Credit Services to Individual Farmers

These services provide loans directly to individual farmers. The borrowing farmers have to be registered as BAAC clients. They submit their loan proposals to a BAAC credit officer at their local branch or field office. The credit officer helps and advises farmers on the client registration procedures.

People who apply to become BAAC clients must have the following qualifications

1. They must have Thai nationality
2. They must be at least twenty years of age
3. They must be genuine farmers as defined in BAAC regulations
4. They must have sufficient farm experience or training in the field of agriculture
5. They must be permanent residents and undertake major agricultural activities within the operating area of the BAAC branch where client registration will be made, for a period of not less than one year
6. They must produce a reasonable annual marketable surplus of farm produce or be able to improve their agricultural activities to increase their incomes enough to repay their loans
7. They must be honest, well known, industrious and thrifty
8. They must not be of unsound mind or mentally infirm
9. They must not be bankrupt or insolvent
10. They must not have been expelled by any BAAC branch, and must not currently have an outstanding loan with any agricultural cooperative, farmer association or other institution providing agricultural credit

Types of Loans
Credit services to individual farmers, classified by types of loans, are as follows :
1. Short Term Loans for Agricultural Production
The objective of this type of loan is to meet production costs during a given production season, such as costs of land preparation, seeds, fertilizers and labor hiring. This type of loan must be repaid within twelve months, except in extraordinary cases where the repayment may be made within a period of eighteen months.

2. Loans for the Postponement of the Sale of Farm Produce
The objective of this type of loan is to help farmers meet their household expenses while they postpone the sale of produce in order to avoid selling during periods of over-supply and low prices. This type of loan must normally be repaid within six months.

3. Medium Term Loans
Medium term loans are intended for investments in agricultural assets that can be used for more than one year, for example loans for investment in agricultural land reclamation or improvement or the purchase of agricultural machinery or livestock. The repayment of this type of loan is normally required within three years, except in extraordinary cases where the repayment may be extended to five years.
4. Cash Credit Loans

A cash credit line is a kind of short term loan for crop production, which provides great convenience for farmer clients. Once a farmer has entered into a cash credit agreement he or she can make several withdrawals up to the loan ceiling and within the period of the agreement which will not exceed five years.

5. Long Tern Loans for Refinancing Old Debts
This type of loan is for the redemption and repurchase of agricultural land that originally belonged to the farmers, their married partners, children or parents. These loans are intended to maintain the farmers' land ownership. They are also provided for agricultural expenses of the first planting season, investment in necessary farm assets and expenses involved with mortgage of immovable property.

6. Long Term Loans for Agricultural Investment
This type of loan is intended for investments in fixed agricultural assets to improve existing production enterprises or introduce new ones. These investments are relatively expensive and require a long period of time before the enterprises can be expected to break even. Repayments of this type of loan are normally required within fifteen years, or within twenty years in extraordinary cases. A grace period for the repayment of principal and/or the payment of interest may be allowed but normally not for more than the first five years. This type of loan can be available to individual borrowers and to farmers in special projects.

7. Loans for Farm-Related Activities
This type of loan is intended to meet expenses and/or investment costs for activities related to agriculture. These activities use agricultural produce, either from farmers themselves or provided from other sources, as raw materials for processing as finished of semi-finished goods for sale. Qualifying activities may be for either production or services related to agriculture. This type of loan may be classified into two types:

Short term loans for production which are intended to meet the production costs of farm-related activities. Repayment of these loans is normally required within twelve months.

Long term loans for investment in assets used in farm-related activities. Repayment of these loans is normally required within fifteen years, or in twenty years in extraordinary cases.


Loan Security Requirements

Security requirement for each type of loan described above must be at least one of the following :

1. Farmer clients in the same group obligate themselves in joint liability agreement for their loan repayments.
2. At least 2 branch clients or any people approved by BAAC to stand sureties.
3. The mortgage of unencumbered immovable property which its appraised market value is not less than twice the amount of the loan.
4. The pledge of government securities or on the security of deposits with BAAC Agricultural Development Projects
BAAC extends credit services to farmers who participate in special development projects. The credit may take the form of short, medium or long term loans. The objective of this service is to encourage farmers to engage in new activities or to upgrade their present activities so as to create permanent improvements of their living standards. Government agencies and private organizations normally have important roles in these projects: to provide support on technical issues, marketing and infrastructure construction.

The agricultural development projects may be classified into two categories : those initiated under government policies and the BAAC's own special development projects.
1. Agricultural Development Projects under Government Policies These projects are designed by government in response to cabinet resolutions, or government agencies' plans or activities to assist farmers in solving their farm production problems such as losses from natural disasters, low production volume or quality or falling prices. Government assistance is characteristically to extend loans with special conditions through :
2. Special Agricultural Development Projects These projects involve long tern loans for investment in agriculture, and must be approved by the BAAC Board of Directors. The projects are designed to assist poor and small-scale farmers and to introduce permanent improvements to their farming enterprises. The related government agencies and private sector support participating farmers for infrastructure construction, production input supplies or technical services.


Credit for Environmental Reservation

This is a scheme financially supported by the Asian Development Bank (ADB) and the Overseas Economic Cooperation Fund (OECF). The scheme intends to boost production and income of rural farm households by promoting farm and farm-related activities; supporting farmers to participate in environmental preservation; and encouraging investments for environmental preservation. ADB has also supported training organized for working personnel and farmers to improve their working knowledge and ability.

Supporting activities under this scheme are as follows :

1. Investment in forest planting, including land preparation, planting seedling, supplies for forest planting and necessary costs of investment (excluding investments in land purchase and eucalyptus planting)

2. Investments in the construction of bio-gas ponds and supplies and equipment involved with bio-gas ponds.

3. Investment in farm-related activities intended to raise farm household income. The activities must conform with environmental preservation laws, and must not damage natural resources or the environment. Excluded are activities involving land purchase, tobacco, forest cutting, refinancing old debts, trucks not used for farm-related activities and agricultural trade without value added.