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20 June 2014
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Rice agencies, farmers hash out subsidy details

A conclusion on how much of a subsidy each rice farming household will receive has not been settled, but an academic warns the junta it should focus on the quality of fertiliser if it decides to subsidise the product.

Bang Palasan (in orange shirt), a farmer in Khon Kaen, shows the 100,000 baht she was paid yesterday by the BAAC for rice pledging. BAAC president Luck Wajananawat said this was the final payment under the scheme. Some 89.9 billion was paid to 838,538 farmers.

“We disagree with any plans to control fertiliser prices, as their prices for rice plantation are now quite competitive and the import tariff is waived,” said Nipon Poapongsakorn, a distinguished fellow at the Thailand Development Research Institute.

The junta is being urged to limit subsidies for rice farmers, focusing mainly on the poorest ones.

“To ensure the state subsidy goes directly to poor farmers, the number of rice plots farmers can own should be limited to 10 rai per family,” said Mr Nipon.

He estimates 70 billion baht will be the cost of the state subsidy if it is allocated to 3.5 to 3.7 million farmer households nationwide under such conditions.

A subcommittee on rice production standards and marketing chaired by Gen Chatchai Sarikalya, deputy head of economic affairs for the National Council for Peace and Order (NCPO), is expected to finalise measures to help rice farmers deal with low paddy prices and spiralling production costs this week.

The NCPO is due to call a meeting with farmers and millers today to discuss both short- and long-term measures they feel they need.

A National Rice Policy Committee source earlier said 50-60 billion baht would be used to help farmers suffering from low paddy prices.

Over the long term, the junta pledged to work out measures to cut production costs for farmers such as a cap on prices of planting raw materials such as fertilisers, chemicals and farmland rental.

It also pledged to help subsidise the cost of seeds, fertiliser and agricultural chemicals worth 1,700 to 2,000 baht a rai by using a combined 40-50 billion baht for 3.5 million households of rice farmers.

The Office of Agricultural Economics estimates farmers have average rice production costs of 4,000 to 4,500 baht per rai.

The junta will assign the Bank for Agriculture and Agricultural Cooperatives (BAAC) to earmark 20 billion baht as working capital for farmers’ cooperatives and agricultural institutes to buy fertiliser or rice seed to sell to farmers at low prices.

The capital will also be used to buy paddy from farmers to be processed as white rice for sale to local buyers.

BAAC president Luck Wajananawat said his bank was set to propose measures to the NCPO aimed at helping farmers.

The measures include a special credit line to be given to farmers to delay selling their paddy, available from the 2014-15 season, and a lending facility for agricultural institutes to buy paddy in order to help cut the supply into the market.

The BAAC’s long-term measures will look at how to cut production costs for farmers including farmland rental, a campaign to use more organic fertiliser, a bank dedicated to rice seeds and fertiliser, productivity enhancement and a central market for rice farmers.

Rawee Rungruang, who leads a network of farmers, said the subsidy proposal of 1,700 to 2,000 baht a rai for production costs and a cap of 15 rai was a bit low.

“We propose a subsidy worth 2,500 baht per rai and a cap at 30 rai per family,” he said.

“Small-scale farmers should be classified as those owning no more than 25-30 rai per family.”

In a related development, the NCPO approved an allotment of 6.6 billion baht yesterday from the central budget to help rubber farmers suffering from low rubber prices and another 5.49 billion to help rubber farmers affected by natural disasters from 2013-14.



First published: ฺBangkok Post, June 18, 2014


Nipon Poapongsakorn, Ph.D.
Distinguished Fellow