Banks help sugar farmers combat PM2.5

A pilot programme from the central bank allows sugarcane companies to buy new machinery and reduce slash and burn agriculture, writes Somruedi Banchongduang

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The amount of PM2.5 air pollution has increased in Thailand in recent years, driven by multiple factors such as industrial manufacturing, the widespread use of internal combustion engine-powered vehicles, and the open burning of garbage and agricultural crop residue.

In the agricultural sector, the sugar industry contributes a significant amount of PM2.5 emissions due to the widespread practice of burning sugarcane before harvesting. In response, the Bank of Thailand initiated its "Financing the Transition" programme.

FINANCIAL SWEETENER

The central bank, in collaboration with the Office of the Cane and Sugar Board (OCSB), Krungthai Bank (KTB), and Siam Commercial Bank (SCB), launched a pilot loan programme to reduce PM2.5 pollution in the sugar industry.

The regulator said the loan initiative aligns with government policies aimed at limiting air pollution and promoting environmentally sustainable industrial practices.

The government has encouraged fresh sugarcane harvesting as an alternative to burning for some time.

However, a lack of cane harvesters is cited by farmers for their continued burning. Financial support from the banking sector is expected to nudge the industry towards a more environmentally sustainable model.

Under the programme, KTB and SCB developed tailored loan products to support sugar businesses.

The transition loans finance the purchase of efficient agricultural machinery, such as cane harvesters and leaf compactors, that will reduce the level of PM2.5 pollution.

The loans offer favourable interest rates and extended repayment periods of up to seven years, with principal payments required only once a year to align with the seasonal income cycle of sugarcane harvests.