Rural voters who backed Prime Minister Anutin Charnvirakul’s government are expressing growing frustration as rising costs and falling prices inflict severe hardship, fueling a deepening farm debt crisis. The administration, still in its early months, faces a significant challenge to regain public confidence.
Farmers Bear the Brunt of Global Shocks
Farmers like Chaon, who cultivates 72 rai of land in Ayutthaya and owes approximately half a million baht, are struggling to make ends meet. He laments, “Once they won and formed the government, they disappeared.” The current economic pressures stem from a confluence of factors, including the war in Ukraine significantly increasing fuel and fertilizer costs, alongside a sharp decline in rice prices.
Retail diesel prices in Thailand experienced a peak surge of over 60%, while fertilizer costs have climbed by more than 30%. “The government is not tackling the problem,” Chaon stated, reflecting a sentiment shared by many in the agricultural sector.
Eroding Support and Confidence
This discontent highlights the growing political risk for Anutin’s administration. Despite a landslide election victory secured with the support of rural constituents, the government is now facing considerable backlash as global price shocks exacerbate Thailand’s long-standing farm debt issues.
A recent poll conducted by Suan Dusit University in May revealed that approximately 57% of respondents had little to no expectation of the government’s performance. This marks a stark reversal from March, when 68% of those surveyed expressed optimism.
In response, deputy government spokesperson Ploythalay Laksameesaengjan assured that “the government will roll out further measures to support people and boost confidence in its work.” However, she noted that higher oil prices, driven by international conflict, were beyond the administration’s direct control.
Broader Economic Headwinds
The plight of Thai farmers underscores the wider economic pressures facing Southeast Asia’s second-largest economy, which has been grappling with sluggish growth. Thailand has also lagged behind its regional peers in post-pandemic recovery, largely due to its reliance on the slow-recovering tourism sector and weak domestic demand, further constrained by high household debt.
The May poll indicated a strong public demand for action, with nearly 78% of respondents calling for urgent measures to address rising living costs. Finance Minister Ekniti Nitithanprapas has already characterized the situation as a “cost-of-living crisis,” acknowledging the increasing financial strain on ordinary households.
Limited Fiscal Space and High Debt
However, extensive stimulus spending in previous years has limited the government’s fiscal policy options. Inflation is also projected to exceed the Bank of Thailand’s target range of 1% to 3% this year, even as the central bank has maintained its key interest rate at 1%.
Thailand’s overall household debt stands at a concerning 86.7% of its gross domestic product, among the highest in Asia. This high level is attributed to weak income growth, a history of easy credit, and economic shocks, which have blunted the effectiveness of government stimulus measures.
To alleviate some of the hardship, the government has implemented support measures and initiated a 176-billion-baht consumer subsidy program, part of a broader 400-billion-baht borrowing decree. This decree is currently facing a legal challenge from opposition parties.
Insufficient Support Measures
Even targeted government initiatives, such as subsidies of approximately 1,000 baht per rai for rice farmers, have fallen short of offsetting the increased costs of fertilizer and fuel. Pramote Charoensilp, president of the Thai Agriculturists Association, stated that these subsidies are insufficient to cover farmers’ expenses.
Ngamprawan Ehsomnuk, dean of the school of law and politics at Suan Dusit University, observed, “The pressure on the government is not just economic. It’s a crisis of confidence in whether the government can govern effectively.”
A Cycle of Debt
For many, like 64-year-old Ayutthaya rice farmer Phayong Saengthong, the current circumstances feel overwhelming. After decades of farming, Phayong carries over 1 million baht in debt. The recent harvest resulted in an additional loss of 200,000 baht due to escalating fertilizer and fuel costs, coupled with low rice prices.
Thai rice prices plummeted last year, with export prices reaching an 18-year low. This decline is primarily attributed to a surplus in global supply and intense competition from India.
“The debt is overwhelming,” Phayong expressed. His situation is far from unique. A reports the central bank’s research institute in April indicated that over half of the 3.73 million farm borrowers at the state-owned Bank for Agriculture and Agricultural Cooperatives are trapped in a “debt trap” from which they are unlikely to escape before retirement.
With formal loan options exhausted, Phayong relies on suppliers for credit. “If they stop giving me goods on credit, I may have to stop growing rice,” he warned, echoing the sentiments of many among the approximately 4.6 million rice farming households in rural Thailand who had anticipated greater government assistance.
Pramote, who plans to advocate for stronger support at an upcoming national rice policy board meeting, stated, “There are no clear measures to help farmers.”
Chaon believes that if paddy prices were closer to 10,000 baht per tonne, compared to the current rate of about 7,800 baht, farmers could find a path forward. He concluded, “With costs so high and rice prices so low, there’s nothing left but debt.”
