Cabinet approves new debt aid for farmers
Focus on lower rates and repayment period
The cabinet has approved in principle the extension of debt repayment and lower lending rates for small-scale farmers as the latest move to help shore up the agricultural sector.
According to Nathporn Chatusripitak, an adviser to the Prime Minister's Office minister, the measures are still needed because the agriculture sector remains saddled with a spate of problems from both volatile farm prices and periodic natural disasters.
"While the overall economy has improved, as indicated by the expanding manufacturing sector, the farm sector is still full of problems," he said. "New measures are considered essential to tackle farmers' plight."
Under the two measures, the government could cut lending rates for one year to small-scale farmers between Aug 1 this year to July 31, 2019, covering only the first 300,000 baht of loans.
The state will subsidise 2.5% of their interest rate annually, while the state-owned Bank for Agriculture and Agricultural Cooperatives will shoulder 0.5% a year.
The subsidy programme is estimated to cost about 16.3 billion baht, 2.71 billion baht of which would be allocated from the fiscal 2018 budget for the first two months (Aug 1 to Sept 31) of this year. The remaining 13.58 billion baht for the last 10 months would be earmarked from the fiscal 2019 budget.
The cabinet on Tuesday gave a nod for the first batch, and the Finance Ministry needs to ask for the cabinet's approval later for the second batch, Mr Nathporn said.
Small farmers are required to pay normal interest rates for loans that exceed 300,000 baht.
BAAC reported that small-scale farmers owe a total of 650 billion baht to the bank, while the government expects 10 million small farmers to be entitled to the scheme.
On another measure, Mr Nathporn said the cabinet approved an extension of debt repayment for 3.81 million BAAC borrowers for three years from Aug 1, 2018 to July 31, 2021.
Farmers who want to participate in the projects are required to submit applications to the BAAC by Dec 31, 2018.
Participating farmers are required to repay interest at least once a year.
Any participating farmers who have found that their loans have escalated beyond their means are also eligible for the BAAC's debt restructuring programme and special credit line to improve their efficacy.
In addition, participating farmers will be entitled to BAAC credit to enhance their capability through a credit facility for production restructuring or a credit facility for unexpected expenses and raw material procurements.