Apirom Sukprasert, president of the BAAC.
Apirom Sukprasert, president of the BAAC.

BAAC mulls Bt5 bn equity fund to hasten switch to ‘smart farming’

Economy January 23, 2018 01:00


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THE BANK for Agriculture and Agricultural Cooperatives (BAAC) is considering setting up a Bt5 billion fund for equity investment in potential ventures undertaken by so-called smart farmers, small and medium-sized enterprises (SMEs) and agricultural cooperatives.

The state-owned bank also aims to tackle the accumulated debts of up to Bt200 billion owed by one million of its customers, Apirom Sukprasert, president of the BAAC, said in an exclusive interview with Nation Multimedia Group.

The BAAC is consulting with the Bank of Thailand about project financing and direct equity investment in the operations of smart farmers, SMEs and agricultural cooperatives that are identified to have business potential, he said. The initial funding would be about Bt5 billion, Apirom said. If the proposal is approved, the bank will earmark funds for these special projects this year.

An alternative option is for the BAAC to propose to Deputy Prime Minister Somkid Jatusripitak that use be made of some of the funds under the government’s Bt150 billion mid-year budget to support a young smart farmers programme, he said.

“Direct funding from the government budget may reduce the burden on the farmers, while lending would increase their debts,” Apirom said. 

The bank’s strategy is in line with government policies that aim to reform the agricultural sector, according to Apirom. The economic value of the farm sector represents less than 8 per cent of the country’s gross domestic product but it employ 30 per cent of the 38 million-strong workforce.

The government has tried to develop the concept of smart farming, hastened by the trend towards an ageing society that will result in the departure of large numbers of retiring farmers.

The bank will also work with potential SMEs and cooperatives to support smaller farmers, such as by providing them with a market window or helping them to increase their productivity, said Apirom.

The BAAC also has set a priority to solve the debt problems of its clients. About one million of them have combined debts of up to Bt200 billion owed to a mix of sources, including the bank, underground lenders and relatives. The first step is to negotiate with outside lenders and transfer their debts to the bank. This process could take place in the coming months, he said. 

The bank may give each of them a debt moratorium for half of their debts. The first half would be restructured and the bank would give them a two-year grace period. 

If these farmers are able to repay the debts within a designated period of, say, seven years, the bank would consider debt forgiveness for the other half of the liability, Apirom said.

Apirom said he has a vision for BAAC to become sustainable development bank for rural communities over the next five years. It has annual working capital of Bt1.3-1.4 trillion, almost funded by the bank’s depositors. 

The BAAC is also participating in the government’s welfare programme for low-income earners. Among the 11.4 million registered with the government as welfare-card holders, 3.9 million are small farmers registered with the BAAC. Of this group, 3.6 million are clients of the bank.

The government has promised to increase the monthly handouts to welfare recipients next month, under the second round of support measures.

The BAAC and other parties will start training for small farmers around April in an effort to increase their productivity.