The damage caused to the agriculture sector as a whole by the recent flooding has been estimated at Bt10 billion, a source at the Commerce Ministry said on Friday.

Because of this, farm prices are expected to increase between 2 and 5 per cent due to a supply shortage next year, the source said.

The Agriculture and Coopera-tives Ministry reported that flooding in 58 provinces had caused Bt1.23 billion in damage to paddy fields and crops, as of Friday.

The ministry said the situation had affected 301,737 farmers and damaged 3.68 million rai out of a total of 4.52 million (in 58 provinces) of plantation area.

The flooding hit the Central region, where the country's biggest white-rice plantations are found, the hardest.

Farmers in the region lost their third crop of rice out of a maximum of four crops per year.

However, farmers and crop traders shared the view that that the floods would only have a short-term effect.

High demand and a shortage of agricultural goods will push up prices by 2 to 5 per cent, they said.

The price of paddy rice dropped to between Bt6,100 to Bt6,200 per tonne this month due mainly to high moisture content. The price was Bt6,813 at the same time last year.

The floods have also damaged other crops and marine farms along the Chao Phya River.

Suwan Kathawut, president of the Thai Rice Growers Association, said farmers in flooded areas, particularly the Central region, were suffering under the impact of the disaster.

He called for the government to find a solution to help farmers since they did not know any other way to earn a living.

Most agricultural traders also commented that the prices of farm goods would increase slightly as crops grown after the flooding will create higher yields.

They said that increasing prices would derive from stable demand both in domestic and overseas markets.

Preecha Temprom, president of the Tapioca Starch Association, said the flooding had had less impact on the tapioca industry.

Demand for tapioca starch and chips is expected to increase. As a result, the price of cassava is expected to rise by 10 to 20 per cent next year, Preecha said.

He said the association aimed to produce more than 28 million tonnes of tapioca products next year, compared with 25 million tonnes this year.

The price of tapioca starch should increase to US$240 (Bt8,990) per tonne from the current $200, he said.

Thai Rubber Association president Luckchai Kittipol said rubber prices next year should increase by 2 per cent from the current Bt58 to Bt60 per kilogram.

He said this year's price hike was due to high demand in the world market. Rubber quantities will also increase because of a long rainy season, which benefits the plantations, Luckchai said.

Meanwhile, Khunying Jada Wattanasiritham, chairwoman of the Thai Bankers' Association, said the association had proposed that the Bank of Thailand set up permanent soft-loan reserves to be granted to victims of natural disasters.

The central bank provided banks with a soft-loan programme to support their customers that were affected by the tsunami disaster in 2004.

If there were such a scheme specifically for victims of natural adversity, it would give banks the flexibility to assist their clients in the event of a flooding disaster, she said.

As president and chief executive of Siam Commercial Bank, Jada said the bank was ready to help its customers who had been affected by the floods, in the event that their debt-servicing ability had been reduced.

However, the bank could not yet put a figure on the overall damage suffered by its customers.

Prasarn Trairatvorakul, president of Kasikornbank, said his bank would take about one month to evaluate the damage suffered by its customers, and would also wait for the government's further decisions on how to react to the situation.

The floods are expected to mainly affect the agricultural sector, but the bank's loan provisions to the industry are limited to 5 per cent of its total credit portfolio, equal to other sectors, he said. As a result, Kasikornbank is not overly concerned, he added.

However, if the bank's borrowers were affected by the floods, the bank is ready to help them on debt restructuring, such as prolonging their repayment period, he said.

Tisco Bank chief executive Pliu Mangkornkanok said his bank would also take about one month for a damage assessment.

He said he believed the flooding would not hurt the bank's customers that much because the problem had not been as serious as the tsunami disaster.

"In the tsunami, many of the bank's customers had their cars washed away in the rush of water. That didn't happen this time," said Pliu, alluding to the bank's core auto-loan business.

Bank of Thailand deputy governor Tarisa Watanagase forecast that overall flood damage would not be that great because the problem would not exceed two weeks.

The central bank's regional offices are currently estimating the damage and it is too early to talk about soft loans, Tarisa said.

Twatchai Yongkittikul, secretary-general of the Thai Bankers' Association, said he could not say at the moment whether the association would ask for soft loans from the central bank to help flood victims because no one yet knew about the real extent of the damage.

Soft loans should not be available if the damage is not significant because bank customers should not expect financial assistance when their losses are minimal, he said.

Kasikorn Research Centre, meanwhile, forecast that the flooding would lead to about Bt1.6 billion in damage to paddy fields and crops.

This figure is above the Bt1.4 billion estimated by the Agriculture and Cooperatives Ministry for the floods in 2004.

The higher estimate is based on the assumption that damage to agricultural produce in the Central region from this year's floods is greater than in 2004.

The ministry has roughly estimated that the flooding between August 1 and October 10 this year led to Bt927.49 million in damage to produce.

Achara Pongvutitham,

Petchanet Pratruangkrai,

Somruedi Banchongduang

The Nation