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19 August 2013
Read in Minutes


‘Rice farmers will need aid if pledging scheme ends’



The Thailand Development Research Institute suggests that relief measures for farmers be considered by Parliament in case the rice pledging scheme is abolished, while the Department of Internal Trade believes the programme is transparent.

Speaking at a seminar on “Rethinking the Future of Thai Rice” yesterday, TDRI distinguished fellow Nipon Poapongsakorn said relief measures should be approved by Parliament so that a plan for their implementation could be clearly formulated. The suggested plan should be run for four years of the government term.

Such measures should be financed by the annual government budget, not borrowings, to lessen the debt burden that may arise through mismanagement, Nipon said. 

He suggested that measures like South Korea’s enhanced-income policy could replace the rice pledging scheme. Under this policy, the government pays 70-85 per cent of any discrepancy between the targeted price and market price as compensation to farmers.

“The global market has moved with higher volatility than expected,” he said. 

Recently, a cut in the pledging price and a limit of amount of pledged rice have been proposed and the final result depends on negotiations between farmers and the government.

Such measures would likely create two markets and two prices, Nipon said, as rice that is not in the pledging scheme would likely see prices much lower than that in the scheme.

He said the Commerce Ministry’s announced sales target of 1 million tonnes per month could greatly affect the market price, as fewer traders would likely bid for the rice on expectation of seeing lower prices from consistent flows of the commodity into the market. 

Given traders’ lack of confidence in the quality of rice in the government’s warehouses, Nipon suggested that it not sell old rice and issue a law on “writing off” or destroying it, while focusing on the sale of quality rice through agricultural futures markets. 

Wiboonlasana Ruamraksa, director-general of the Department of Internal Trade, said the rice pledging programme had demonstrated clear results. As it is not preoccupied with profits and losses, it is able to upgrade farmers’ incomes.

Currently, Thai farmers earn profit from growing rice and enjoy a better quality of life, she said.

However, Thai rice could confront high costs of production in the future, given redundancies and lack of cooperation among those responsible for research and development, farmers and the market, said Rice Department director-general Chairit Damrongkiat.

R&D will likely become a key for Thai rice’s competitiveness in the future, not prices, he said.


Nipon Poapongsakorn, Ph.D.
Distinguished Fellow