To the many vexing dilemmas facing the KMT-run central government in the wake of the 921 earthquake, that of the farmers' associations has just been added.
Widely considered to be the bedrock of the KMT's support among local factions in Taiwan, many of the farmers' associations had been racking up huge losses in their credit departments even before the quake.
But now, their financial woes appear to have been irredeemably worsened -- and they are demanding the government do something about it.
Leaders of farmers' associations in some of the worst-hit areas called on the government yesterday to bail them out of an imminent financial crisis brought on by huge quake-related property losses.
Chen Wei-min (陳維民), deputy secretary-general of the National Training Institute for Farmers' Organizations (NTIFO, 農民團體幹部聯合訓練協會), predicted that overdue loans among farmers' associations in central Taiwan will climb to 20 percent of all loans, up 10 percent from before the quake.
Based on this prediction, Chen said, NT$27 billion of the NT$135 billion in outstanding loans among 43 farmers' associations in Taichung City and Nantou, Taichung, Miaoli and Yunlin counties will become overdue -- meaning interest payments will not be collected for at least three months. Of this total, at least 70 percent, or NT$18.9 billion, will eventually become bad loans -- meaning the associations do not expect them to be repaid.
So far, NT$10.9 billion of the associations' loans have already been classified as bad due to the loss of collateral after houses were destroyed (NT$5.7 billion), land ruined (NT$2.2 billion), debtors died (NT$1.4 billion) or other reasons (NT$1.6 billion), according to a NTIFO survey released yesterday.
The data from six other affected farmers' associations have not yet been collected, reportedly because of communication difficulties, NTIFO officials said.
The survey also showed that buildings and facilities of 38 farmers' associations had been damaged in the quake. Reconstruction costs are estimated at NT$26.2 billion.
NTIFO Secretary-general Chen Ming-chi (
Also, the Central Bank of China should appropriate NT$67.5 billion as reconstruction loans for clients of farmers' associations, Chen said.
But it is obviously not going to be quite that easy.
Huang Teh-feng (黃得豐), a section chief in charge of grassroots financial institutions at the finance ministry's Bureau of Monetary Affairs, responded yesterday by saying that further inter-ministerial coordination is required before a final solution can be worked out.
Huang said the finance ministry had been trying to separate the problems of farmers' associations from other national banking institutions which employ sounder risk-management policies.
Huang said that in addition to solving their structural problems, the farmers' associations need to devise better management strategies.
Minister of Finance Paul Chiu (
Perhaps more importantly, any decision relating to the associations will have important political ramifications for the KMT ahead of next year's presidential elections. Their grassroots political clout has proved especially important for the party in past elections and, with Vice President Lien Chan (連戰) trailing in almost every current opinion poll, the party will need all the organizational muscle it can get at the grassroots level if he is to overcome James Soong (宋楚瑜) and Chen Shui-bian (陳水扁).
It has come as little surprise to analysts, therefore, to hear the finance ministry announce that regardless of the long-term future of the associations, it has worked out temporary plans to deal with any cash-flow problems they are likely to face.
Ministry officials said yesterday that the Central Deposit Insurance Corporation and Taiwan's three agricultural banks will extend credit to farmers' associations in dire need of cash, while it will encourage such associations within the same region to help each other with liquidity.
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