Moreover, 149,437 of them had borrowed the money from loan sharks, for a combined debt of Bt21.59 billion.

“Farmers’ debts within the system have been deferred under the government’s moratorium measure, while the BOT expects farmers’ income will improve in the second half of this year due to an expected improvement in the weather. Meanwhile, the central bank and other government agencies will continue to closely monitor the drought’s effects on the economy,” said Roong Mallikamas, senior director of the BOT’s Macroeconomic and Monetary Policy Department.

Farmers’ debt is the major reason for their land being lost, which is a huge problem because the land is their life-blood, and it is a problem that will get worse as farming costs rise, more crops fail and cash-crop prices remain low, Local Action Link said.

The central bank currently projects that the economy will expand by 3.5 per cent this year, against an edone stimated 2.8 per cent in 2015, but has warned that the prospect of worse-than-expected drought will to continue to put pressure on domestic consumption during the course of the year.

The Monetary Policy Committee’s “Monetary Policy Report” last month said the panel expected that last year’s drought would cause water supply in dams to remain low through the first half of 2016, and that this would affect farm output – especially off-season rice production, which requires irrigated water. It also revealed that forecasts by several agencies were predicting irregular rainfall patterns to cease in the first half of this year, which led the Monetary Policy Committee to expect farm activities to return to normal in the second half, with a downside risk in the event that the impacts of the El Nino weather phenomenon turn out to be more severe than expected.

Meanwhile, Chanatip Jariyawiroj, director of the BOT’s Financial Consumer Protection Centre, said the central bank had foreseen the importance of farmers’ financial literacy in terms of combating outside-the-system debts, and the Bank for Agriculture and Agricultural Cooperatives (BAAC) had been working continuously on ways to improve it by offering its expertise.

“The BAAC has an understanding [of financial literacy] and can reach the target group, so the BOT and the bank have been working together to develop content tools and multipliers to support financial literacy among farmers under a memorandum of understanding since November 2014.

“We had a joint meeting at the beginning of January to find suitable ways to improve farmers’ financial literacy in the future,” he added.