The government has been urged to expedite the development of water sources and to urgently improve the varieties of rice and other key agricultural crops, while it has also been advised that the planned debt suspension scheme should operate with conditions.
Nipon Puapongsakorn, a distinguished fellow at the Thailand Development Research Institute (TDRI), said the government's assistance policy for farmers, as announced recently by Prime Minister Srettha Thavisin in parliament, emphasises the debt suspension programme in particular.
However, it was still good that the planned scheme comes with certain conditions, he said.
Beware of misspending funds
"Nevertheless, the debt suspension should primarily target households of farmers facing genuine hardship. The assistance should not be extended to those who are not genuinely in need, as the funds used come from taxpayers, and if assistance is given indiscriminately, it could become a financial burden on the country's treasury," said the economist.
According to Mr Nipon, the debt suspension scheme should only cover roughly half or two-thirds of farmers' debt burden, and when the debts are reduced, farmers will have a higher net income.
In the future, when their debt burden decreases, they would be able to repay their debts. However, once this programme is implemented, the government should support additional programmes to further increase income in this area, collaborating with the private sector that requires labour.
Nevertheless, there is a skills gap in the labour force, with some farmers having outdated skills, while modern knowledge has advanced significantly. Therefore, the private sector should organise its own training programmes according to its needs, while the government should provide support, such as vouchers, for farmers to access these training programmes, allowing them to acquire the skills required by the private sector.
According to Mr Nipon, the government can take the data compiled by companies offering jobs and make it available online for farmers to access. It should also ensure that this information reaches people in various villages because not everyone may be able to access it online. This will provide additional job opportunities for farmers and increase income, benefitting both them and their family members, said Mr Nipon.
"In the past, up to 13 debt suspension programmes have been implemented, and when farmers start a new planting season, they often have to borrow again to cover their working capital. When a new government comes into power, they would request debt suspension again, repeating the same cycle, and creating a bad discipline for farmers," said Mr Nipon.
"Therefore, the full debt suspension should be avoided, and extra incentives should be given if someone repays their debt, such as special interest rates. The government can support this by subsidising interest rates for the Bank for Agriculture and Agricultural Cooperatives. This approach will be beneficial for the country, and debt levels will decrease."
Regarding the medium-term goals of generating income through innovation, Mr Nipon suggested Thai farmers consider using Vietnamese rice varieties in the central region, as Thai rice varieties do not perform well there, especially in flood-prone areas. Despite not being officially certified, these Vietnamese rice varieties are being sold discreetly because they have a short growth cycle of 90 days, making them suitable for areas prone to flooding. The yield per acre is also higher than that of Thai rice.
"Our agricultural research system is weak, as evidenced by the reduction in research funding by the Rice Department in fiscal 2022/2023, which dropped to only 120 million baht from the previous 300 million baht," said Mr Nipon. "While rice can generate over 100 billion baht in revenue for the country each year, the government should increase R&D funding for rice varieties to align it with rice GDP, such as increasing it to 1%, or about 1 billion baht, or 1.1-1.5%. This will be more beneficial for farmers."
Mr Nipon proposed a major reform in Thailand's agricultural research system, establishing an independent organisation that works as a large team in various areas, such as market-oriented research for rice. There should be a commercial institution dedicated to the study of rice quality, production techniques, and economic factors. Vietnam already has such a system.
In this organisation, Thailand should have experts in two main fields: breeders and biotechnology. Additionally, there should be individuals with knowledge of the physical aspects of soil and fertilisers. Furthermore, within this larger team, economists should also be included, similar to what is practised in India. This includes conducting calculations on the investment required for cultivating these rice varieties and determining the expected profits.
For the Agriculture Department and the Rice Department, their roles should be limited to regulatory functions and licensing.
"We need a significant reform in our crop improvement system to ensure higher yields and taste that meets market demands," said Mr Nipon. "The government must invest in new biotechnology tools, and the agricultural curriculum in universities must be updated to align with modern practices."
Rice-pledging unnecessary
Chookiat Ophaswongse, an honorary president of the Thai Rice Exporters Association, added that agricultural product prices are currently in a good condition. Therefore, measures such as pledging or income insurance may not be necessary. However, debt suspension, if done for the entire debt of farmers, would have an impact on fiscal discipline.
"If the government wants to help, it could assist in reducing production costs. For instance, in the past, the government provided assistance by giving each rice farmer 1,000 baht per rai and reducing fertiliser costs. The government can still take similar measures, as long as they don't distort the market and prices," Mr Chookiat said.
"In the medium and long term, what the private sector would like to see is an improvement of infrastructure. This includes expanding the area of rice cultivation in the irrigated areas. Currently, rice cultivation in the country relies mainly on rain, accounting for about 80% of cultivation, whereas in irrigated areas it's only about 20%. Increasing the proportion to 30-35% would enhance rice cultivation. This can be achieved through the development of reservoirs, canals for water distribution, and the promotion of irrigation."
Furthermore, Mr Chookiat said the government should invest more in research and development of agricultural products to improve productivity. This should go hand in hand with infrastructure development, he noted.
Farmers' proposal
Pramote Charoensilp, president of the Thai Agriculturist Association, said his association is preparing a letter to request a meeting with the prime minister, commerce minister and agriculture and cooperatives minister to discuss seven key aid measures to farmers. One of the critical measures is to prepare for water management, which includes dredging canals and ponds, and managing surface water, as well as implementing underground water storage projects to address soil moisture amid global warming.
Additionally, there will be a proposal for debt suspension, both for the principal and interest payments for 3-5 years. However, if someone is able to repay the debt earlier, they should only pay the principal.
Subsequently, the government should have programmes to reduce production costs, such as subsidising pest control and fertilisers, and developing short-duration rice varieties that can be exported.
Moreover, there should be support for farmers, including support for harvesting costs, soil improvement, and farmland management, providing 2,000 baht per rai for each family with no more than 20 rai. Additionally, the government should consider providing monthly assistance of 3,000 baht for farmers aged 60 and above.