Thai farmers like being buffaloed by this bank. Buffalo loans help double rural incomes

The Royal Buffalo and Cattle Bank loans water buffalo instead of money. Investors receive religious dividends instead of cash payments. When Thai King Bhumibol Adulyadej visited this region in the mid-1970s, he concluded that the lack of draft animals was a major cause of rural poverty. He started the buffalo bank by donating 200 water buffalo. Today the bank has almost 7,000 animals and runs entirely on donations from the public.

Farmers interviewed here say their income has doubled since the bank loaned them a buffalo. ``Life is better than before,'' said Prakuad Radpikun, who two years ago got a buffalo which has already had two offspring.

``I no longer need to pay rent on the buffalo, so I can save 2,000 to 3,000 baht [$78 to $118 dollars] per year,'' Mr. Prakuad said. ``I use it to fix my house.''

Water buffalo are the main source of power for pulling plows and carts on about 30 percent of the small farms in southeast Asia. Thai farmers who don't have buffalo say they spend about a quarter of their annual income on renting draft animals for plowing their fields.

Most of the bank's buffalo were raised for meat and were purchased from slaughter houses by the bank's patrons. A buffalo costs about $250, depending on its weight.

Chaitip Chiratanapong, an education specialist in the national education commission, recently bought 10 buffalo from the Bangkok Meatball Company and donated them to the bank. Ms. Chaitip said she was motivated by religious beliefs and by affection for the King.

Most Thais are Buddhists who believe that they will earn spiritual merit by saving an animal's life. Thai Buddhists believe in reincarnation and hold that good deeds will be rewarded in the next life.

Tim Phannasiri, who oversees the buffalo bank, also attributes interest to respect for the King. ``Our people love our King as our father. So anything the father does, the son and daughter would like to join.''

According to bank director Sanguan Cheunchon, the buffalo's first-born calf belongs to the bank as an interest payment, but the farmer is allowed to buy it for around $60, about one-third of its market value. The buffalo's second calf belongs to the farmer.

A farmer is allowed to use a buffalo about three years before it is passed on to a poor neighbor who does not have a draft animal.

Dr. Tim, the livestock department director, argues that buffalo are more efficient than the tractors which many farmers are trying to buy. He points out that buffalo cost less, survive by eating grass and their manure makes good fertilizer.