The heavy burden of farm life after pledging scheme

Son's daugther Walisa Sukcharoen makes maximum use of the 3-rai plot of farmland her father has given to her, growing high-priced riceberry variety.

Piyaporn Wongruang
The Nation

This is the first part in a series of articles on the rice-pledging scheme

A cool wind blew over Tao Poon village in Ratchaburi's Photharam district, bringing with it light rain that fell on rice fields. Seeing the rain, 66-year-old Son Sukcharoen rushed to spread a plastic sheet over his harvested rice so it didn't get soaked with water.

It was the last time Son would dry the rice in the sun before selling it in the market. If it got drenched and damaged, Son would have lost the investment he had put in this harvest, and that would have added to his debt.

"I have borrowed a new sum of money to invest in chemical fertilisers and pesticides for this harvest and bet that the yield this time would bring me a little better price, as I have tried joining the Good Agricultural Practices [GAP] programme," Son said.

Farmers like Son were among millions who took part in the grand rice-pledging scheme. A few years ago, the Yingluck government re-introduced the scheme, which offered farmers unprecedented price guarantees up to Bt20,000 per tonne of rice.

Critics questioned the scheme from the beginning, as it would involve almost every grain of rice in the country, a practice deemed unreasonable by many.

But farmers like Son revelled in the high prices offered, without realising that along with the high prices, their investment costs also increased, leaving them with a narrow profit margin.

However, farmers did not feel much pain until the scheme was axed.

Last year, the military government decided to scrap the scheme, following allegations of large scale corruption and losses to the state estimated at about Bt500 billion baht so far (see box).

The government gave farmers Bt1,000 baht per rai (up to 15 rai). While farmers pocketed a maximum of Bt15,000, the market price for rice is now hovering between Bt6,000 to Bt7,000 per tonne - less than half the maximum subsidy offered by the government. That means farmers are shouldering increased investment costs.

The economic position of many farmers has become more fragile due to external factors, including deep indebtedness and losing their farmland.

Local Action Links, a non-profit research think tank on the plight of Thai farmers, conducted a study on farmer debt in several areas in the Central Plains last year.

In Chai Nat's Sankhaburi district, its case study of 64 farmers under the Chai Nat Agricultural Promotions group showed just how severe the debt burden had become for farmers.

The farmers generally owned around six rai, meaning almost half of them had to rent additional farmland to grow rice. The Local Action Links says the cost of renting land is generally about a quarter of the total yield per rai, about Bt1,500. So this has added to their costs.

All 64 farmers had their land mortgaged with financial institutions. On average, they were around Bt314,000 in debt.

Son's situation is not much different. He has given the eight rai of farmland he inherited from his parents to his daughter and son, and he now has to rent 20 rai of farmland. It means a quarter of his yield goes to the landlord.

Pongtip Samranjit, the director of Local Action Links, said farmers had shouldered heavy indebtedness and farmland losses over the past 10 years. The trend has been for farmers to own less land while those losing land or renting land is on the rise, the director said.

Pontip said that after the rice-pledging scheme ceased, countless farmers had been exposed to this bitter truth more clearly, and it had become clear to the public now how much of a burden farmers were under.

Pontip said the more worrying trend was farmers deep in debt turning to loan sharks, which increased the chance of them losing their land, and even their homes.

"We have interviewed four cases who engaged in loans provided by loan sharks, and all of them have experienced attempts to kill themselves," he said.

Along with increased debt, the rice-pledging scheme has apparently also impaired many farmers' ability to learn and be self-reliant.

Krissnana Kaudlim - a 43-year-old farmer in Ratchaburi's Photharam district who formed a village farm group so farmers had more bargaining power at the market - has experienced this.

Krissana, a leader of the Photharam Agri-Nature Learning Group, said he was an indebted farmer before it was rehabilitated under the Farmers' Rehabilitation and Development Fund. It was then that he was able to redeem his family's land.

But Krissana realised that the mass production of rice was not for him, and he decided to go for training at Agri-Nature Foundation. After finishing the training, Krissana went back to his village and tried to form the farm group, applying self-reliant farming as its principle.

Shortly before the rice-pledging scheme was introduced, a group of around 10 farmers in the village joined the initiative. Through the self-reliant principle, they tried to process their rice and sell it in the local market. All the farmers collapsed because of the introduction of the scheme, he said.

He said that instead of selling the rice at the market, the farmers sold it to silos.

That resulted in the group having no rice to process, but they had to buy high-priced rice from the silos. The group collapsed.

But what hurt Krissana more was the realisation was that the group's learning process was disrupted.

With high rice prices now a thing of the past, some farmers have come back to him as he is offering a little higher price - around Bt7,800 per tonne.

"Farmers' learning and establishing groups is very important as that is a strength that farmers can have when dealing with others. And this closely connects to the economy at a fundamental level, which is community-based economic development. All have gone in the name of the scheme," said Krissana, who now is trying to rebuild his group.

Pontip said the scheme had shown once again that government farm policies did not get to fundamental or structural problems in the farm sector, which was debt, loss of land, low levels of education and a lack of self-reliance.

Pongtip said structural problems were political and she could understand why policy-makers avoided them. But as a farm advocate who had witnessed farmers endure painful experiences, Pongtip said the government could not leave the problems untouched or they would grow and become a heavy burden the country could not bear.

"The more they grow rice, the less quality of life they have," he said.

Timeline of controversy

The rice-pledging scheme was one of the Yingluck government's principal farm policies aimed at assisting farmers.

But the government, which first reintroduced the scheme for the 2011-12 farm production year, was unprecedented in terms of its scale and the price-guarantee rates.

The scheme involved 25 million tonnes in the first year, almost every gain of rice in the country, and prices as high as Bt20,000 per tonne.

When it was introduced, the government said it aimed to lift farmers' incomes and reduce the gaps in farmers' incomes, increase market access for farmers, and promote economic growth and stability via domestic consumption and self-reliance.

The National Anti-Corruption Commission launched an investigation and alleged that government-to-government deals with China were bogus and no rice was shipped to China. Relevant ministers were charged, and former prime minister Yingluck Shinawatra was left facing three legal actions.

She has already been impeached, while she is still facing a criminal charge for alleged negligence for failing to act when the scheme incurred heavy losses and allegation of corruption swirled around it. At the time, she was chairwoman of the National Rice Policy Committee.

Yingluck is also facing a civil liability after the military government claimed the scheme cost the state around Bt500 billion. The Supreme Court's Criminal Division for Political Office Holders has set the first round of evidence and witness deliberation in this case for January 15.