El Niño to push up farm debts
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El Niño to push up farm debts

A farmer harvests rice in Kalasin province. (Photo: Yongyuth Phuphuangphet)
A farmer harvests rice in Kalasin province. (Photo: Yongyuth Phuphuangphet)

Farmers' debt is expected to increase by 8% or 89.3 billion baht this year, following a drop in crop yields, especially rice and rubber, as a result of the El Niño impact, according to economics analyst Aat Pisanwanich.

Total debt in Thailand's agricultural sector is estimated to stand at 11.7 trillion baht.

El Niño, a cyclical phenomenon that causes ocean warming, will cause world temperatures to increase and bring drought to many countries.

This will affect the farming of five key economic crops in Thailand, namely rice, rubber, oil palm, durian and cassava, because a 1% increase in temperatures would mean a 1% drop in rainfall, said Mr Aat, who is also senior consultant at Intelligence Research Consultant Co (IRC).

It is estimated that the world's temperature will rise between 2023 and 2032 by 1.2 degrees Celsius, up from an earlier estimate of 0.8 degrees Celsius.

An increase of temperatures by more than 1 degree Celsius in Thailand this year would cause the amount of available water to drop by 4,025 million cubic metres from last year.

This would deal a blow to the agricultural sector, which uses 80% of water in the country, and eventually drive up production costs in farming.

Farmers, especially those who plant rice, will face tougher times as their costs increase and their revenue falls, said Mr Aat.

With the El Niño effect, it is expected that rice and rubber farmers will see their revenue decrease to -971 baht a rai and -3,315 baht a rai, respectively, he said.

The revenue of durian growers would also plunge by 21,932 baht a rai while oil palm farmers would face a drop in revenue of 3,505 baht a rai.

Mr Aat said rice farmers will see the highest increase in their level of debt to 298,590 baht a family, followed by rubber farmers (271,700 baht a family), oil palm farmers (263,055 baht a family), cassava growers (255,750 baht a family) and durian farmers (134,520 baht a family).

Asean has faced the impact of El Niño twice over the past 30 years. Each time it caused a significant drop in the quantity of rice produced in the region.

It is expected that Thailand will see a drop in paddy rice of 3.5 million tonnes this year, the highest amount in Asean, followed by Indonesia, Vietnam and Myanmar, according to IRC.

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