Representatives from the Bank for Agriculture and Agricultural Cooperatives (BAAC) and GIZ Thailand recently organised a workshop on agricultural climate-resilient financing.

Held from 12-14 March 2024 in Nakhon Ratchasima, the ‘BAAC – GIZ Strategic Alignment Planning Workshop’ marked the continued joint efforts of the two organisations to provide Thai smallholder farmers with access to sustainable, climate-resilient farming management.

In March 2023, BAAC and GIZ signed an MOU that focuses on capacity building and preparedness and implementation of green agricultural finance, sustainable finance mechanisms and operations. To address the impact of climate change on Thailand’s agricultural sector, particularly rice farming, collaboration between the two organisations is currently concentrated on the following five agricultural development projects:

• Thai Rice Nationally Appropriate Mitigation Action (Thai Rice NAMA),
• Thai Rice: Strengthening Climate-Smart Rice Farming (Thai Rice GCF),
• Innovative Climate Risk Financing for the Agricultural Sector in the ASEAN Region (AgriCRF),
• Inclusive Sustainable Rice Landscapes Transforming Thai Rice Value Chain for Environmental Sustainability (ISRL), and
• Thai – German Cooperation on Energy, Mobility and Climate (Biomass Component).

The three-day workshop not only focused on exchanging views and opinions between financing and the development framework and concept, but also on activity planning for the ongoing collaborative projects. BAAC strategies and priorities as the “sustainable rural development bank” were also highlighted.

Wichai Paksa, BAAC Director of Office of Foreign Affairs said, “Although we have jointly implemented project activities for some time, today’s workshop sets the first important strategic milestone for our continued exchange in the future and our support for Thai farmers to enjoy better incomes.”

The BAAC executive further explained the BAAC agenda for 2024/25, which emphasises addressing poverty issues facing the majority of farmers, promoting the use of technology and innovation to enhance competitiveness while supporting economic activities by providing knowledge and financial resources, and considering balanced values across economic, social, and environmental dimensions. The aim is to increase income for farmer households.

Tobias Breunig, Advisor on Agricultural Finance, GIZ, shared similar thoughts on the impact of climate change on the agricultural sector and its threat to farming patterns and livelihoods of Thai farmers. “GIZ and BAAC can work together on climate resilience and sustainable finance to help improve livelihoods and incomes for smallholder farmers,” he said.

A dozen BAAC and GIZ representatives from various departments, including Policy and Strategy, Personal Credit, Customer and Community Development, Customers Relations, Institution and Entrepreneur Credit Department, the Office of Institution and Community Organisations Development, the Office of Foreign Affairs, and the Research and Innovation Development Center actively shared views on how climate change can also lead to BAAC’s risks as a banking institute.

Lessons learned from the Thai Rice NAMA Project implemented by GIZ during 2018-2023 in six central plains provinces regarded as the country’s rice bowl were also presented to showcase how socioeconomic challenges facing the agricultural sector can become a key factor in implementing an upcoming Thai Rice GCF project, also focusing on financial incentives and mechanisms for climate smart agriculture.

Representatives from the two organisations brainstormed on how capacity development activities on climate change and climate resilience financing should be carried out at all levels, from farmers to financial institutions. They also discussed how innovative solutions can enable BAAC as a financial institution to effectively assess credit risks from climate impacts; and the potential roles BAAC as an agricultural bank could take. This included the presentation of the Environmental Social and Governance (ESG) Risk Radar tool. The tool would support BAAC in assessing ESG risks and impacts, climate risks included, on its loan portfolios.

Representatives from both BAAC and GIZ agreed on a framework for collaboration and activity implementation in the coming years. Wichai concluded: “This is the first planning workshop we had together, and we hope this can be continued so that we can keep our exchange and learning momentum in both organisations for the benefit of Thai farmers.”