Household debts of rice farmers are soaring because of higher fertiliser and raw material prices and the rising cost of living, the University of the Thai Chamber of Commerce (UTCC) has warned.
A survey released by the university yesterday found the average household debt of rice growers stood at 103,047 baht last year, surging 6% from 2010.
Thanavatha Phonvichai, UTCC vice-resident for research, projected household debt would jump another 6% to 130,000 baht this year, a disturbing trend, he said.
"There are signs that household debt is increasing in 2012. There is no problem yet. But once household debt reaches 150,000 baht a year, then it will be a concern," Mr Thanavatha said.
The university surveyed 1,211 farmers nationwide from Aug 8 to 12.
According to the survey, formal debt accounted for 60% of monies owed and the rest was informal debt.
The majority of farmers surveyed are lumbered with household debts of between 50,000 to 100,000 baht.
Most farmers said they would repay their formal debts by borrowing money from loan sharks.
Among the farmers who said they had informal debts, about 22% owed between 40,001-50,000 baht.
About 61% of those who had taken informal loans admitted they would not be able to repay any of the money owed. Some 30% said they could repay their debts and almost 9% said they could pay off part of the loans.
About 15% of farmers with informal debts owed between 50,000-100,000 baht. Of those, 81% said they could not make any more payments at all, just over 15% said they could repay their debts and 3% said they could pay back part but not all of the money.
The farmers who had no collateral had to resort to loan sharks because they needed money for cultivation materials including fertilisers and seeds, the survey found.
Their debts also grew because their cost of living was rising. Farmers are investing more to increase their production as a result, and hoping to benefit from the government's rice pledging scheme.
Most respondents said their profits, revenues and yields in the latest crop did not increase compared to the previous harvest. Spending and savings rates did not rise either.
The survey showed the government's agriculture measures did nothing to improve farmers' lives.
Farmers continued to demand the government subsidise raw material costs because they have no bargaining power, it said.
Although their crops are sold at good prices, costs have not come down, Mr Thanavatha said. He pointed out that the rice pledging scheme would not help reduce farmers' debts as it could only temporarily shore up the economy.
The government should use taxpayers' money to invest in basic infrastructure to yield long-term benefits, such as improving irrigation systems, he said.
The rice pledging scheme is a flagship policy of the Pheu Thai Party-led government, which came to office in August last year.
Mr Thanavatha noted that the government's policy to issue credit cards for rice farmers would help protect them from loan sharks but the survey found that most farmers, especially in the Northeast, knew little about the cards.
The government should invest more effort to make farmers better understand the project, he added.
Meanwhile, the Department of Special Investigation (DSI) is investigating corruption connected to the rice pledging scheme.
According to Pol Lt Col Pong-in Intarakhao, director of the DSI's Bureau of Security Crime, an inspection in Sakon Nakhon province last week found 149 people possibly involved in graft. Authorities discovered the amount of pledged rice paddy did not match reported figures. Suspects include rice mill staff, farmers and officials of the Public Warehouse Organisation (PWO).
Pichet Saen-ubon, a rice farmer in Wanon Niwat district, said he had pledged about 16 tonnes of paddy and hoped to receive 15,000 baht a tonne as the government had promised.
However, rice mill officials claimed his paddy was too moist and deducted about three tonnes from the pledged amount. He found out later that the deducted paddy was pledged under the name of a proxy.
Sakon Nakhon police chief Pol Maj Gen Polsak Banjongsiri said the PWO did not supervise implementation of the scheme closely but had its temporary employees handle it.