Farmers urged to take advantage of high-value trees

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Farmers urged to take advantage of high-value trees

Perennials can be used as collateral

Farmers can use trees they grow or have on their farmland as loan collateral under the Secured Transactions Act, which was enacted in 2018.

Farmers are encouraged to use high-value trees as loan collateral to help ease financial hardship caused by the pandemic.

Thosapone Dansuputra, director general of the Business Development Department, said that over the past few years, the department has worked with the Bank for Agriculture and Agricultural Cooperatives (BAAC) to organize campaigns to encourage farmers to grow more perennial trees on their land to optimize production and increase their income.

The campaigns are also encouraging farmers to use the trees they grow or have on their farmland as loan collateral under the Secured Transactions Act.

The Secure Transactions Act, in force since July 2016, facilitates access to credit for small and medium-sized enterprises (SMEs) and startups by allowing them to use inventory, raw materials and intellectual property as collateral.

The law helps unlock the financial limits for entrepreneurs to obtain loans, which in turn stimulates economic growth.

In 2018, the cabinet approved Ministerial Regulations from the Ministry of Commerce allowing the use of 58 varieties of high-value trees such as teak and Siamese and Burmese rosewood as collateral under the Secure Transactions Act. .

The regulation encourages people to grow more high-value trees on their land to generate income and allow SMEs to have better access to sources of finance.

As part of efforts to promote reforestation and encourage people to grow high-value trees on their own land, the cabinet in 2018 approved an amendment to the 1941 Forest Act, allowing people who grow these trees to harvest them for income.

Pikul Kittipol, chairman of an agarwood farmers’ group in Rayong, said agarwood producers would like financial institutions to give them loans under the Secured Transactions Act. She said it was because agarwood trees have great value, as all their parts, be it trunk, roots, leaves or limbs, can be used as raw materials for many products such as perfumes, medicines and cosmetics.

According to Ms. Pikul, Japan is buying agarwood leaves to extract substances from it to make a medicine for the treatment of colon cancer.

Distilled water with agarwood also has benefits as an antioxidant, she said.

Rayong farmers in Ms. Pikul’s group are currently planting agarwood along with other valuable trees such as teak, Siamese rosewood, ironwood and Siamese sal.

According to Ms Pikul, farmers are legally allowed to cut and process trees after the Royal Forest Department amended its law to comply with the Secure Transactions Act, but farmers must seek permission from the Organization of the forest industry (FIO) before exporting.

“Farmers would like the government to improve the regulations by unlocking the FIO-related licensing regulations which will help facilitate farmers’ trade,” Ms. Pikul said.

Agarwood is considered the most valuable cash crop in the world because it can be used for both oilseed plants and heartwood, which are valuable when extracted and processed, and can be exported to the whole world.

Planting agarwood is among the list 2 conserved plant species, just like orchids. Agarwood permitted for export must be registered with the Department of Agriculture under the CITES convention, and the trees must come from farmers’ plantations and not from restricted forests.

The main export markets for agarwood are the Middle East and Europe. Thailand is the largest exporter of agarwood, followed by Singapore and India.

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