Time for new chapter in tackling poverty
Over the past years the government has boasted of numerous economic advances, including an increase in GDP figures. Yet this does not necessarily bode well for its plan to tackle poverty. In fact, these achievements have exacerbated economic inequality, with farmers now marginalised at the bottom of the social spectrum.
A study by the Bank of Thailand’s Puey Ungphakorn Institute for Economic Research (Pier) shows that the country’s poverty problem is deep-rooted and can’t be solved by superficial measures aimed at political gains. On the contrary, such measures worsen the problem. Unless it is rightly addressed, this will become a political time bomb that will throw the country into crisis when it goes off.
According to the survey, 40% of farming households are living below the poverty line, set at 32,000 baht (US$995) a year, with the sector’s low income and higher debt a drag on the country’s economic growth. Farmers’ annual per capita income stood at 57,032 baht last year, just shy of the government’s 2021 target of 60,000 baht. Some 66% of their income comes from farming. Meanwhile, 30% of farming households are struggling with debt that exceeds their average farming income on a per-person basis. Another 10% have debt equivalent to three times their farming income and half have debt equivalent to 60% of their income.
It’s sad to know that the people who produce our food earn so little, with so many living below the poverty line.
The survey indicated a spate of challenges that lie ahead including the ageing population of farmers. Labourers in the agricultural sector aged from 40-60 increased significantly in decade from 2003-2013, jumping from 39% to 49% of the workforce. Over the same period, younger farmers aged 15-40 declined from 48% to 32% of the total labour force. This comes as little surprise given the hardship and low income the trade offers.
Such a trend is worrisome. The farming sector is occupied by older farmers who typically lack the ability to innovate (or even produce, given their age) which would add quality to their products. Not to mention that a looming labour shortage could pose a threat to the country’s food security; or that the farming sector could be controlled by a few giants, or
multinationals, who could therefore dictate prices.
Most Thai governments in modern history have introduced assistance packages with the hope of eradicating poverty and the focus has usually been on the farming sector. Fugitive former premier Yingluck Shinawatra came up with a rice-pledging scheme that offered rice at prices 50% higher than the market rate (normal pledging prices are set at about 20% above the market to help out during the harvest season).
The current Prayut Chan-o-cha administration opted to give farmers cash, either in the form of a subsidy to help cover the cost of production or as compensation for damages from natural disasters or calamities. Yet that kind of assistance is unsustainable and can’t ultimately help farmers stand on their own two feet.
With a mind to putting people first, the regime claims it has allocated 14% of the
2019 budget (about 400 billion baht) to eradicating poverty.
During his visit to Buri Ram last month for a mobile cabinet meeting, Gen Prayut announced a massive injection of development funds into the lower Northeast, which triggered speculation that he was paving the way for an election bid in February. The prime minister promptly denied that was the case.
Meanwhile, his cabinet surprised observers by approving in principle 121 development projects for the lower northeastern provinces worth over 20 billion baht. Gen Prayut said they were largely proposed by the private sector and should be prioritised and implemented based on their urgency to ensure the budget was spent in a prudent way.
Yet the prime minister told the media last week his government was ready to inject 16 billion baht into villages across the country this month as part of the government’s Thai Niyom Yangyuen
(Sustained Thai-ness) programme to address local people’s grievances.
Since 2007, successive governments have allocated a budget to help farmers and the poor through state financial institutions in what is known as quasifiscal activities, which has caused their debt to accumulate to 800 billion baht. A big portion of that debt derives from the notorious rice-pledging scheme.
This quasi-fiscal package has concerned some analysts and policymakers as it gives the state a chance to abandon fiscal discipline, which would create a long-term budgetary burden. The new monetary and fiscal law stipulates a cap in public debt at 30% of the national budget. Such a measure aims to provide flexibility and accommodate economic changes while ensuring the state maintains fiscal discipline.
Now the accumulated public debt accounts for 24-25% of the 3-trillon-baht budget approved last week by the National Legislative Assembly. This means the next government will have about 100 billion baht in its coffers to use for quasi-fiscal activities and subsidy schemes.
We can see that a colossal sum of state money has been allocated to help the poor over the past decade. But the fact that poverty still remains so entrenched, with so many people struggling to make ends meet, means those measures are a failure and need to be reviewed, especially those assistance policies designed for political gain.
It’s time we learnt our lesson and found sustainable solutions to eradicate poverty rather than allowing some people to exploit the situation for the purpose of staking out short-term political gains at the expense of future burdens and a potential crisis.