Rice petition to be filed tomorrow: Warong

Warong said he wanted all relevant officials, a ten-member committee working under Commerce Minister Boonsong Teriyapirom inspected.

“I will also seek an investigation into the business sector,’’ he said.

The MP said he would make a two-minute video clip on the rice pledging scheme to be shown via social media networks, plus details of the scheme would be made into pocket books. 

Warong, who grilled the government about the scheme in Parliament, said either the rice-pledging scheme would die, or it would bring down the Yingluck Shinawatra administration.

Moody's Investors Service yesterday also warned that bigger than expected losses from the government's rice buying scheme put the country's economic goals at risk.

Recent losses and any future losses from the unmodified scheme would increase the difficulty of the government achieving a balanced budget by 2017, and were “credit negative” for the Thai sovereign, Moody’s said yesterday.

The rating company based its comment on reports that losses from the controversial rice scheme in the 2011-12 harvest season were bigger than the Ministry of Finance originally forecast. 

Thailand – rated “Baa1” with stable outlook – had hoped to win a credit upgrade, to an “A” rating once assigned before the financial crisis in 1997.

But in a statement, Moody’s said implied losses of Bt200 billion in the harvest year were much higher than the World Bank’s estimate of Bt115 billion and the Finance Ministry’s forecast loss of Bt70-Bt100 billion. 

Continuing the program and bearing further costs would have major credit implications, it said. Previous estimates of losses for the 2011-12 harvest year were equal to 1.0 per cent of gross domestic product, but the current estimate puts the cost at 1.7 per cent of GDP or 7.8 per cent of total expenditure in 2012.

The overall budget deficit for the fiscal year that ended in September 2012 reached 4.1 per cent of GDP, but was revised slightly downward from 3.9 per cent because of a larger-than-expected non-budgetary cash deficit. 

“While financing of Thailand’s budget deficits is supported by the country’s deep onshore capital markets, the growing losses from the rice buying scheme and the potential need for additional government funding resulting from the continuation of the scheme increasingly jeopardise a reduced deficit, which we previously forecast will be 3.1 per cent of GDP in fiscal 2013,” the statement said.

“In addition, this makes achieving a balanced budget by 2017 more challenging.”

The current rice subsidy scheme was established in October 2011 in order to boost farmers’ incomes. “However, the government’s purchase of rice at around 50 per cent above market prices carries a fiscal cost when the rice has to be resold at a loss,” it noted. 

“In the past five harvest seasons, rice farmer support programs required much smaller government outlays that averaged less than a third of the estimated cost of the 2011-12 program.

“In addition, the government’s rice buying scheme is largely responsible for a decline in rice exports. Total earnings from rice exports fell in 2012 to $4.6 billion from $6.4 billion in the previous year, owing to the government withholding rice stocks for sale. 

“In volume terms, Thailand’s rice exports fell to 6.7 million tonnes in 2012 from 10.7 million tonnes in 2011, the lowest level since 2000. However, given that rice exports make up a relatively small proportion of Thailand’s total exports (averaging 2.6 per cent over the past 10 years), the direct and immediate effect on Thailand’s balance of payments is not material.”