More than half of farmers' loans unlikely to be repaid

PUBLISHED : 6 May 2026 at 07:23

NEWSPAPER SECTION: Business

WRITER: Somruedi Banchongduang

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More than 50% of farmer debtors are unlikely to fully repay their debts within their lifetime, largely because most of them are elderly, according to the Puey Ungphakorn Institute for Economic Research (PIER).

The institute says a combination of debt relief measures is needed to address the issue.

PIER, a research centre under the Bank of Thailand, estimates 52% of the country's 3.97 million farmer debtors in the National Credit Bureau database will be unable to fully repay their debts over their lifetime.

Based on borrowers' repayment behaviour over the past five years, the study found a large share of borrowers would only be able to fully repay their debts after age 70, when their income-earning capacity has significantly declined, said PIER executive director Sommarat Chantarat.

The study was conducted in collaboration with the Bank for Agriculture and Agricultural Cooperatives and covers 2017 to 2025, identifying two drivers of persistent debt among farmers: weak repayment capacity and problematic repayment behaviour.

In terms of repayment behaviour, a mismatch between annual repayment schedules and actual income cycles is a key factor contributing to defaults. The study found more than 65% of farmers, whose incomes have become more frequent and diversified, fail to allocate funds effectively for debt repayment.

The inconvenience of making repayments is another contributing factor. Transaction costs for travelling to bank branches, which range from 300 to 1,000 baht per trip, discourage small, frequent repayments.

Ms Sommarat said that over the past eight years, a culture of "interest-only repayment" has emerged, partly driven by various debt relief measures offered to farmer borrowers. This trend has further entrenched persistent debt.

The real concern lies in the widespread adoption of interest-only payments as a dominant repayment pattern, noted PIER. Over the past eight years, the share of borrowers paying only interest has surged from 20% to more than half, while only 10% have consistently reduced their principal.

Focusing solely on non-performing loan (NPL) figures may obscure the true severity of the problem. Although the NPL ratio in the agricultural segment stands at around 10% of total household debt, many borrowers remain trapped in a cycle of debt and are unlikely to exit it.

Debt levels among farmers have also increased, with the median rising from 200,000 to 250,000 baht -- around three times higher than that of other household groups. More than 30% of borrowers have seen their debt more than double over the past eight years, and over 30% now carry debt exceeding 500,000 baht.

PIER recommends the government shift its focus from short-term relief measures to long-term structural solutions to address persistent debt among farmers. Sustainable resolution will depend on three key drivers: prioritising public investment over subsidies, fostering collaborative partnerships, and leveraging digital technology and artificial intelligence.

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- KEYWORDS

- Thai farmers

- Bank of thailand

- Agricultural debt

- Pier research

- Debt repayment

- Household debt

- Baac