Thailand's farmers left high and dry

Ms Meena Chaimongkol, a 46-year-old single mother, says she has lost 70 per cent of her family's padi crop this year because of erratic water supply. To make up for the loss of income, she has resorted to going to Bangkok once a month to buy used clo
Ms Meena Chaimongkol, a 46-year-old single mother, says she has lost 70 per cent of her family's padi crop this year because of erratic water supply. To make up for the loss of income, she has resorted to going to Bangkok once a month to buy used clothes to mend and sell locally.PHOTO: PASSANAN CUTTER

Household debt up amid water shortage, low commodity prices and economic slowdown

One would not think it from the holiday bustle in Bangkok's glittering shopping malls, but the rest of Thailand is bracing itself for a lean year.

A rainfall deficit has left a series of reservoirs that are crucial sources of Thailand's dry-season water at between a third and half of their capacities.

Experts say the capital itself may run short of tap water.

The countryside is already suffering as many people need water for their livelihoods. And the pinch is being felt more widely as spending shrinks because there is no cash available.

Big C, Thailand's second-biggest hypermart chain and a major retailer in smaller towns, saw total third-quarter revenues decrease by 4.6 per cent over the same period last year.

Early last month, Siam Commercial Bank said disappointing retail industry figures were a "reality check" and that "consumers, particularly low-income consumers, have been under fiscal strain".

Big C's revenue decrease was "driven by a retail sales decline", wrote Ms Warunee Kitjaroenpoonsin, director of corporate affairs at Big C Supercenter PCL, in an e-mail. "The third quarter was also impacted by slow private consumption, high household debt levels and a slow global economic recovery."

Rural Thailand accounts for half of the population. From rubber to rice, embattled farmers are facing a perfect storm of water shortage, low commodity prices and an economy which, hit by domestic political uncertainty, is forecast to grow just 2.9 per cent this year.

Thailand's ratio of household debt to gross domestic product, at 84.2 per cent last year, was 45 per cent higher than in 2003.

The National Economic and Social Development Board believes the figure may reach 87 to 88 per cent by the end of this year.

The farmers are the deepest in debt. It is also the poorest farmers who have the highest debt, said Dr Nipon Poapongsakorn, a distinguished fellow of the Thailand Development Research Institute Foundation.

"Most of the debt is from the formal sector - buying of fridges and television sets on instalment, for instance," he explained.

"The government has had several loan schemes so they (the farmers) are heavily indebted. And the 20 per cent poorest farm households owe 124 per cent of their income."

The ongoing El Nino-induced rainfall deficit and drought projected to continue into next summer will reinforce the problem of ballooning household debt, which analysts have been warning of for some years, said Dr Nipon.

Thailand's farmers must rely on non-farm income - trading or odd jobs or remittances from working members of the family, perhaps in Bangkok - to meet their debts.

As much as 60 per cent of the average rural family's income is from non-farm sources, Dr Nipon said. While that has helped, it has made the farmers vulnerable to slowdowns in the larger economy - which is what is happening now.

Ms Meena Chaimongkol, a 46-year-old single mother, owns 2.5ha of land in Huay Khaokam, a village near Phayao in the lower north that is part of the 22 provinces affected by the water deficit.

She said she has lost 70 per cent of the family's padi crop this year because of erratic water supply.

She has resorted to going to Bangkok once a month to buy used clothes to mend and sell locally. But that exposes her to an economy that is not doing much better.

"Most farmers are able to pay debt from non-farm income," Dr Nipon said. "But then, when the economy slows down, they have no money."

A version of this article appeared in the print edition of The Straits Times on December 09, 2015, with the headline 'Thailand's farmers left high and dry'. Print Edition | Subscribe