Khonwan

Lending to farmers

I’ve had an interest (excuse the pun) in this subject for some time but would now like to open it up for general discussion amongst the farmers in this forum section (who tend to be far more sensible than many of the posters in the general section).

It annoys me to constantly read of all money lenders being referred to as loan sharks. How is this term defined? At what rate of interest is a loan considered as usury? Who does the defining? Who’s view matters? Is lending without violence, intimidation, threats (other than the explicit threat of temporary/permanent, partial/full loss of security defined in a written contract signed by all parties and duly witnessed) considered loan sharking? Do borrowers’ opinions on this subject matter? Does this issue have many shades of grey, or is it simply black & white?

Most farmers, in my area anyway, own insufficient land to farm profitably so must rent additional land. Where is the rental money to come from? Most have already committed their land titles to a bank (usually BAAC, and only BAAC in the case of Sor Por Kor title) as security for short and long-term loans. Where is the money to come from for farming inputs such as fertiliser, pesticide, fuel, and often labour? Sure, crop middlemen will often provide some inputs such as fertiliser either on credit terms or with inflated prices that incorporate their desired credit compensation…but in nearly all cases this locks the farmer into having to sell their produce at a much reduced value even though the fertiliser has cost them much more than the normal retail price.

And, what of the cash-rich farmer looking for a decent return on his money? He (or “she” but since contributors to this farming section appear to be almost exclusively male, l will continue to use the male form only) may consider buying more land (somewhat difficult in my District, which is void of land that can be legally sold since there are no titles greater than Sor Por Kor) or renting land to extend his farming. Or, he may lend his cash to farmers in the above paragraph.

A cassava farmer (since that is what I now know best these days) will spend around 850-1,000 baht per tonne of tubers to sell at usually around 2,000-3,000 baht per tonne: he can make a profit of somewhere in the region of 100-200% per annum.

“Informal sector” lending rates in my area appear to me to be predominantly 4-5% per month (48-60% per annum) but are sometimes as low as 3% per month (36% per annum) and as high as 10% per month (120% per annum). Most loans are payable annually since farmers tend to receive income only annually at harvest. Security on these loans tends to be less than AAA as collateral is almost always Sor Por Kor land that cannot be legally sold or even rented out (BAAC, being a government agency has special dispensation granted by the Thaksin government) and, furthermore, tends to be already held by BAAC. Given the magnitude of these risks, the reader may well consider that a lender could be justified in wanting more than the maximum 15% per annum allowable under Thai law.

So now we test the ethical considerations.

Cash-rich Farmer A considers the legal maximum of 15% per annum to be insufficient compensation for the risks involved and to be a much poorer return on investment compared to that available should he extend his farming by renting land. I should add that land in my area rents for 1,500 baht per rai per annum, which works out at 300-400 baht per tonne. He considers leaving his cash in the bank but dismisses this idea since his money will likely depreciate in real terms, such is the poor rate of interest. Farmer A therefore rents additional land. In consequence, Farmer A deprives a poor farmer whose only hope of financial improvement was to farm additional rented land.

Cash-rich Farmer B decides to accept the inherent risks and lends at 3% per month (a rate similar to that of many microfinance institutions in other countries). In consequence, poorer farmers have access to the required credit that allows them to increase their annual earnings even after deduction of land rental and debt servicing.

Which of these two cash-rich farmers have given greater assistance to the community?

Please join an open discussion.

Anyone know if waterproof Bluetooth earphones are available in Thailand? I want them for swimming. Wavetooth look suitable, Mi-Sport VBT better (though I understand not yet released).

Can anyone advise me how to listen to BBC World Service live radio on my Nokia 3720? I’ve tried several methods but failed miserably.

My 3ph 50kVA transformer is unbalanced at no load. It hasn’t caused me any major problems in the past but I’m more concerned now that I’ve added a 3ph 2hp submersible deep well pump to my property.

Phase:phase readings taken a few minutes ago (at no load) indicated 429V, 415V, 419V averaging 421V indicating unbalanced voltage of 1.9%. Can anything be done at the transformer to correct this no-load imbalance?

Interestingly, readings taken with only one 3ph 3hp motor operating (it’s worth pointing out that the motor has been rewound on three occasions in the past therefore the rating might not be spot on, I guess) were 422V, 409V, 415V respectively, averaging 415V indicating unbalanced voltage of 1.7%.

A related complicating problem is that my phase protector (the WIP device recently discussed and photographed) appears to have to be set to at least twice the unbalanced voltage I calculate in order to prevent tripping, i.e. if running this motor only, I need to set the phase protector to at least 4% UB to prevent it tripping. Why? Does this indicate the device is faulty? Running my 3ph 12kW shower requires the device to be set to at least 10% to prevent tripping though my test readings indicate 5% UB.

I contacted a Thai company for a price for their 3ph AVRs. Their smallest was 6kVA, which cost B105,000 + VAT for the 2.5% model (B88,000 +VAT for the 5% model) – cheaper just to rewind the motor frequently (cost me B2,000 to rewind my 3ph 3hp motor last month). Raising the sub frequently would be a real hassle though.

I have a Thai friend who is a learned-on-the-job electrician. He recently installed a control box for my new borehole 3-ph 2hp submersible pump. As can be seen in the photograph, it contains a phase protector and a contactor coupled with a thermal overload relay.

Having just had him rewind a 3-ph 3hp motor (nothing to do with the borehole) after it being damaged due to a dropped phase when one fuse in a cut-off went, he advised  me to buy a similar phase protector, contactor, and thermal overload relay, which I did.  I was going to install these myself today but I am now thinking that I should return the contactor and thermal overload relay to Global House (within their 30 days refund guarantee). It seems to me that the phase protector should be sufficient by itself, though I’m happy to install them if of any benefit.

To fit or not to fit, that’s the question.