Farmers furious

The government’s decision to reduce the minimum price guarantee under its controversial rice-pledging scheme to Bt12,000 per tonne has run into immediate opposition on two fronts: from farmers who are to be directly affected, and from political opponents and critics of the administration.
Farmers’ groups in several provinces said the abrupt lowering of the rate, which takes effect today after special Cabinet approval was granted yesterday, would affect their investments in the current crop, which were based on the previous guarantee of Bt15,000. A group of farmers based in Ayutthaya, a major rice-growing province, said there was a possibility of imminent rallies by farmers if the price remained at Bt12,000.
The opposition moved to capitalise on the issue immediately, saying the Bt3,000 price difference was significant and asking the government to show political responsibility. Democrat Party leader Abhisit Vejjajiva said the same group of rice traders would continue to benefit unfairly from this populist policy, while farmers would see the greatest impact from the Bt3,000 per tonne lost to them.
Government critics had earlier speculated that the change might be unconstitutional and that the government might have been required to declare a new policy to Parliament, as the Bt15,000 rate was announced to Parliament as a key policy when the government took power. The Council of State, which had initially raised similar doubts, said yesterday that the change was legitimate but the government needed to implement the rice scheme carefully.
The business sector and rice traders called for quick release of rice from the government’s stockpiles, but in a transparent manner.
The Board of Trade of Thailand and the Thai Chamber of Commerce – influential business lobbies – also urged the government yesterday to review the loss-making rice-pledging scheme to restore public and investor confidence and promote the country’s growth.
Chairman Isara Vongkusolkij said yesterday that unclear information on the rice-pledging figures, including spending and losses, has undermined the confidence of the private sector, which is greatly concerned that Moody’s Investor Service could cut the country’s credit rating.
“If Thailand is downgraded, it would create problems for investors. The government as well as private enterprises would face more difficulty in accessing loans and credit. The government needs to urgently provide clear information on rice-pledging spending and inventories to the public, as well as earn some income by releasing its rice stocks to fortify its finances,” he said.
The two bodies called on the government to review the pledging mechanism to ensure minimum losses and impact on the market, and to adjust conditions in line with good governance principles.
They proposed three urgent measures that the government should take to boost confidence among the public and investors:
l Lower the pledging price to the current market price.
The government should cap payment to each farm household to keep the subsidy budget down to a minimum. The intervention project should be applied to only the main rice crop, or once a year.
l Delineate zones for rice growing to ensure sound development of rice farming and to promote quality rice varieties.
l Accelerate the sales of rice from stockpiles to maximise spending on the subsidy scheme.
Vichai Assarasakorn, secretary-general of the chamber, said that the government should release rice stocks quickly, because the existing stockpile would only expand as rice output was added to it, and custodial cost would only increase.
“The government’s present releasing method by secretly selling to a few traders has created doubts among the public of whether it is fair for all involved. The government needs to release rice under fair bidding to all involved,” he said.
A Finance Ministry subcommittee handling the rice scheme’s accounting found that the scheme had incurred a loss of Bt130 billion.
The chairwoman of the subcommittee, deputy Finance Ministry permanent secretary Supa Piyajitti, proposed simultaneous searches at 150 warehouses, both government- and privately run, across the country to verify a claim by the Commerce Ministry that there was still 2.9 million tonnes that could contribute to future revenues under the scheme.
She said the simultaneous searches would minimise the chance of rice being distributed among warehouses to fool inspectors.
The Thai Agriculturist Association will today make a public statement declaring its opposition to the reduction in the minimum rate to Bt12,000 per tonne, said association chairman Wichian Puanglamjiak.