Pledging scheme will help sustain rural economy: UTCC
Big spending on farm-subsidy projects, mainly rice and cassava, this year could help prop up the rural economy amid falling agricultural prices and lower demand in global markets, a study by the University of the Thai Chamber of Commerce (UTCC) found.
However, the study also indicated that the government should only continue price subsidies for a few years, as the projects have not promoted sustainable development in the agricultural sector, and have also increased corruption among involved agencies.
"The government should seriously consider long-term development and improve the marketing of farm-goods exports, rather than only focusing on pledging," said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre. "Although the subsidy has helped stimulate the rural economy and increased the incomes of farmers, it should be ended in the next three to five years."
The UTCC’s Chamber Business Poll surveyed 2,400 farmers, and it found that most rice farmers, about 70 per cent, are satisfied with the pledging project as it can hold up commodities prices.
Farmers shared the view that the pledging could boost their income, reduce their debt burden, and increase their purchasing power.
Up to 80 per cent of respondents wanted the government to continue the rice-pledging project in the coming years.
Asked which of their problems the government should solve as a priority, the farmers said they wanted it to control the skyrocketing cost of production, mainly fertilisers and pesticides. They also want to see higher crop prices, reductions in their debt burdens, control of the rising cost of living, and assistance if they faced natural disasters.
Thanavath said the government should not only consider boosting crop prices, but also seek measures to reduce the cost of production and long-term agricultural development.
The irrigation system should be developed for increased productivity, while farmers should be trained to focus on quality production.
Because of its focus on the pledging programme, the government has failed to develop marketing for rice trading in the past year, Thanavath said.
"Thailand will certainly lose its place as the top rice exporter to India this year and slip to third place behind Vietnam because of weak marketing, while India has high capacity to export rice at a lower price," Thanavath said.
According to the US Department of Agriculture’s forecast on world markets and trade, India will become the world’s biggest rice exporter with about 8 million tonnes this year. Vietnam will export 7 million tonnes and Thailand 6.5 million.
To promote rice export urgently, the chamber suggested that the government closely cooperate with rice exporters.
In the period from January to July 16, Thai rice export volumes fell significantly, by 46.6 per cent to 3.66 million tonnes from 6.8 million tonnes during the same period last year.
The survey also showed that the rice and cassava pledging projects had paved the way for corruption among officials and involved enterprises. About 45 per cent of respondents agreed that there was corruption during pledging procedure.
Wachira Kuntaweethep, a lecturer at the UTCC, said most farmers were satisfied with the current pledging price of rice at Bt15,000 per tonne of white paddy, and Bt20,000 for paddy jasmine rice.
However, the most satisfying pledging price for farmers is Bt18,361 per tonne. A few of them, about 8 per cent, said they would be ready to accept a cancellation of the pledging measure if it was found to damage rice-export competitiveness, but most still want the pledging to be continued.
They said the government should focus more on promoting rice quality, and some would be ready to accept a lower pledging price to increase export competitiveness.
More than 80 per cent of cassava-farmer respondents were satisfied with the pledging project. However, they want the government to increase the pledging price to Bt5.18 per kilogram, from the current Bt2.90.
