Rising rice prices sow hope for Thai farmers to escape debt
After finishing the most recent rice crop, Sripai Kaeo-eam immediately moved on to the next crop, ignoring the recommendation of Thai officials to limit rice growing to save water.
"This crop is our hope," said the 58-year-old farmer in Chai Nat, central Thailand province. Sripai is in debt of more than 200,000 baht (5,600 USD), mainly due to loans for farming. So when Asian rice prices hit a 15-year high last month after India restricted exports , she felt motivated.
India is currently the world's largest rice exporter. Followed by Thailand.
Not only Sripai, farmers in other rice growing regions of Thailand are also expected to benefit. However, the area of rice cultivation land in this country in August decreased by 14.5% compared to the same period last year, according to government estimates. This number has decreased continuously since 2020.
Government data and the opinions of many experts show that rice growing activities in Thailand are under pressure from climate change, agricultural debt and lack of innovation. These pressures are weighing heavily on farmers, despite the government providing tens of billions of dollars in subsidies over the past decade.
Farmers harvest rice in a field in Chai Nat (Thailand). Photo: Reuters
Experts say that instead of promoting agricultural research, government spending is stifling productivity. Many families are heavily in debt because they borrowed money to farm. The debt even lasts for generations.
The shrinking area of rice growing land could reduce Thailand's rice output, making food price inflation worse. Food prices have recently been under pressure due to drought in major producing countries, affecting billions of people who consider it an essential food, agricultural expert Somporn Isvilanonda said.
"The area under rice cultivation has decreased due to lack of rainfall and irrigation water," Somporn said. The water shortage is forecast to become even more serious next year, when El Nino strengthens, according to Thai government forecasts.
Besides, what millions of Thai farmers are seeing is not just the current crop, but a narrow door for them to escape a life of debt. If the season is good, they can earn double or even triple every year. "I'm dreaming about it, because India has stopped exports," Ms. Sripai said.
Thailand currently has the highest household debt ratio in Asia. In 2021, 66.7% of farming families in the country were in debt, mainly due to farming-related activities, according to government data.
Sripai is repaying the loan at an interest rate of 6.87% per annum. "All of us farmers are in debt. We are in debt because of drought, floods and insects," she said.
Thai Prime Minister Srettha Thavisin said last week that the government would find ways to improve incomes for farmers. "There will be a unified policy on water resource management, innovation to increase productivity, as well as finding new markets for agricultural products," he said. Some loans will also have their repayment period extended.
However, "The severe weather caused by El Nino will cause many risks to farmers. This year's rainfall is currently 18% lower than normal. Water storage lakes are also only 54% full," the Finance Office said. said the former National Secretary of Thailand. Experts predict this will reduce rice productivity and cause output fluctuations.
A report by Krungsri Research shows that half of agricultural land in Thailand is for rice growing. About 5 million households are participating in this activity.
Successive Thai governments have spent 1,200 billion baht ($33.85 billion) supporting rice prices and incomes for farmers over the past decade, Somporn said. "However, they have not done enough to increase productivity," he commented.
Although rice prices are high, "farmers have not been able to take advantage of the opportunity to grow rice." Somporn estimates rice production will decrease by 30% in the next two seasons, due to lack of water.
Nipon Poapongsakorn - an agricultural expert at the Thai Institute of Research and Development - said that over the past decade, the country "has been stuck in rice growing success". Investment in rice variety research has decreased from 300 million baht 10 years ago, to 120 million baht this year.
"Our rice varieties are very old and have low yields," he said. Nipon said that in 2018, Thai farmers produced 485 kg of rice per rai (a unit measuring an area equivalent to 1,600 m2). This figure in Bangladesh and Nepal is 752 kg and 560 kg respectively. Thai farmers can only grow rice varieties licensed by the government.
Experts say that in recent years, countries such as India and Vietnam have invested heavily in research, surpassing Thailand in productivity and increasing export market share. The average income of Thai farmers is also decreasing.
Sripai says that over the years, their challenges have only increased. But the current price is a rare opportunity.
"We just hope to get out of debt," Sripai said.
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