Skyrocketing prices for fertilizers and agricultural production has pushed farmers in the Mekong region into severe debt and poverty.
Many have been forced to abandon their farms or have been unable to pay their debts and have lost their land, despite their roles in ensuring food security for millions of people.
“This is the worst year for farmers. Everything is more expensive, except rice prices, and they keep dropping,” said Prasert Tangthong, 58, a farmer with a small holding in Sing Buri province in central Thailand.
For years, Prasert has been in chronic debt. He had to borrow from loan sharks and the state bank to sustain his farm and his family’s livelihood. The recent rise in the cost of production, especially fertilizer, has been a death knell to him.
He had to sell off some electrical appliances and a motorbike to get money to pay off his debts. His wife divorced him recently because he could no longer financially support her.
Prasert is not alone. Farmers across the Mekong region have had difficulties maintaining their production, while commodity prices have been volatile, something that is out of the farmers’ control.
The World Bank’s commodity price data show that the year-on-year price of di-ammonium phosphate, a fertilizer known as DAP, was 30% higher in July and a massive 150% higher than in 2020 and 2019.The price of potassium chloride and urea increased 168% and 24% from last year, respectively.
The soaring prices have been driven by multiple factors, including export restrictions in China and the war in Ukraine that has prompted trade sanctions against Belarus and Russia – the world’s top fertilizer exporters.
The ongoing price volatility has been a big blow to farmers in the Mekong countries, of which the agriculture sector largely depends on imported chemical fertilizers.
“Price spikes have immediate and long-term direct and indirect impacts on food security. In the near term, higher prices increase production costs and lower input use, negatively impacting food production,” said Aziz Elbehri, Senior Economist at the Food and Agriculture Organization (FAO) for Asia and the Pacific.
“Many farmers may also exit farming if no immediate support is provided to mitigate the crisis or if other alternatives are readily available. This may also contribute to longer-term impacts on future production, productivity and farmers’ livelihoods.”
The long-term impacts will depend on the duration of the price hikes. He added that next year’s production seasons are expected to have lower production and more food insecurity, especially among small-scale farmers who depend on farm income for food and nutrition needs.
Vicious cycles of debt
According to the World Bank’s 2019 data, the agriculture sector accounts for 31% of total employment in Thailand, 35% in Cambodia, 37% in Vietnam, 49% in Myanmar and 61% in Laos.
But the livelihoods of small-holder farmers have dropped dramatically, despite their large share in regional employment.
About 40% of Thai farmers are still living below the poverty line due to low productivity and a lack of bargaining power in the market. In Vietnam, poverty rates are still much higher among rural and ethnic minority families and households primarily engaged in agriculture, according to the World Bank’s report.
In Cambodia, farmers are reported to borrow more to pay for rising production costs, leaving many deep in debt. The majority have relied on imported fertilizer, mainly from Thailand and Vietnam.
Land loss and unrest
In Thailand, on the other hand, many rice farmers have considered quitting farming.
“In the future, there will be no rice farmers anymore. Many of us are planning to stop growing rice. The more we farm, the poorer we are. Our generation may be the last generation of rice farmers,” said Pinkaew Khunkaewthae, a coordinator of the Farmers Debt Network, a group of Thai farmers calling on their government to solve their debt.
Farmers across Thailand must borrow from loan sharks or the government’s banks to sustain their farms. Those who fail to repay their debts face lawsuits and having their land seized by the lenders.
Thailand’s Office of Agricultural Economics’ (OAE) annual report shows that 7.8 million hectares of farmland was mortgaged, redeemed or free used (which farmers have no land ownership rights to) in 2020, accounting for 62% of the farmland in Thailand.
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In Thailand, the term redeemed means the farmer has sold his land to someone else on a temporary basis, with the aim of buying it back. Free use means the farmer does not own the land he grows his crops on.
The Covid-19 pandemic and rising production costs have increased the risk of farmers losing their land.
The Legal Execution Department’s data shows that the number of civil cases that involved asset seizures, evictions and properties sold at auction had increased from 329,681 cases (properties valued at $19 billion in total) to 348,573 cases (valued at $16 billion) between 2020 and 2021.
Under pressure from debt and land loss, more than 1,000 farmers camped in front of Thailand’s Government House for nearly two months early this year, demanding the government’s help.
Their protests added fuel to Thailand’s ongoing unrest, which featured a series of protests against the military-led government, with many claiming it had been involved in human right violations and suppressing freedoms.
Farmers, most of them senior citizens, urged the banks to delay lawsuits involving the farmers’ property seizures and also to reduce the debt for vulnerable farmers, including those living with disabilities, illness and infirmity. – Mekong