Rural communities struggle with debts
The agricultural sector is enduring difficult times, and serious institutional help is needed, writes Apiradee Treerutkuarkul
Yard Anusasananant’s eyes well up every time she passes a farm which used to belong to her family but was sold off to settle debts. The 84-year-old grandmother used to own 15 rai of paddy fields in Sankaburi in Chai Nat. But when new rice breeds were introduced requiring expensive chemicalbased farming methods, Grandma Yard, as she is known to her family and the local community, borrowed heavily from local loan sharks to buy the latest varieties.
However, the new rice breeds did not yield sufficient harvests, and she was left unable to repay her steep loans.
Heavily in debt, Grandma Yard was forced to sell the family’s last plot of farmland. Because she receives only 700 baht a month from the government’s Elderly Fund and makes little extra income from selling vegetables, she is struggling to pay down the debt.
Another Sankaburi rice farmer in a similar situation is Kim-ang Pongnarai. She is under heavy pressure to repay half a million baht in loans she took out to invest in a rice farm.
Debt is at the centre of a vicious cycle that many farmers cannot break. But growing rice, which got them into debt in the first place, can also be used as a catalyst to help the farmers get back on their feet and build solidarity in their time of need.
Ms Kim-ang and other local farmers have formed an integrated agricultural support group to seek out programmes which can give them affordable sources of funds so they can continue rice farming.
“We never think of rice as a commodity. We’ve been farming rice for generations. It is our duty to feed the people and provide food security for the nation.
“But we can’t do this if we are saddled with debt and are hungry ourselves. We need a programme that will provide us with a social safety net and sustainable sources of income,” she said, adding effective debt management can end the poverty cycle which is holding back the farmers.
According to the UN’s Food and Agriculture Organisation (FAO), some one billion people in developing countries live in extreme poverty, with 70% of them living in rural areas and agriculture being their main source of livelihood.
The farmers toil as subsistence food producers, family farmers and landless farm workers, who rely on their own resources to manage their livelihoods and deal with the risks inherent in subsistence farming.
Although agriculture is key in eradicating poverty and hunger, farmers and people connected to the farming sector face uncertain and unstable circumstances that offer very little help when it comes to escaping poverty. Across Asia and the Pacific, some of the most vulnerable people are the rural poor, like Grandma Yard and Ms Kim-ang, who have worked rice farms all their lives and who are least likely to switch jobs at their advanced age.
“Millions of landless farmers, indigenous people, ethnic minorities, people with disabilities, members of female households and other disadvantaged groups simply have no social protection,” says Kundhavi Kadiresan, FAO assistant director-general and regional representative for Asia and the Pacific.
“In fact, more than two-thirds of people in the Asia-Pacific region have no access to comprehensive social protection,” he said.
And that is reflected in the sudden personal, climatic or financial shocks that can drive a Thai rice farmer from farm owner one day to tenant the next.
Since 2004, the number of farmers owning their land has dropped dramatically. Back then, almost 44% were owners, but by 2011 that number had dropped to just over 15%, largely due to farmers’ inability to repay their debts. Annual average household debt is now averaging 56,000 baht.
Central to social protection, which provides farmers with financial and social security, are crop insurance, cash transfers and viable labour markets to help rural families become self-sufficient, according to the UN.
The UN has learned through various initiatives that even one of the three components, if practised effectively, can improve the lives of many.
To break the cycle that has crippled the farmers, dubbed the country’s “backbone”, social protection requires political will to succeed.
The social protection initiative urges governments to implement a blend of policies, programmes and intervention that protect the poor and food-insecure people. It helps lift them out of poverty and hunger by providing social assistance, social insurance and viable labour markets.
When poor rural households have access to social assistance they are better prepared to manage risks associated with farming. If they feel financially secure and see worthwhile opportunities in farming over a long period of time, they tend to increase investments in agricultural assets and engage in more profitable farming activities. That contributes to the bigger picture of economic growth, reduced poverty and improved food security.
Cash transfer programmes launched in Africa are credited with increases in household economic activities, especially for households headed by women. In Mexico, cash transferred to the mothers of households living in extreme poverty enables their children to go to school and visit healthcare centres, according to the UN.
Experts acknowledge that healthy growth in the farm sector forms a fundamental basis for national development. While urban populations are growing across the region, most of the poor and disadvantaged live in rural areas without the necessary safety nets to help them when things go wrong.
The UN has found that Thailand is among a growing number of countries in Southeast Asia which recognise the need for social protection measures to alleviate poverty in rural areas. The 30-baht universal healthcare programme is one example of a social protection initiative to support minimum health standards.
Agriculture cooperatives offer financial assistance programmes that can ease credit constraints among the poor rural farmers.
Ban Rang Si Mok Cooperatives Occupational Group in Ratchaburi’s Damnoen Saduak district is an award-winning example of how farmers can team up to help themselves and members of their communities to break the cycle of poverty.
Initiated in 2006 by farmer-turned-agricultural entrepreneur and businessman Jarun Jaroensap, the Occupational Group provides its 270 members with soft loan programmes, seedlings and fertiliser. The price for agricultural products and markets are also insured.
Mr Jarun’s family had debts of some 300,000 baht. The productivity of traditional farming was not enough to repay the debt, so Mr Jarun sought advice from Kasetsart University’s Department of Agriculture, which suggested that he grow niche farm products like baby corn, asparagus and coconuts, which are not affected by market price volatility. Today these products bring in an average monthly income of 200,000 baht.
Elsewhere in the country, financial security requires the forging of innovative ideas, says Sumalee Thongteera, manager of Lamphraphloeng Agricultural Cooperative, who helped commercialise Pad Mee Korat hot stir-fried noodles, a famous local dish in Thailand’s northeastern Nakhon Ratchasima. The noodles are available in an instant ready-to-cook package.
The popular One Tambon One Product (Otop) item generates hundreds of thousands of baht in revenue each month and boosts the incomes of about 50 female members of the cooperative who are also housewives supporting their families.
“I would like cooperatives to do more than provide soft loans and products. They should think outside the box and develop innovative ways to support members and improve the quality of their lives,” says Ms Sumalee.
Before Ms Sumalee was elected manager of the cooperative in 2007 she was troubled that so many farmers in her province were deeply in debt. They paid very high prices for seeds, fertiliser, pesticides and other farm items, but received low prices when they sold their crops.
Driven by a passion for learning she sought help from Suranaree University of Technology to develop the ready to cook stir-fried noodle products and ultimately became very successful.
The Lamphraphloeng Agricultural Cooperative manager also believes that innovation is crucial to boosting security among those in the agriculture sector.
She is working with the university’s food science department to develop a seasoning cube for Korat stir-fried noodles and has plans to expand into overseas markets. Members of the cooperative are also encouraged to grow organic rice, produce their own fertiliser and biogas, activities that boost income while reducing costs.
Eight years on, Ms Sumalee says she is proud to say that debt repayment among thousands of her cooperative members is high and many families have paid off their loans. Above all, housewives in rural areas now put their leadership skills into practice so they can help support their families.