Thai Cabinet Blocks THB1.68b Rice Intervention Citing Constitutional Constraints

 

 

The rice absorption scheme has been frozen after legal advice warned it would unconstitutionally commit the next government to major expenditure.

 

The Thai Cabinet has blocked a major agricultural intervention intended to bolster rice prices, following a legal ruling that the move would unconstitutionally bind the hands of the incoming administration.

 

The Ministry of Commerce had sought to secure 1.68 billion baht from the central emergency fund to launch a "rice absorption" scheme for the 2025/26 season.

 

The project aimed to remove three million tonnes of paddy rice from the market to prevent a price collapse.

 

However, the Council of State—the government’s senior legal advisory body—ruled that the proposal violated Section 169 of the Thai Constitution, which prevents an outgoing or acting Cabinet from approving projects that create long-term financial obligations for their successors.

 

 

 

Government spokesperson Siripong Angkasakulkiat confirmed on Tuesday that the rejected funds were intended to cover direct purchase premiums, milling costs, and management fees.

The plan involved the Public Warehouse Organisation (PWO) and the Marketing Organisation for Farmers (MOF) purchasing grain at "market-leading" rates to stabilize the domestic sector.

 

 

While the major absorption scheme was halted, the Cabinet did approve several modifications to existing agricultural programmes:

 

Credit Reductions: Loan limits for the "Rice Barn" scheme—which pays farmers to delay selling their harvest—were reduced by 1.2 billion baht. This adjustment follows a downward trend in market prices, which have fallen below the original loan-to-value estimates.

 

Storage Extensions: Interest compensation for traders holding stocks from the previous season has been extended by six months, pushing the deadline to 30 April 2026.

 

Quality Incentives: A 120-million-baht fund was greenlit to promote "Exquisite Rice", a programme targeting 200 farmer groups to produce high-value, premium grains for export.

 

The Bank of Thailand (BoT) has issued a warning alongside these developments, urging the government to ensure that any approved budget allocations are processed without delay.

 

The central bank highlighted concerns that slow disbursements could strain the liquidity of the Bank for Agriculture and Agricultural Cooperatives (BAAC).

 

The Ministry of Commerce is expected to resubmit the three-million-tonne absorption plan for formal consideration once the new Cabinet has been officially sworn into office.