One-fifth of the One Tambon One Product (Otop)  projects supported by the Bank for Agriculture and Agricultural Cooperatives (BAAC) have gone out of business or are in danger of doing so, the bank's chief said.

The BAAC is one of the state-owned banks that has provided loans to promote new small community enterprises under the Otop scheme initiated by deposed prime minister Thaksin Shinawatra. The BAAC has provided more than Bt1 billion to support Otop projects, said its president Thirapong Tangthirasunan.

As things turned out, 80 per cent of them have been able to sustain their businesses while the rest have collapsed or are on the verge of collapse because of difficulty repaying the loans, he said.

"Twenty per cent is not a small number - there are many borrowers who are in this critical situation, and they are unable to recover quickly," he said.

There are many factors that have caused the failure of these Otop operators, such as oversupply of some foodstuffs, the low quality of products or no real market demand.

For instance, the proliferation of Otop projects has led to an oversupply of dried banana on the market, as many operators turned to this product instead of coming up with innovative and niche products.

Sometimes villagers sold the wrong products in their villages, such as Western-style cakes, even though it was not a popular food in those communities.

Wine made from local fruits could not survive market competition as buyers expect higher quality, comparable to imported wine products from France.

"The BAAC has learnt a lesson, so it will not accelerate loans to promote Otop. We will now do it more gradually and let the businesses take off naturally," said Thirapong.

There are some positive developments, as a new generation of farmers has better knowledge of modern business, the bank presidentd.

Children of farmers who graduated from vocational schools or universities could turn farm products into more value-added commercial products, he said.

For example, the son of a farmer who grows coconut trees on Koh Samui has turned coconut oil into spa products and exported them.

Knowledge and expertise have contributed much to the success of some start-ups.

The BAAC will also give more loans to women, as the Grameen banks in Bangladesh and elsewhere do, Thirapong said.

The Grameen bank has succeeded in extending micro-credit to poor women, as they are more disciplined than men, Thirapong said.

Wichit Chaitrong 

The Nation