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Rice stocks from subsidy scheme must be liquidated soon

Jul 09. 2015
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THE VALUE of the overflowing state rice stockpiles of around 16 million tonnes, a legacy of the previous government's flagship subsidy scheme, was recently estimated at only Bt200 billion - if they are sold.
“We expect to receive around Bt200 billion from releasing 16 million tonnes of rice in the state’s stockpile, compared with the cost of Bt600 billion,” Chutima Bunyapraphasara, permanent secretary at the Commerce Ministry, said earlier.
But the figure is far from what has been spent on it.
As is widely known, past governments have spent many billions of baht on 15 rice-subsidy projects over the past decade. More than a half of that happened under the administration of former prime minister Yingluck Shinawatra.
Unfortunately, people pay too little attention to the massive losses suffered by the country through the rice-subsidy schemes launched by many governments, who used them as a populist policy to gain votes, and seem to care more for news like 14 students being arrested or the break-ups of movie and pop stars.
The National Rice Policy Committee, chaired by Prime Minister General Prayut Chan-o-cha, at its meeting on July 1 agreed to release all the state’s leftover rice stock of 15.46 tonnes, as of the end of June, through bidding.
The rice stockpile was divided into three main groups.
Group 1 represents A and B grade rice, totalling 9.7 million tonnes, and will be open for bidding for packing in 2-kilogram bags for local markets and export.
Group 2, categorised as C grade or sub-quality rice, is unfit for eating. This group has about 4.6 million tonnes for auctioning, for use as a raw material in ethanol production.
Group 3, which is classified as rotten rice and unfit for use as material for ethanol production, totals 1.29 million tonnes, and will be open for bidding for use as fuel in biomass power plants to generate electricity.
There is scepticism whether the rice classified as “sub-quality” is really what it is. Who are the ethanol producers who will take part in the bidding for “sub-quality” rice? Will there be any kind of collusion or corruption in the bidding process?
Rice typically gives ethanol output greater than other materials used for production. According to one estimate, about 1.3 million tonnes of rice will yield around 400 million litres of ethanol.
The committee meeting on July 1 instructed completion of bidding this month for some portion of the C grade rice in Group 2, and all of the decomposed rice in Group 3, before the new crop enters the stockpile. 
More than that, the government needs to speed up inviting bids for “sub-quality” rice and the rotten rice, at least to ensure that it would not hurt the country’s reputation as one of the world’s quality rice producers.
Of course, the rice in groups 2 and 3 must be ridden with weevils, which is the main factor that makes rice stocked in the state’s granaries rotten and decomposed. Instead of burning such bad-quality rice, it would be more useful to send it to the ethanol plants and biomass power plants to be converted into fuel and electricity.
Apart from that, it will also save the government’s spending on the rice inventory under the pledging scheme, which costs about Bt46 million per day.
What if the new lots of rice from the harvest season that enter the state’s granaries are contaminated with weevils from the old rotten stock?
This would certainly be a worrying factor and could hurt exports, as Thai rice may lose its reputation, and this could depress the selling price.

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