The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is set to launch a drought relief measure, offering farmers a three-year instalment plan for interest payments.
The measure has been prepared in anticipation of lower rainfall this year, bound to hurt farmers' debt-servicing ability, said bank president Apirom Sukprasert.
Although the government recently offered to suspend debt principal payments for three years, farmers are still liable for interest. The BAAC is offering a three-year payment period for interest instalments if the predicted drought takes a toll on their income, Mr Apirom said.
Last year the cabinet approved two measures to aid farmers. The first was an extension of debt repayments for 3.81 million BAAC borrowers for three years, from Aug 1, 2018 to July 31, 2021. Farmers are required to repay interest at least once a year.
In the second measure, the government cut the lending rates for one year to small-scale farmers between Aug 1, 2018 to July 31, 2019, covering only the first 300,000 baht of loans, while they are required to pay normal interest rates for loans that exceed 300,000 baht.
The state subsidises 2.5% of their interest rate annually, while the state-backed farm bank shoulders 0.5% a year.
The BAAC reported that small-scale farmers owed a total of 650 billion baht to the bank, while the government expects 10 million small farmers to be eligible for the scheme.
Kasikorn Research Centre earlier forecast that the severe drought predicted for this year would cause 15.3 billion baht worth of damage, mainly from low off-season rice and sugar-cane output during the summer, knocking 0.1% off GDP.
