Thailand plans $6.8 billion aid for farmers hit by Covid-19, floods

The government will transfer the cash into the accounts of eligible farmers through the Bank for Agriculture and Agricultural Cooperatives.
The government will transfer the cash into the accounts of eligible farmers through the Bank for Agriculture and Agricultural Cooperatives.PHOTO: REUTERS

BANGKOK (BLOOMBERG) - Thailand plans to dole out nearly US$5 billion (S$6.8 billion) in cash to millions of farmers reeling from the impacts of Covid-19, floods, droughts and poor crop prices.

The Cabinet will consider a programme to allot 155 billion baht (S$6.35 billion) to growers of rice, rubber, oil palm and other crops at a meeting next Tuesday (Nov 30), Prime Minister Prayut Chan-o-cha said in a statement on Facebook.

The government will transfer the cash into the accounts of eligible farmers through the Bank for Agriculture and Agricultural Cooperatives, he said.

The payments will be expedited as price-support measures for rice, rubber and palm oil as well as to prevent distress sales of agriculture produce, Mr Prayut said.

Earlier on Wednesday (Nov 24), the nation's monetary and fiscal policy committee approved raising the ratio of government borrowing from state banks to 35 per cent of the federal budget outlay, from 30 per cent, to fund the payout.

The largess for farmers comes amid growing speculation of an early election as Mr Prayut seeks to win over rural voters, a traditional support base of parties aligned to former prime minister Thaksin Shinawatra.

Mr Prayut's royalist-backed government has faced criticism over the handling of the Covid-19 crisis from opposition parties and pro-democracy groups, which have been pressing for reforms to the Constitution and monarchy.

The government will need to approve borrowing of between 80 billion baht and 90 billion baht to support the farmers, Finance Minister Arkhom Termpittayapaisith said. The new borrowing ratio will be published in the Royal Gazette within two to three days, he said.

Flooding in September and October caused as much as 8.4 billion baht in damages to Thailand's rice industry alone, exacerbating woes of farmers already hurt by the pandemic and poor prices, according to a report from Kasikorn Research, a unit of Kasikornbank.

The money for farmers will help further bolster a nascent economic recovery, according to Mr Amonthep Chawla, head of research at CIMB Bank Thai.

"Fiscal support is needed to help drive the economy at least until the nation is fully reopened to foreign tourists," Mr Amonthep said. "Farmers are suffering from low rice prices and floods. It's appropriate for the government to continue fiscal support to fragile groups."