Rice pledging can boost farmers' incomes and will be continued, commerce minister vows

He said the scheme could raise farmers’ annual income by Bt66,000 per person on average. He also reiterated that the project did not damage the market mechanism.
He said the programme had pledged 44 million tonnes of paddy rice during the past two years and the government had spent Bt340 billion on the scheme each year.
Meanwhile, most rice farmers are “quite satisfied” with the government’s pledging scheme, even though the project has created huge budgetary losses for the Kingdom and damaged rice-trading competitiveness, a survey by the University of the Thai Chamber of Commerce shows.
The UTCC reported that about Bt100 billion had reached farmers as a result of the government’s spending of about Bt400 billion each year on its rice-subsidy project. In his statement to Parliament, Niwatthumrong put that figure at Bt340 billion per year.
The university claimed that income from exports had dropped by Bt50 billion to Bt60 billion a year, because of the price of Thai rice on the world market having been distorted by too high a pledging price.
“Although rice farmers said they had earned more because of the pledging project, the government needs to find an ‘exit policy’ [and to decide] whether to continue the project for long, as it has created huge losses for the country and damaged rice-sector development,” said Thanavath Phonvichai, director-general of the UTCC’s Economic and Business Forecasting Centre.
The government should conduct research to weigh whether the pledging policy really benefits the country and the majority of people, he suggested.
Based on a survey of 1,228 rice farmers, a poll showed that most were “quite satisfied” with the pledging project, as it had enabled them to earn more. On average, each farmer had earned an additional Bt58,314 a year since the scheme was launched.
But despite farmers’ satisfaction with the programme, the UTCC said the government would need to spend a huge amount each year on a never-ending subsidy if it did not come out with a clearer policy for the sustainable development of rice farming and trading.

High debt level
Farmers still have a high average debt of Bt264,825 per household, the UTCC found. Survey respondents said that although they had generated more income from pledging over the past two years, they were still burdened with debt because of higher production costs and the rising cost of living.
More than 80 per cent of farmers said they had faced higher production due to the pledging programme.
About 63 per cent of respondents said their standard of living had improved, while the remainder said it had worsened because of higher living costs.
While farmers said they understood there was a huge budgetary cost for the Kingdom in subsidising the price of rice, they still wanted the government to maintain the policy as it stands.
However, a moderate number of farmers said they could accept it if the government were to reduce the pledging price, or review some of the conditions of the scheme.
Thirty-five per cent of respondents said their main wish was that the government continue with the pledging scheme, while about 30 per cent said the government should find measures to help the export sector, and 15 per cent want it to emphasise rice-quality development.
Some 10 per cent said they wanted the government to seek new markets, while the remainder said it could cancel the pledging scheme and allow rice prices to move in accordance with the market.
Some farmers also voiced the opinion that the government should cancel the pledging policy after rice prices had risen to a satisfactory level, or production costs had decreased.
Almost 20 per cent said Thailand should cancel the pledging scheme after the implementation of the Asean Economic Community in 2015.

Lost competitiveness
A parallel UTCC survey of 135 rice traders found that Thailand was losing competitiveness because of the pledging policy.
Up to three-fourths of the respondents shared the view that rice exports had dropped significantly because of the programme.
The quality of Thai rice grains has also fallen, while the Kingdom is losing competitiveness each year, they said.
More than 70 per cent of respondents said the rice-pledging scheme had created more losses than benefits for the country.
Almost one-third of traders said Thailand would never be able to restore its position as the world’s largest rice exporter, while about 28 per cent said the country could become the largest exporter again in the next three to four years.
To promote sustainable development in rice farming and trading, traders suggested the government should switch from pledging to an income-guarantee scheme, so that Thailand could compete with other countries.
Exporters said the government should also directly help farmers to develop the sector and reduce production costs.