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20 November 2013
Read in Minutes


Government shrugs off rice programme concerns

Despite mounting complaints by rice farmers over late payments in the government’s rice pledging scheme, the national rice policy committee has yet to call a meeting about the issue.

The government has meanwhile reaffirmed it will move ahead with the controversial, costly and loss-ridden scheme despite increasing calls from critics at home and abroad to ditch it.

Deputy Prime Minister and Commerce Minister Niwatthamrong Bunsongphaisan said the committee has not felt it urgent to call a new meeting.

He insists the scheme’s liquidity remains strong and is sufficient to pay participating farmers this week.

The International Monetary Fund (IMF)last week suggested Thailand drop the subsidies for rice growers, saying uncertainty and a lack of data have undermined confidence in the country’s public finances.

In its report, the IMF said with the pledging prices about 40% above market prices, the government will inevitably incur losses as long as the scheme remains unchanged.

It also suggested the Thai government replace the paddy scheme with other subsidies that are more effective in supporting households such as for education or employment chances for young workers.

Nipon Puaopongsakorn, a former president of the Thailand Development Research Institute, believes the government is having trouble finding new capital for the scheme and that the programme will end in the foreseeable future.

The government has spent as much as 680 billion baht in four harvest seasons over the last two years but could sell only 135 billion worth so far.

The government has allocated another 270 billion baht to finance the 2013-14 main crop.

Buying started last month, with more than 2 million tonnes of paddy already obtained from rice farmers.

“The scheme will be discarded sooner or later,” said Mr Nipon.”It not only destroys the country’s overall rice market but also affects other parts of the govern-ment’s budget that would be better used to finance infrastructure development.”

Luck Wajananawat, chief of the stateowned bank Bank for Agriculture and Agricultural Cooperatives (BAAC), early this month admitted rice farmers who pledged their paddy under the scheme for the main crop starting from October face late payments, as the government lacks funding.

Dwindling government liquidity for the scheme is due to the BAAC running out of borrowing authority for the pledging.

Its planned 140-billion-baht loan using a Finance Ministry guarantee to fund the current harvest’s 270-billion-baht budget will be put in the Public Debt Management Office’s borrowing plan next January.

Delays in the Commerce Ministry’s rice stockpile sales have also been blamed for the liquidity crunch.

The government said it plans to buy 16.5 million tonnes in the current harvest year.

The remaining 130 billion baht in the 270-billion budget will come from state rice stockpile sales.

The Finance Ministry also plans to propose the cabinet review its recent resolution to ensure that the outstanding spending limit set at 500 billion baht for the ricepledging scheme at year-end will extend into next year in order to keep public debt under its 50% threshold.
To achieve this, the Commerce Ministry must accelerate selling rice in its stocks.