Govt rebuts rice report

The Commerce Ministry and government agencies responsible for the rice-pledging scheme yesterday rejected reports that the project had run up huge losses of up to Bt260 billion, but failed to produce any evidence to substantiate their rebuttal.

Yesterday’s move followed a report on Thursday by the Finance Ministry’s Post-Audit Committee on the Rice Pledging Scheme, which said the government had exceeded the budget and faced huge losses. 

The project also threatens Thailand’s credit rating because of huge financial losses, it said. 

Moody’s Investors Service warned earlier that the losses were credit-negative for the Thai sovereign.

Commerce Minister Boonsong Teriyapirom denied yesterday that the government had suffered a Bt260-billion loss, arguing that the rice in the stockpile had still not been sold while the pledging project was still in operation.

“The government cannot yet estimate the final loss figure from the pledging scheme. The figures can be finalised only three years after the end of the pledging scheme this September. The government must release all rice stockpiles so that it can know exactly the cost and spending on the pledging programme,” he said.

He questioned how the committee could have calculated the losses as the government still has more than 10 million tonnes of rice in the stockpiles. 

Boonsong said the main objective of the pledging was to help farmers. There could be losses but they would not be as high as the report estimated or exceed the previous government’s income-insurance project budget of between Bt70 billion and Bt80 billion.

In spite of facing losses, Boonsong said the government would continue the pledging next year. However, some details and conditions of the pledging could be changed.

The ministry added that the government had already earned Bt120 billion from release of rice stocks. It should be able to earn more to offset losses by selling the remaining stocks. However, the it did not reveal how much the government was spending for stocking rice in warehouses each month.

To find out a clearer figure, the ministry will submit a report of the audit committee to the National Rice Policy Committee next week.

Supat Eauchai, vice president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said the government had spent a combined Bt614 billion for the pledging from 2011 to 2013. The pledging had added about 39.5 million to 40 million tonnes of paddy (25 million tonnes of rice) to the government stocks.

Deputy Commerce Minister Natthawut Saikua admitted that the government did face a loss from the pledging but the aim of the government was to help farmers.

However, the loss figure would not be as high as estimated by the committee. He pointed out that the government had several million tonnes of rice stocks.

Based on the Finance Ministry committee report, as of January 31, the government faced a loss of Bt220.96 billion. 

It is estimated to be accumulating a loss of Bt10 billion a month under the pledging scheme – a cumulative loss of Bt260 billion by the end of May.

Of the total losses, Bt42.96 billion was for the main crop in 2011-12, Bt93.93 billion for the second crop in 2012, and Bt84.07 billion for the main crop in 2012-13.

 

Call for review

Meanwhile, the Thai Rice Farmers Association acknowledged the huge losses incurred by the government under the rice-pledging scheme, and expressed worries about the future and the lower rice quality.

Association president Prasith Boonchuey said the government needed to review the scheme after the end of the pledging round this September. 

“Despite the high pledging price, farmers have never got high returns and still faced a high debt burden after the higher cost of production. Farmers do not want this unstable pledging at a high price as the government will finally need to review the policy because of huge losses and financial liquidity problems. 

“Farmers have ignored development of rice quality because the government has focused only on price, while they have no plan to promote sustainable growth of rice plantations,” he said.

Prasith said the pledging policy had not helped farmers to improve their living standards. 

Farmers want a project that focuses on long-term development rather than a pledging scheme that will be ended eventually.

As a short-term measure, he called on the government to reduce the pledging price to Bt10,000 a tonne of paddy, as well as limit the quantity of pledging. He claimed that most farmers, particularly in the Northeast, did not want the pledging. 

Farmers favour income guarantees, by which they get specific incomes, rather than the pledging, as it involves many problems such as delayed payments.

Because of the high pledging price, Prasith said farmers had to shoulder higher production costs, mainly rental fees, which had doubled from the past. For instance, the rental fee for a rai (1,600 square metres) of land in each rice-planting period has jumped from Bt1,000 to Bt2,000 in Chainat.

To help farmers in the long run, the association called on the government to develop rice-grain quality, reduce costs, increase yield per rai and production, promote marketing, and impart knowledge to farmers.

Primarily, as a self-reliance plan, the association will set up its own “farmers’ welfare shop” to sell cheap agricultural equipment. 

The association called for soft loans by the government to help farmers.