made progress in an abbreviated forn while the village fund plan and efforts to hone production by individual tambons have yet to takeoff. The recovery process for the indebted farmingsectorwill be time-consuming

With grassroots the buzzword, the new government immediately set observers wondering if it would or could deliver on its key farm policies: three-year debt suspension, a one-million-baht fund for every village, and the goal of having each tambon specialise in making a specific product.

In the first six months, the government made some headway, although the debt-suspension programme turned out to be much more limited in scope than many farmers had anticipated.

The programme was limited to debtors of the Bank for Agriculture and Agricultural Co-operatives (BAAC) who met certain criteria.

Some senior executives at the bank initially resisted the plan, saying it might encourage more farmers to renege on debt payments. However, they agreed to a plan that offered many debtors arguably better incentives to stay out of the programme, such as access to new loans at favourable rates.

The incentives include a three-percentage-point reduction in interest rates on loans, an additional percentage point on deposits up to 50,000 baht, emergency credit of 30,000 baht, a maximum 100,000 baht credit for future business, the chance to win education funds, life insurance and health-care and the right to join the government's job rehabilitation plan.

Farmers who enter the debt-relief programme are required to meet conditions including a job training programme to ensure that they will be able to repay the debt after three years. They will not be eligible for new loans, although they will receive the additional percentage point on deposits up to 50,000 baht.

The bank has 2.35 million clients eligible for the debt-relief plan, with combined debts of 94 billion baht. Each debtor's outstanding borrowing stands below the 100,000-baht cut off. Fifty percent of them were believed likely to accept the conditions when the bank finished assessing their needs in June.

The BMC projected that it would lose about six billion baht in interest through operating the plan, but the government has agreed to make up the loss.

As of June 6, 916,613 farmers with a combined debt of 30 billion baht had said they wanted to take part in the plan. They represented 48.86% of 1.87 million farmers questioned.

Once agreements are finalised, the BAAC will ask the Agriculture Ministry to provide assistance that matches their individual needs.

The ministry is preparing many alternative careers for farmers to choose from in both farming and the non-agricultural sector, ranging from animal-raising to hairdressing and tailoring to mechanical services.

All departments at the ministry have plans to assist farmers, using tambon technology transfer centres as bases. Pilot projects have started in six provinces: Pathum Thani, Ubon atchathani, Nakhon Si Thammarat, Lampang, Sa Kaeo and Kanchanaburi.

The Livestock Development Department plans to distribute 50 chickens and 50 kilogrammes of feed to each farmer who wants to raise poultry. The department has 456 million baht to distribute chickens free to 33,000 farmers, as well as products to encourage farmers to raise cattle or buffaloes as additional sources of income.

Pittayapol Nattaradol, the BMC president, suggested farmers who want to stay in the agricultural sector consider raising mixed crops, instead of monocrop farming, to reduce the risk to their income. As well, farmers should move toward organic production to reduce production costs.

He urged farmers to change their lifestyles by reducing consumption of cigarettes and liquor, to save money.

Apart from the governmentsponsored programme, the BMC has worked with non-governmental organisations in helping train farmers in new careers.

Even so, many farmers say they hare been overlooked as those who borrow money from co-operatives have been excluded from the debt suspension programme. They are waiting to see if the government will allocate funds next fiscal year to bring them into the system.

While the debt-relief plan has made progress, the village fund and one tambon-one product programmes have made little heading and some public misunderstanding

The two projects are intended to cover the country's 78.000 villages.

Many people wrongly believed that the village funds would be disbursed as grants but, in fact, the money will be lent only for projects backed by sound business plans.

Although local people want the authority to manage the funds, too few people have the skills required. To correct this shortcoming, the government plans to provide them with training.

As well, the process of selecting the most suitable product for each tambon is time-consuming as almost all make a variety of goods.

For example, the Co-operative Promotion Department's records show that 217 tambons together make 219 products. However, it must whittle down the number of eligible products to 30. Ultimately, the government will pool the recommendations from all the ministries and settle on a master list of 200 products.

To show its commitment to rural development, the government plans to issue bonds worth 50 billion baht to absorb cash from saving cooperatives and spend the amount to finance the establishment of farm development and planning centres at subdistrict level.

PRODUCT PRICES

With no farmers protesting against the government, Commerce Minister Adisai Bodharamik claimed success in managing prices.

The Commerce, Agriculture and Interior ministries appointed joint committees in all provinces as a first stop for farmers to air their grievances and nip problems in the bud.

The government believes prices of most farm products will improve this year, although observers say an increase may be just a case of good luck, driven by market conditions abroad.

Mr Adisai said that his new strategy of releasing the government's stockpile of tapioca chips and rice by direcly selling the products abroad had helped lift the price of fresh supplies. In May, the price of cassava root topped one baht a kilogramme, well above the government's target of 0.85 baht, while second-crop paddy was fetching about 4,400 baht a ton_slightly higher than the intervention price of 4,300 baht.

However, exporters said that an increase in demand abroad had been the main factor. The European Union wanted tapioca pellets for its animalfeed industry because of a delayed harvest, while demand had also increased in China and Indonesia.

The price of rubber had shown more stability by mid-year, recovering in May amid a rain-induced squeeze in supplies, after dropping to a record low in March.

Traders anticipated a further improvement as world demand is increasing for natural rubber as a substitute for synthetic rubber that had jumped in price in line with the cost of oil. As well, stocks held by the now-defunct International Natural Rubber Organisation were gradually being depleted.

In contrast, the price of fresh palm nut was unsatisfactory at 0.75-0.80 baht a kilogramme in March. Growers urged the government to intervene and boost the price to 2.30 baht. However, the only hope for palm-nut planters this year is that the government sets standards for bio-fuel, as palm nuts are among the crops that can be used to make alternative fuels.

Somkiat Osotsapa, president of the Institute of Social and Economic Policy, predicted that farm-price problems would arise in the second half of the year as the government had actually done nothing to improve prices. He cited statistics comparing prices this year with past years. External factors were the reasons for price increases for some products, but the additional earnings had been offset by the rising prices of production essentials such as fertiliser.

The only reason there had been no protests was because the government had broken the links between farmers, traders and politicians who normally supported demonstrations, he said.

Local poultry production was helped by the outbreak of food-andmouth and mad cow diseases in the EU and bird flu in Hong Kong. The latter prompted Japan to ban chicken imports from China. As a result, exports of Thai poultry increased in value by about 40% in the first four months of this year, compared with the same period last year, and were expected to maintain steady growth. The price of Thai poultry exports also improved by US$1,000 a ton in the first half of this year.

The world price of tuna increased in the first six months to $700-750 tons in March from a record low of $450 a ton last year. The improvement came after a fishing industry meeting in Manila last December agreed to reduce the supply of tuna.

Thailand's shrimp exports to its major market, the United States, were doing well as its main competitors in Latin America had production problems.

© The Post Publishing Public Co., Ltd. 2001
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