Major Thai Coffee Brand Vows to Repay 200 Debt-Ridden Farmers

By Reuters 17 February 2020

CHIANG RAI, Thailand—A major Thai coffee brand has vowed to repay about 200 farmers who were forced to take out loans while waiting nearly three years for payment, leaving them with spiraling debts.

Doi Chaang Coffee—which has more than 50 franchises in Southeast Asia—said it would pay about 7 million baht (US$224,000, about 325 million kyats) after the Thomson Reuters Foundation revealed the non-payment and ensuing debts.

Doi Chaang calls itself a social enterprise, a company that addresses environmental and social issues while making a profit, and was founded in 2003 seeking to give growers a fairer price.

“By June we should be able to pay back all of the money that we owe to the coffee growers,” said Panachai Pisailert, managing director of Doi Chaang Coffee Original Co.

“The past two to three years the economy has been bad, and that has affected Doi Chaang’s coffee sales,” he added, saying the company used to pay its suppliers within four days.

The Thomson Reuters Foundation spoke to 20 farmers in three villages in northern Chiang Rai, who said Doi Chaang had owed them payments ranging from 2,000 to 230,000 baht since 2017.

The growers said they were worried about being unable to pay back high-interest loans from informal lenders, as well as those from state-owned banks and money borrowed from village funds.

One farmer said Doi Chaang’s failure to pay him 50,000 baht had led him to take out loans from a rural development bank and a village cooperative to pay for fertilizer and pesticides to preserve his crops. He now owes about 300,000 baht in total.

“I will probably be in a never-ending cycle of debt to the bank,” he said on condition of anonymity for fear of reprisals.

Fears for the future

Labor rights experts said such debts put people at risk of falling prey to the world’s most common form of modern slavery, debt bondage, where people are locked into exploitative work to repay debts.

“The coffee growers, who have little capital, will be susceptible to cash-flow problems and eventually be driven deeper into debt,” said Betty Yolanda, Asia manager at the Business and Human Rights Resource Centre, a monitoring group.

“This situation can be used by other buyers to exercise control over the coffee growers through debt bondage, forcing them into a cycle of debt and exploitation,” she added.

Somboon Trisilanun, the Labor Ministry’s inspector general, said the agriculture industry was tougher to monitor than other, more industrialized sectors due to the large number of workers.

“It’s not possible for authorities to inspect all field crops, but they [workers] are protected under the labor law and there are key indicators [of exploitation],” he said.

Doi Chaang said it conducted business “like a family” and did not have written contracts with its suppliers.

“This kind of practice is rather unusual … and makes the farmers vulnerable to being exploited,” said Viroj NaRanong, research director at the Thailand Development Research Institute, a policy think tank.

Coffee is the main source of income for most of the hill tribes living in Chiang Rai, who grew opium poppies before shifting to food crops and coffee beans in the 1960s.

One local chief said Doi Chaang owed about 3 million baht to about 30 residents of his village for their coffee beans, and many farmers were worried that they would never be repaid.

“The company says they help raise the living standards of locals … but in reality [the villagers] are struggling,” said the chief, who asked not to be named for fear of retribution.