Bangkok, Thailand – Thai farmers are sinking deeper into a debt trap, with a new study by the Puey Ungphakorn Institute for Economic Research (PIER) warning that more than half of borrowers may never fully repay their loans, posing a severe threat to the agricultural sector and the country’s economic development.
Debts rise, repayment stalls
The study analyzed data over a decade, covering 3.97 million indebted farmers. The median debt rose from 200,000 baht to 250,000 baht, roughly three times that of other household groups.
More than 30 percent of borrowers have more than doubled their debts in the past eight years. A similar proportion now carries liabilities exceeding 500,000 baht.
Interest-only payments become the norm
Researchers found the repayment behavior particularly alarming. The share of farmers paying only interest jumped from 20 percent to more than half.
Only 10 percent consistently reduce the principal. Meanwhile, 42 percent of farmers lack sufficient income to service their debts and are repeatedly hit by income shocks.
Aid does not solve the problem
PIER sees the crisis masked by years of relief measures. Non-performing loan numbers remained relatively stable, but the underlying situation of debtors continued to deteriorate.
Previous quick fixes included debt moratoriums and payment deferrals. Researchers say these weakened repayment willingness and affected around 45 percent of borrowers.
Researchers demand long-term solutions
PIER estimates that only about 25 percent of farmers can repay their debts completely without help. More than 30 percent could succeed if their repayment behavior improves. Over 22 percent already have debts exceeding their repayment capacity.
The report urges targeted, long-term solutions, including better coordination among government, financial institutions, and borrowers, as well as digital tools and data to steer aid more effectively.
Warning of the next debt wave
Pilot programs show that interest subsidies combined with incentives to reduce the principal can improve repayment. Researchers want state support treated as investment rather than subsidy. Without a course change, Thailand faces a locked-in debt cycle that burdens rural livelihoods and limits the agriculture sector’s long-term potential.